indian property
TRANSCRIPT
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Asia Pacific Equity Research13 January 2012
India PropertyOutlook 2012: Markers for a recovery
Real Estate
Saurabh KumarAC
(91-22) 6157-3590
Gunjan Prithyani
(91-22) 6157-3593
J.P. Morgan India Private Limited
See page 13 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware ththe firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a singfactor in making their investment decision.
Property stocks in their limited trading history in India have reacted tovolumes and not pricing. With physical prices at peak and stocks near
Lehman valuation lows, we see a potential for this anomaly to reverse.Affordability calculations show that if mortgage rates come down by50bps and prices by 15%, mortgage payment/income levels will go back to
2009 (recovery) levels across markets, thus improving volumes. We see
both of these as plausible events unfolding through this year. However, as
history shows, its best to wait for volumes to recover on an anecdotalbasis first and then buy stocks later, rather than guessing it in advance.We move into CY 12 with DLF, Phoenix and Prestige as our top picks.
Volumes returning Or are we just reading in too much? Of late price
competitive launches (Prestige Tranquility, DLF Bangalore, SunteckGoregaon, Airoli) seem to have garnered good offtake. A broad basedcorrection isnt underway yet though in overheated micro markets (esp.Mumbai) pricing has taken a hit. Given repayment overhang & growthhunger, we think developers are slowly adopting to a more pragmaticapproach. For ready-to-move in inventory, we see limited pricing downsidegiven constrained supply. However, we think new launched inventory needsto correct by 15-20% to entice end users/investors from a risk rewardperspective.
Key market calls for 2012: We see Mumbai as a potential dark horsegiven pent up demand building through last 14 months. Notification of newbuilding code norms and price discounting (which is underway) combined
with rate cuts could lead to improvement in volumes from a low base. Weexpect Bangalore will continue with its good run though growth rates maymoderate at the margin. NCR, however, may be sluggish given bunching upof large deliveries which might lead to action shifting to the secondarymarket. Office demand, in our view, is likely to be subdued, as thatsegment lags macro recovery. Our outlook for retail malls remainsconstructive as seen in occupancies of newly completed properties thoughrentals might not be able to move up meaningfully.
Key stocks for CY12: We continue to stick to our framework of pickingstocks with (1) Low level of associated regulatory/political risks, (2) Abilityto raise financing in a constrained market, and (3) Prime land holdingscoupled with (4) Reasonable valuations. On this framework, DLF (debt
reduction)/ Phoenix (asset stabilization) and Prestige (strong presales)come out well and are our top picks. We believe IBREL is cheap butneeds confidence on group to improve which may take time. HDIL is on ourwatch list as a candidate for potential maximum improvement infundamentals, as traction can build up meaningfully in a short period of timearound the airport project and debt repayment issues in FY13.
Figure 1: Property Price Index vs. BSERealty performance- A stark divergen
Source: Bloomberg, C&W
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100
150
Property Price Index BSE Realty
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13 January 2012Saurabh Kumar(91-22) [email protected]
Table of ContentsKey stock picks.......................................................................................................3
Then vs. now A brief comparison vs. 2008...........................................................4
Property price cuts of 15% required to bring affordability back to FY09 levels.....5
Key market calls .....................................................................................................6
Office lags macro recovery; 2012 likely to remain muted.....................................8
Retail performance in line with trend.......................................................................8
Ability to manage cash flows remains the key..........................................................9
Deliveries are getting bunched up in 2012/13 which may keep pre launch andsecondary pricing in check ............. ............. ............. ............. ............. .............. .......9
Valuations cheap but stock prices lack catalysts. Buy backs and promoter buying
have happened in select names...........................................................................113QFY12 will lead to higher performance divergence..............................................12
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13 January 2012Saurabh Kumar(91-22) [email protected]
Key stock picks
In the current backdrop, our preference is for companies that offer high absolute
valuation upside with lower concomitant regulatory/credit risks. We rate the stockson four parameters viz. Valuations (current & relative to GFC), Exposure toregulatory/ political risks, ability to withstand a credit crunch (given the experienceof 2008, past track record and current cash flows) and visible share price catalysts.Our risk reward framework here places an equal emphasis on risks (regulation /credit) relative to reward (valuations / catalysts).
