This leading Delhi based realty company managed to sell a part of its stake of its telecom venture, Telenor and raised Rs.2022 crore through this sale. This is going to be used to discharge a part of the its gargantuan debt of Rs.6200 crore. That’s good news. But what the market is now concerned about is the slippage in its schedule of deliveries. It has missed the scheduled delivery of its past projects of 17 million (m) sq feet, which it now plans to complete by end- FY11.
Till 31st Dec 2009, the company launched 24.42 m sq feet and this was shockingly equal to launches it had during the boom time of 2007. Seemingly, the company got carried away by the ‘affordable housing’ bandwagon and was quick to launch huge projects. Of the 24.42 mln sq feet launched, almost half or 13 mln sq feet have been booked by customers. And this, over the next four years, is expected to bring in revenue of Rs.1375 per annum.
Though there was assurance that the company has managed to raise funds to reduce its debt, there is concern that if all the money is used to reduce debt, from where will the company get money to fund the projects under implementation?
For the 9MFY10, the net income of the company was down 28%. Interest costs have almost halved, yet net profit was down 44% at rs.511.64 crore. For FY09, the company had a net profit of Rs.1197.71 crore and it is unlikely that the company would be able to surpass that number for FY10.
The company will be able to stand back firmly on its feet only by FY11. The annualized EPS of Rs.2.87 discounts the current market price by around 25 times. Wait for the company to speed up its implementation schedules and then take a long term call.
Till 31st Dec 2009, the company launched 24.42 m sq feet and this was shockingly equal to launches it had during the boom time of 2007. Seemingly, the company got carried away by the ‘affordable housing’ bandwagon and was quick to launch huge projects. Of the 24.42 mln sq feet launched, almost half or 13 mln sq feet have been booked by customers. And this, over the next four years, is expected to bring in revenue of Rs.1375 per annum.
Though there was assurance that the company has managed to raise funds to reduce its debt, there is concern that if all the money is used to reduce debt, from where will the company get money to fund the projects under implementation?
For the 9MFY10, the net income of the company was down 28%. Interest costs have almost halved, yet net profit was down 44% at rs.511.64 crore. For FY09, the company had a net profit of Rs.1197.71 crore and it is unlikely that the company would be able to surpass that number for FY10.
The company will be able to stand back firmly on its feet only by FY11. The annualized EPS of Rs.2.87 discounts the current market price by around 25 times. Wait for the company to speed up its implementation schedules and then take a long term call.
Source: Internet (premiuminvestments.in by S P Tulsian)
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