Sunday, June 22, 2008

Stock Idea: Prime Property Development Corp.

Prime Property Development Corpn. (Code: 530695) Rs.65.75
Incorporated in 1992, Prime Property Development Corporation Ltd. (PPDCL) is small real estate developer based in Mumbai. It made a late entry and started its real estate activity only in 2002. PPDCL is led by Shri Padamshil L Soni who has a rich experience of nearly two decades in construction. Apart from his two sons, the company has eminent personalities on its board including Shri Y. C. Pawar, Shri K. Nalinakshan, Dr. B. Samal to name a few. Under their leadership, the company has now positioned itself as a unique company catering to the niche segment of the property market. Within a short span of time, the company boasts of constructing landmark residential and commercial buildings for high end customers in Mumbai. ‘Prime Beach’ and ‘Prime Centre’ constructed in Santracruz by the company are among the most luxurious apartments and also well known for its modern and elegant architecture. On the other hand, its ‘Prime Plaza’ is a 100% commercial project with ultra modern facilities in Santacruz was a huge success. ‘Prime Avenue’ – a 100,000 sq. ft. residential cum commercial project in Vile Parle was the flagship project of the company comprising residential flats and large commercial units like showrooms, shops and offices.
Currently, PPDCL is developing two projects that are nearing completion. Of these, ‘Prime Down Town Mall’ project is much bigger being a 270,000 sq ft luxurious composite Mall with multiplexes. The mall is at the prime location of Hughes Road, Mumbai and is being constructed in partnership with others. Once operational it will be among the largest malls in Mumbai with hi-tech elevation and an international feel. ‘Prime Tech Park’, the other project is a 90,000 sq ft commercial building in Vile Parle mainly for IT /ITES companies. It is just next to the Western Express highway and barely a few kms away from the domestic and international airports. Apart from these two projects, the company has undertaken two more projects, of which both are shopping malls – one in Mumbai and the other in Pune. The Mumbai mall name ‘Prime Square’ is a four storey, 70,000 sq ft mall located on, S.V. Road, in Goregaon – a flourishing suburb of Mumbai. The Pune mall called ‘Prime Pune Mall’ will be a gigantic 430,000 sq. ft. state-of-the-art mall with anchor shops, multiplexes, food courts, entertainment area and a hotel. In short, the company is estimated to generate more than Rs.500 cr. of revenue over the next 2-3 years.
PPDCL has also finalised a location in Vile Parle (W) to construct a 60,000 sq ft shopping mall and has even created a blue print for the same. It is also planning to develop a residential project in Pimpri, Pune. The plan is still on paper and yet to be finalized. Financially, due to sale of units in ‘Prime down Town Mall’ and ‘Prime Tech Park’, PPDCL has ended FY08 on quite a buoyant note. It recorded a topline of Rs.105 cr. and bottomline of Rs.32.70 cr. Importantly, it has made the highest tax provisioning of Rs.17.50 cr., which ensures the integrity of its real profit. This translates into an EPS of Rs.16 on its equity of Rs.10 cr. with face value of Rs.5 per share. It is expected to declare Rs.2.50 as dividend which gives a yield of nearly 4%. Considering the company’s current projects on hand and that too at prime locations, it may report total revenue of Rs.150 cr. with net profit of Rs.40 cr. for FY09 i.e. an EPS of Rs.20 on its current equity. Hence, the scrip is available fairly cheap at a current P/E ratio of merely 4 times. At the same time, adverse profiling of the sector coupled with higher input prices, imposition of service tax on rentals of commercial property & hardening interest rates are bound to dampen the sentiment and affect the demand for certain categories of properties. Yet, the company is largely insulated from the downturn and investors can buy the scrip at current levels with a price target of Rs.100 in 9-12 months.
Source: Internet (MT)


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