Within this framework, DLF, PEPL and Phoenix emerge as our top picks. Theseare companies which, we believe, offer the best risk reward balance with near termshare price catalysts, prime on book assets, high annuity streams and where we donot see any stress on credit profile.
a) DLF/ Debt Reduction- Progress on debt reduction driven by non core asset
sales remains the key stock catalyst. Recent announcements point to a
decent traction on the same with closure of Rs20B worth of transactions
over the last 6 months. Progress on sale of Aman resorts, albeit delayed,
remains the key to watch out for. Current valuations at 1.2x FY13E P/B arealso accommodative, in our view.
b) Prestige Estates/ Improving pre sales and rent growth. Operating trends
for the company continue to remain solid given market leadership position
in Bangalore. Debt levels for the company are relatively low as well.
Operationally the company continues to deliver fairly strong results and ison track to achieve our stabilized cash flow of Rs 6.3B in the next 2 years.
c) Phoenix Only listed retail real estate play. With the opening of 3 market
cities, the company has emerged as the largest retail landlord in the country.Response to the recent mall launches has been encouraging and overall the
company seems to be on track to achieve Rs3B rental income by FY13 end.Relaxation of FDI in retail could further boost sentiment.
Table 1: India Property - Relative ranking (top 3 marked out on each parameter)
CompaniesOverall
rank
Ability towithstand
credit stressRelative
valuationsStock
catalystsRegulatory
risksPhoenix 1 2 10 2 1DLF 2 4 5 1 7IBREL 3 6 1 3 8PEPL 4 7 7 4 1OBER 5 1 7 5 7Sobha 6 9 6 6 1HDIL 7 5 3 7 8Unitech 8 8 2 8 8JPIN 8 3 4 11 8Indian hotels 10 10 9 10 1GPL 11 11 11 9 1
Source: Company, Bloomberg, J.P. Morgan estimates.
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13 January 2012Saurabh Kumar(91-22) [email protected]
Then vs. now A brief comparison vs. 2008
Property stocks in their limited trading history in India have reacted almost
exclusively to volumes and not pricing. With physical prices at peak and stocks nearLehman lows, we see a potential for this anomaly to reverse. Affordability
calculations show that if mortgage rates come down by 50bps and prices by 15%,
mortgage payment/income levels will go back to 2009 (recovery) levels across
markets thus improving volumes. We see both of these as plausible events unfolding
through this year. However, as history shows, its best to wait for volumes to recover
on an anecdotal basis first and then buy stocks rather than guessing it in advance.
Figure 2: India Property Price Index vs. BSE Realty performance
Source: Bloomberg, C&W, J.P. Morgan. Both index rebased to 100 as at Mar-09
The current state of India physical property markets gives a sense of dj-vu (similar
to 2008) with uncertain macro, deteriorating affordability and high prices adversely
impacting volume trends and sector share price performance. The sector, in general,
has now traded back to Lehman levels or even lower in terms of valuations. While
funding environment has been tight for the sector, the situation isnt all that bad as in
the 2008 downturn. Most companies albeit are looking to sell down non core assets
and downsize landholding to bring down the overall debt levels.
Drawing a parallel to 2009, sector revival hereon would hinge on a combination
of:
a) Decline in mortgage rates- Policy rates seem to have peaked with RBI
guiding to a reversal in monetary policy cycle. Major Banks/HFCs are
offering fixed rate schemes for initial 3-5 years and few HFCs have also
started offering discounts of upto 25bps on floating mortgage rates.
b) Lower unit sizes in new launches thereby reducing the overall ticket size.One of the leading developers, Hiranandani, has recently announced 1BHK
apartments in its township in Thane. We expect others to follow the suit.
c) Sharp cut in property pricing Yet to see any meaningful price cuts.
Of the above 3 conditions, there seems to be some visibility on two conditions i.e.
peaking of mortgage rate and reduced sizes in new launches. While we have not seen
meaningful property price cuts as yet, some initial signs of price discounting have
come through in overheated markets (EMI subvention scheme in Mumbai/NCR etc).
While this implies that some price correction is imminent, the timing and extent may
be hard to call. Any sharp cut in property prices (10-15%), as and when it happens,
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Mar-09 Jun-09 Sep-09 Dec -09 Mar-10 Jun-10 Sep-10 Dec-10 Mar11 J un 11 Sep 11
Property Price Index BSE Realty
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would ease affordability concern over 2H. This should trigger physical volume
recovery and shortly stock price recovery, in our view.
Property price cuts of 15% required to bring affordabilityback to FY09 levels
If developers take meaningful price cuts (10-15%) , we estimate affordability
(EMI/Monthly Income) should come down from current 45-50% levels to
comfortable 30%/40% in NCR/Mumbai respectively, thereby bringing it back to
2009 (recovery) levels.
In our calculations below, we are assuming prices to drop by 5-15% from peak
levels, mortgage rates coming off by 50bps and incomes remaining largely stable
Y/Y. Improved affordability should in turn aid a strong revival in residential
absorption trends, which have been fairly muted over the past 6 months in keymarkets like Mumbai/NCR.
Figure 3: Mumbai Affordability- EMI/Monthly Income (assuming mortgage rate decline of 50bpsand price cut of 15%)
Source: Bloomberg, J.P. Morgan
Figure 4: NCR Affordability (assuming mortgage rate decline of50bps and price cut of 15%)
Source: C&W, Bloomberg, J.P. Morgan
Figure 5: Bangalore Affordability (assuming mortgage rate decline of50bps and price cut of 5%)
Source: C&W, Bloomberg, J.P. Morgan
35%
40%
45%
50%
55%
60%
65%
70%
20%
40%
60%
80%
100%
30%
35%
40%45%
50%
55%
60%
65%
70%
Affordability metrics to start
improving over 2H driven by
decline in mortgage rates and
lower selling prices/unit sizes
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13 January 2012Saurabh Kumar(91-22) [email protected]
Figure 6: HDFC Mortgage rates (floating) vs. benchmark rates
Source: Bloomberg
Key market callsResidential markets in Mumbai have been witnessing sluggish trends over the past
12 months, which has led to significant pent up demand. Current absorption run rate
in Mumbai is close to bottom seen in 2008 downcycle and hence could potentially
bounce back sharply, if meaningful price cuts start coming through in new launches.
Regulatory environment in Mumbai has started to improve with notification of new
FSI norms in the city and approvals starting to come through at the margin. This
should aid launch activity, which was at a standstill over the last year.
Bangalore, in our view, should continue to witness steady volumes trends on the
back of planned affordable launches and decent salary/hiring trends in IT/ITeS
industry despite macro headwinds. Prices in the city havent appreciated
meaningfully either thereby keeping the affordability under check.
Gurgaon could be a potential laggard in 2012 as a large number of deliveries
coincide with sluggish demand trends. This could result in oversupply issues and
keeping the pricing under check. According to Prop Equity, Gurgaon will witness
delivery of ~32000 units, which is more than double of 2011 completions.
Figure 7: Mumbai suburbs Residential absorption close to 2008 lows
Source: Prop Equity, J.P Morgan
4.00
5.00
6.00
7.00
8.00
9.00
10.00
11.00
12.00
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500
1,000
1,500
2,000
2,500
Sep-2007
Nov-2007
Jan-2008
Mar-2008
May-2008
Jul-2008
Sep-2008
Nov-2008
Jan-2009
Mar-2009
May-2009
Jul-2009
Sep-2009
Nov-2009
Jan-2010
Mar-2010
May-2010
Jul-2010
Sep-2010
Nov-2010
Jan-2011
Mar-11
May-2011
Jul-2011
Sep-2011
Absorption (units) Mean levels
Mortgage rates seem to have
peaked with banks/HFCsoffering 25bps discount to
floating rates to entice
customers even as pressures on
cost of funding remain.
Volumes in Mumbai have been
sluggish for the past 12 months.
Current absorption run rate in
Mumbai is close to bottom seen
in 2008 down cycle.
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13 January 2012Saurabh Kumar(91-22) [email protected]
Figure 8: Gurgaon- Residential absorption near mean levels
Source: Prop Equity
Figure 9: Bangalore Residential absorption trends remain stable
Source: Prop Equity
Figure 10: Gurgaon Residential supply trends (units)
Source: Prop Equity
-500
500
1500
2500
3500
4500
Sep-2007
Nov-2007
Jan-2008
Mar-2008
May-2008
Jul-2008
Sep-2008
Nov-2008
Jan-2009
Mar-2009
May-2009
Jul-2009
Sep-2009
Nov-2009
Jan-2010
Mar-2010
May-2010
Jul-2010
Sep-2010
Nov-2010
Jan-2011
Mar-11
May-2011
Jul-2011
Sep-2011
Absorption (units) Mean
1500
2500
3500
4500
5500
6500
7500
Jul-2007
Sep-2007
Nov-2007
Jan-2008
Mar-2008
May-2008
Jul-2008
Sep-2008
Nov-2008
Jan-2009
Mar-2009
May-2009
Jul-2009
Sep-2009
Nov-2009
Jan-2010
Mar-2010
May-2010
Jul-2010
Sep-2010
Nov-2010
Jan-2011
Mar-11
May-2011
Jul-2011
Sep-2011
Absoprtion (units) Mean
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5,000
10,000
15,000
20,000
25,000
30,000
35,000
2008 2009 2010 2011 2012 2013 2014 2015
Supply (units)
Absorption trends in Gurgaon
remain healthy. However,demand has been moderating
over the last few months, after
touching record high levels early
last year.
Bangalore continues to witness
healthy trends on the back of
encouraging response to
affordable launches.
Gurgaon is expected to witness
delivery of ~32000units, which is
more than double of 2011
completions.
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13 January 2012Saurabh Kumar(91-22) [email protected]
Office lags macro recovery; 2012 likely to remain muted
Office leasing, after witnessing record levels in 1HCY11, has started to slow down
over the last 2Qs due to uncertain macro weighing down on corporate expansionplans. Office demand revival typically lags macro economic recovery and hence isnt
likely to do well in 2012, in our view.
Even while rents havent recovered post 2008 downturn, they are unlikely to improve
as supply outstrips absorption. Rentals in few prime locations in Bangalore (CBD),
Mumbai (BKC) and Gurgaon albeit may remain firm given low vacancy levels.
Figure 11: India Office Absorption Trends (msf)
Source: DTZ
Retail performance in line with trend
CY11 marked the beginning of strong revival for retail leasing with new malls being
launched at high occupancy levels and decent pre-leasing witnessed across the
upcoming malls. Retail absorption at 10 msf for CY11 more than doubled ascompared to 2010. We expect the buoyancy in the retail segment to sustain through
2012, given the strong consumption trends across key metros and lack of quality
retail mall supply.
CY11 and CY12 are big years in terms of new project completions. Most of these
recently completed malls or upcoming projects have substantial lease commitments
in place. Further, any clarity on potential FDI relaxation should benefit the retail
developers (DLF, Phoenix, Raheja). Retail rents have started to appreciate over the
last 2Qs and are likely to remain firm given strong absorption trends.
Figure 12: Pan India Retail Demand Supply Trends
Source: JLL REIS
7.2 6.8 7.7
11.3
8.4
11.0
7.4
12.1
9.2
5.97.0
9.2
14.1
7.0
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2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
Q1 2010 Q2 2010 Q3 2010 Q42010 Q12011 Q22011 Q32011
Absorption (msf) Supply (msf)
Macro uncertainty has started to
weigh on corporate expansion
plans thereby adverselyimpacting office space demand.
Office leasing, after witnessing
record levels in 1HCY11, has
been slowing over the last 2Qs.
Retail segment has been
witnessing strong leasing overthe last year with new malls
opening at high occupancies.
Outlook CY12 remains buoyant
on the back of large pre
commitments in place.
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13 January 2012Saurabh Kumar(91-22) [email protected]
Ability to manage cash flows remains the key
Debt reduction is likely to remain the key focus area for most companies in 2012.
This, we believe, will be driven by combination of land/asset sales and improvementin operational cash flows. Number of companies have embarked on an asset sale
program and have seen decent momentum on the same (albeit after delays) in the
recent past.
Improved traction herein should help resolve the cash flow/refinance issues of the
companies and aid sentiment for stock prices. Further, expected reversal in monetary
policy actions should ease credit availability for the sector as overall liquidity
conditions improve over 2H.
Table 2: Asset Sale program by key listed companies
DLF Company has seen decent traction on its asset sales over the recent past. Key transactions concluded over Dec-Q include - sale ofNoida IT Park to IDFC, Pune IT Park to Blackstone and land sale in Gurgaon to M3M. Aman Resorts sale, however, seems to havebeen delayed. This should help company bring down debt levels.
HDIL FSI sales done in Goregaon, Virar Vasai. Further, the company is looking to monetize its Kochi and commercial assets (in AndheriW etc). Progress herein would ease refinance issues of the company.
GPL Company recent sold 49% stake in Gurgaon project to Sun Appollo and is evaluating stake sales to PE players in other projects aswell.
Source: Company reports, J.P. Morgan
Deliveries are getting bunched up in 2012/13 which may
keep pre launch and secondary pricing in check
Execution will be the key differentiator among developers in 2012. Delivery
commitments of most developers in 2012 are substantial as launches done in 2009
(post 2008 downturn) complete 3 years of construction cycle. Gurgaon and South
Indian markets of Bangalore/Chennai are likely to witness record number of
deliveries, more than double of those seen in 2010.
Among key developers, DLF is guiding to deliveries of 12msf+ primarily coming
from completions in Gurgaon and Chennai. Unitech has 7 msf of projects in finishing
stages (primarily pre FY09 projects), which should also get delivered in 1HCY12.
Deliveries commitments for Bangalore developers viz Sobha/PEPL/Puravankara also
are fairly sizeable in 2012. These commitments, if managed well, would be an
important milestone for execution abilities.
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13 January 2012Saurabh Kumar(91-22) [email protected]
Figure 13: Gurgaon Residential supply trends (units)
Source: Prop Equity
Figure 14: Mumbai Residential supply trends (units)
Source: Prop Equity
Figure 15: Bangalore Residential supply trends (units)
Source: Prop Equity
Figure 16: Bangalore Residential supply trends (units)
Source: Prop Equity
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5,000
10,000
15,000
20,000
25,00030,000
35,000
2008 2009 2010 2011 2012 2013 2014 2015
Supply (units)
-
5,000
10,000
15,000
20,000
25,000
30,00035,000
40,000
2008 2009 2010 2011 2012 2013 2014 2015
Supply (units)
-5,000
10,00015,00020,00025,00030,00035,00040,00045,000
50,000
2008 2009 2010 2011 2012 2013 2014 2015
Supply (units)
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5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
2008 2009 2010 2011 2012 2013 2014
Supply (units)
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13 January 2012Saurabh Kumar(91-22) [email protected]
Valuations cheap but stock prices lack catalysts. Buy backsand promoter buying have happened in select names.
Indian property developer stock prices have de-rated almost 70% Y/Y due to aconfluence of tightening credit, deteriorating macro and rising regulatory/politicalrisks. The sector, in general, has now traded back to Lehman levels or even lower interms of valuations. This even as balance sheets and physical market volumes are ingeneral in a much better shape vs. GFC levels
Given the sharp fall in share prices and cheap valuations, few companies have
announced buy back plans. Insider activity (promoter buying) has also been fairly
prominent in few names over the last six months. IBREL and Ansal Housing have
announced share buy back plans; while there has been promoter buying across a
number of mid cap names (Sobha/Parsvnath, JPIN etc).
Table 3: India Property - Valuation Summary
MarketCap P/E EPS growth P/B ROE
US$MM FY12E FY13E FY 12E FY13E FY12E FY13E FY12E FY13EDLF 6,523 20.5 18.7 -3% 9% 1.3 1.2 6% 7%Unitech 1,247 8.4 8.1 -2% 3% 0.5 0.5 5% 6%Jaypee 1,104 4.4 4.4 -13% 1% 1.0 0.8 24% 20%Oberoi 1,478 14.8 11.7 -3% 26% 1.9 1.7 14% 15%Godrej Properties 873 37.4 22.4 -11% 67% 4.4 3.8 12% 18%HDIL 584 3.5 2.9 1% 19% 0.3 0.3 9% 9%IBREL 504 9.3 6.5 63% 43% 0.2 0.2 3% 3%Phoenix 556 25.3 18.4 30% 37% 1.6 1.4 6% 8%Prestige 477 15.8 7.7 -12% 105% 1.1 0.9 7% 13%Sobha 435 12.6 8.9 -4% 41% 1.0 0.9 9% 11%Indian Hotels 923 56.5 19.7 -194% 187% 1.6 1.5 3% 8%
Source: Bloomberg, J.P. Morgan estimates, Pricing as of Jan 12, 2012 close.
Figure 17: Sector Performance chart
Source: Bloomberg, J.P. Morgan
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000 Policy breather-
RBI permitted real estateloan restructuring comes
as a breather.
Reduction in bank
provisioing and risk weightrequirements for loans to
real estate
Hom e loan rate cuts
accounced.
Volumes pick up in the massresidential launces (at 20-25%
discunt to peak).
Price showing signs of
stabilization and even start toincrease in Mumbai/NCR
Equity raisings startLeverage concerns allay
Provisioningnorms for
commercial realestate raised to1% from 0.4%
Developer financing completelyhalts. Incremental sales at a
standstill. Asset liability mismatchon balance sheet worsens
Signs of revival in office market
with lease enquiries picking up.
RBI disallowed
resttructuring of l oans
Introduction of servicetax on residential sales
Withdrwal of tease rhome loan
schemes
Residential volumes start to taper off
esp in Mumbai as prices increase.
Pick up in transactions in land market
Incidence of service tax reduced
RBI increased riskweights on home loans
>Rs7.5M and provisitionfor teaser home loans
LTV's on housing loanscapped at 80%
Home loan rate hikesstart coming through
Sharp stock specific
declines for thecompanies whose names
emerged in the 2Gtelecom scam bribe
CCI ruling against
DLF impoisngpenalty for
execu ting one sidedagreement
New FSInorms
proposed for
Mumbai
Scrappingof car park
FSI policyin Mumbiai
RBI signals
a pause ininterest rate
hikes onslowinggrowth
LIC bribe
for loanscandal
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13 January 2012Saurabh Kumar(91-22) [email protected]
3QFY12 will lead to higher performance divergence
3Q results are likely to be muted for NCR and Mumbai-based developers given
sluggish demand trends, subdued launch activity and higher finance costs. Evenwhile Bangalore developers have been reporting impressive operating numbers
(record high pre sales, launches etc), reported financial numbers are unlikely to
surprise positively as new launches will not start contributing to the financials
immediately (given POCM accounting).
We expect DLF and Sobha to report some Q/Q debt reduction on the back of non
core asset sales (for DLF) and improved operational cash flows (for Sobha). While
there have been consistent disappointments on this front in the recent past, we
believe any meaningful headline debt reduction in 3Q would be key to watch out for
and would be taken positively by the markets.
GPL, on the other hand, would report higher debt levels (on the back of conclusion
of Jet BKC deal (Dec-Q Net D/E at 1.7xE). We expect reported PAT albeit to be
higher Y/Y and Q/Q on the back of recent PE stake sale (other income) and
improved contribution from ongoing projects.
Table 4: India Developers - 3Q results expectations
Revenues (Rs MM) EBITDA (Rs MM) PAT (Rs MM)Q3FY12E Q2FY12 Q3FY11 Q3FY12E Q2FY12 Q3FY11 Q3FY12E Q2FY12 Q3FY11
DLF 24,371 25,324 24,799 11,075 11,730 11,780 3,152 3,724 4,657Unitech 6,091 6,261 6,598 1,703 1,381 2,088 1,132 925 1,114HDIL 4,625 4,407 4,554 2,266 2,321 2,665 1,400 1,486 2,519Indiabulls 4,996 3,320 3,997 1,499 1,026 1,229 744 394 766Oberoi 1,639 2,226 3,987 885 1,155 2,469 848 1,114 2,052
Prestige 1,614 1,281 3,636 579 493 935 309 263 544Godrej Properties 1,610 1,306 482 386 202 65 361 101 177Sobha 3,690 3,294 3,629 846 755 820 454 409 490Phoenix 484 474 451 348 333 327 234 239 238Jaypee Infratech 6,650 7,158 7,554 3,458 3,933 4,742 2,722 3,106 3,789
Source: Company reports and J.P. Morgan estimates.
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13 January 2012Saurabh Kumar(91-22) [email protected]
Companies Recommended in This Report (all prices in this report as of market close on 12 January 2012)DLF Limited (DLF.BO/Rs191.85/Neutral), Housing Development and Infrastructure Ltd. (HDIL)
(HDIL.BO/Rs70.30/Neutral), Indiabulls Real Estate (INRL.BO/Rs56.55/Overweight), Phoenix Mills(PHOE.BO/Rs193.05/Overweight), Prestige Estate Projects Limited (PREG.BO/Rs72.65/Overweight)
Analyst Certification: The research analyst(s) denoted by an AC on the cover of this report certifies (or, where multiple researchanalysts are primarily responsible for this report, the research analyst denoted by an AC on the cover or within the documentindividually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the viewsexpressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part ofany of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or viewsexpressed by the research analyst(s) in this report.
Important Disclosures
Beneficial Ownership (1% or more): J.P. Morgan beneficially owns 1% or more of a class of common equity securities of HousingDevelopment and Infrastructure Ltd. (HDIL), Indiabulls Real Estate.
Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Prestige Estate ProjectsLimited, Housing Development and Infrastructure Ltd. (HDIL).
Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgancovered companies by visiting https://mm.jpmorgan.com/disclosures/company , calling 1-800-477-0406, or [email protected] with your request.
Date Rating Share Price(Rs)
Price Target(Rs)
01-Aug-07 OW 611.70 725.00
01-Nov-07 OW 927.95 1050.00
01-Apr-08 OW 627.00 810.00
18-Jun-08 OW 492.35 750.00
21-Jul-08 OW 463.40 518.00
12-Nov-08 OW 244.60 375.00
03-Feb-09 OW 132.90 200.00
04-May-09 OW 230.90 260.00
03-Aug-09 OW 396.15 440.00
16-May-10 OW 298.55 375.00
26-May-11 OW 210.05 280.00
03-Aug-11 OW 222.05 255.00
13-Nov-11 N 227.50 240.00
0
339
678
1,017
1,356
1,695
2,034
Price(Rs)
Jul
07
Apr
08
Jan
09
Oct
09
Jul
10
Apr
11
Jan
12
DLF Limited (DLF.BO) Price Chart
OW Rs518 OW Rs260
OW Rs1,050 OW Rs750 OW Rs200 OW Rs255
W Rs725 OW Rs810 OW Rs375 OW Rs440 OW Rs375 OW Rs280 N Rs240
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage Aug 01, 2007.
https://mm.jpmorgan.com/disclosures/companyhttps://mm.jpmorgan.com/disclosures/companymailto:[email protected]://mm.jpmorgan.com/disclosures/companymailto:[email protected] -
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Date Rating Share Price(Rs)
Price Target(Rs)
17-Jan-11 OW 135.35 180.00
18-May-11 OW 147.45 165.00
03-Nov-11 OW 100.25 140.00
Date Rating Share Price(Rs)
Price Target(Rs)
30-Nov-10 OW 206.10 280.00
29-Jun-11 OW 192.00 260.00
15-Nov-11 OW 207.70 250.00
0
56
112
168
224
280
336
Price(Rs)
Oct
10
Jan
11
May
11
Aug
11
Dec
11
Prestige Estate Projects Limited (PREG.BO) Price Chart
OW Rs180 OW Rs165 OW Rs140
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage Jan 17, 2011.
0
156
312
468
624
780
936
Price(Rs)
Nov
07
Aug
08
May
09
Feb
10
Nov
10
Aug
11
Phoenix Mills (PHOE.BO) Price Chart
OW Rs280 OW Rs260OW Rs250
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage Nov 30, 2010.
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Date Rating Share Price(Rs)
Price Target(Rs)
18-Jun-08 OW 471.45 855.00
21-Jul-08 OW 335.49 545.00
02-Nov-08 OW 144.25 230.00
29-Jan-09 N 96.20 100.00
25-May-09 N 293.60 290.00
20-Jul-09 OW 234.10 315.00
30-Jul-09 OW 267.85 330.00
20-Jan-10 OW 386.25 440.00
30-Mar-10 OW 289.55 350.00
11-Nov-10 OW 254.30 330.00
13-Feb-11 N 147.35 160.00
14-Nov-11 N 85.50 105.00
Date Rating Share Price(Rs)
Price Target(Rs)
29-May-09 UW 225.55 200.00
23-Jul-09 N 222.00 242.00
09-Oct-09 N 293.65 295.00
10-Feb-10 OW 167.35 273.00
19-Jan-11 OW 118.40 230.00
02-May-11 OW 124.95 205.00
The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entireperiod.J.P. Morgan ratings: OW = Overweight, N= Neutral, UW = Underweight
Explanation of Equity Research Ratings and Analyst(s) Coverage Universe:J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform theaverage total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Neutral [Over the next six to twelve months,we expect this stock will perform in line with the average total return of the stocks in the analyst's (or the analyst's team's) coverageuniverse.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocksin the analyst's (or the analyst's team's) coverage universe.] In our Asia (ex-Australia) and UK small- and mid-cap equity research, eachstocks expected total return is compared to the expected total return of a benchmark country market index, not to those analystscoverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analysts coverage universe can
be found on J.P. Morgans research website, www.morganmarkets.com.
Coverage Universe: Kumar, Saurabh S: Ascendas India Trust (AINT.SI), DLF Limited (DLF.BO), Housing Development andInfrastructure Ltd. (HDIL) (HDIL.BO), Indiabulls Real Estate (INRL.BO), Indian Hotels (IHTL.BO), Ishaan Real Estate Plc (ISH.L),
0
318
636
954
1,272
1,590
1,908
Price(Rs)
Jul
07
Apr
08
Jan
09
Oct
09
Jul
10
Apr
11
Jan
12
Housing Development and Infrastructure Ltd. (HDIL) (HDIL.BO) Price Chart
OW Rs330
OW Rs545 N Rs100 OW Rs315 OW Rs350 N Rs160
OW Rs855OW Rs230 N Rs290 OW Rs440 OW Rs330 N Rs105
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage Jun 18, 2008.
0
240
480
720
960
1,200
1,440
Price(Rs)
Mar
07
Dec
07
Sep
08
Jun
09
Mar
10
Dec
10
Sep
11
Indiabulls Real Estate (INRL.BO) Price Chart
N Rs295
N Rs242
UW Rs200 OW Rs273 OW Rs230OW Rs205
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage May 29, 2009.
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Jaypee Infratech (JYPE.BO), LIC Housing Finance (LICHF.BO), Oberoi Realty (OEBO.BO), Prestige Estate Projects Limited(PREG.BO), Shriram Transport Finance (SRTR.BO), Unitech Ltd (UNTE.BO)
J.P. Morgan Equity Research Ratings Distribution, as of January 6, 2012
Overweight
(buy)Neutral
(hold)Underweight
(sell)
J.P. Morgan Global Equity Research Coverage 47% 42% 12%IB clients* 52% 45% 36%
JPMS Equity Research Coverage 45% 47% 8%IB clients* 72% 62% 58%
*Percentage of investment banking clients in each rating category.
For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a holdrating category; and our Underweight rating falls into a sell rating category.
Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for coveredcompanies, please see the most recent company-specific research report athttp://www.morganmarkets.com , contact the primary analystor your J.P. Morgan representative, or [email protected] .
Equity Analysts' Compensation: The equity research analysts responsible for the preparation of this report receive compensation basedupon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues,which include revenues from, among other business units, Institutional Equities and Investment Banking.
Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of non-USaffiliates of JPMS, are not registered/qualified as research analysts under NASD/NYSE rules, may not be associated persons of JPMS,and may not be subject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, publicappearances, and trading securities held by a research analyst account.
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please contact your J.P. Morgan Representative or visit the OCC's website at http://www.optionsclearing.com/publications/risks/riskstoc.pdf
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