lanco infratech limited - sify.comim.sify.com/sifycmsimg/feb2010/finance/14930624_lanco.pdf ·...
TRANSCRIPT
LANCO INFRATECH LIMITED
BUY Target Price:Rs.54.00 CMP: Rs.42.00 Market Cap: Rs.101127.8mn.
Date: 5 Feb,2010.
Key Ratios:
Particulars FY09 A FY10E FY11E
OPM(%) 16 18 18
PAT(%) 6 8 8
ROE(%) 13 18 18
ROCE(%) 24 29 29
P/BV(x) 0.44 3.87 3.17
P/E(x) 3.29 21.38 17.53
EV/EBDITA(x) 0.98 8.27 7.87
Debt Equity(x) 0.64 0.57 0.52
Key Data:
Sector Infrastructure
Face Value 1.00
52 wk. High/Low (Rs.) 60.70/10.86
Volume (2 wk.
Avg.)(lakh)
22.05
BSE Code 532778
SYNOPSIS
• Lanco Infratech Limited is one of India’s top
business conglomerates and among the fastest
growing. Lanco Infratech has subsidiaries and
divisions across a synergistic span of verticals.
• These include construction, Power, EPC,
Infrastructure and Property Development. Lanco
Infratech’s projects, operational and underway, are
spread across India.
• At present, the power portfolio includes an
operating capacity of 1,044 MW and additional
capacities under various stages of implementation
aggregating to more than 10,000 MW.
• The Construction and EPC division of the company
is executing various orders worth more than Rs 209
billion.
• The company is developing 163 Kms of National
Highways on BOT basis.
• The topline of the company is expected to grow at a
CAGR of 38% over 2008A to 2011E.
Share Holding Pattern:
V.S.R. Sastry
Vice President
Equity Research Desk
91-22-25276077
Dr. V.V.L.N. Sastry Ph.D.
Chief Research Officer
Table of Content
Investment Highlights ................................................................................................................................... 3
Peer Group Comparison .............................................................................................................................. 10
Financials ..................................................................................................................................................... 13
Charts .......................................................................................................................................................... 15
Outlook and Conclusion .............................................................................................................................. 18
Industry Overview ....................................................................................................................................... 18
Investment Highlights
• Results Updates (Q3 FY10)
The bottomline of the company for the quarter increased at 34% yoy that is Rs.1068.40mn
from Rs.798.78mn of same period of last year. Total revenue for the third quarter stood at
Rs.16107.10 mn from Rs.18202.31 which is 11.5% decreased than that of a year ago period.
EPS for the quarter stood at Rs.4.48 per equity share of Rs.10.00 each.
Expenditure of the company decreased 19% YoY to Rs.13007.4mn from Rs.16114.84mn of
same period of last year. Interest expenses for the quarter stood at Rs.568.9mn. OPM &
NPM for the quarter stood at 21% and 7% respectively.
Quarterly Results – Consolidated (Rs in mn)
As at Dec - 09 Dec - 08 %Change
Net Sales 16,107.10 18,202.31 (11.5)
Net Profit 1068.40 798.78 34
Basic EPS 4.48 3.63
Equity Capital 2382.50 2197.93
Segment-wise Revenue (Rs in mn)
As at Dec - 09 Dec - 08 %Change
Construction 13135 10434 26
Power 5152 9101 (43)
Property Dev 9 445 (98)
Unallocated 25 27 (7)
Decline in Power revenue is primarily on account of lower Power trading revenue and “Nil”
naphtha based generation at Kondapalli I.
Operational data for the major operating units and trading arm for the quarter is provided below:
Projects
Capacity
(MW)
Units
Generated
(MUs)
Net Sales
(Rs Mn)
Kondapalli I 366 672 1,645
Kondapalli II 233* 78 442
Amarkantak 300 483 -
Aban 120 186 522
Vamshi Hydro 10 2 6
*Open Cycle is in operation since December’09. Total Capacity of the plant will be 366 MW
after operation of combine cycle.
• In respect of Kondapalli ‐I Power Station even though the generation has increased
compared to the corresponding quarter in the previous year, the sales realisations have not
increased comparably due to the fact that last year in same quarter plant was required to
generate on naphtha.
• Kondapalli II started generation in December’09 and generated 78 Mn units and booked
sales of around Rs. 442 mn, an average realization of Rs. 5.6 per unit.
• Net Sale of Aban includes sale on account of carbon credit to the tune of Rs. 127 mn.
• Name of Lanco Electric Utility has been changed to Lanco Power Trading Ltd. and it has
traded 718 mn units during the current quarter against 946 mn units in the corresponding
quarter of previous year.
Important Developments in Power Business:
• Lanco has bought 5.44% stake in Amarkantak Power project from International Financial
Corporation.
• Lanco Anpara, a group company of Lanco Infratech Ltd., also entered into an MoU with the
Government of Uttar Pradesh, to enhance the existing capacity of Lanco Anpara by 660
MW, from 1,200 MW to 1,860 MW.
• In line with the policy of Uttar Pradesh, Lanco Anpara, a group company entitled to sell 100
MW to third parties out of 1,200 (2 x 600) MW that is under construction and expected to
be on stream in 2011.Lanco Infratech Limited has entered into a Memorandum of
Understanding (MoU) with the Government of Uttar Pradesh to setup a 2 x 660 MW coal
fired power plant at Fatehpur.
• The Board of Lanco Infratech Ltd., has also resolved to transfer all of its holdings in various
power SPVs to a wholly owned power subsidiary of Lanco Infratech Ltd. Lanco Infratech
shall approach its shareholders for seeking necessary approvals in due course.
Status of Projects under different Verticals
As of 31st December 2009 capital expenditure incurred in power and Road projects and
debt utilized for the same are as follows:
Rs Million
Projects Capex Debt
Anpara 26,168 19,617
Udupi 44,421 31,687
Amarkantak 26,970 18,519
Lanco Energy ‐ teesta 8,269 4,733
Lanco Green ‐ Budhil 3,183 2,177
Lanco Hydro Energy ‐ Uttranchal 1,966 1,374
Kondapalli II ‐ expension 10,699 6,169
Vamshi Industrial 904 591
Kondapalli III ‐ expension 682 -
122,579 84,867
Total Power Projects
Road Projects
Devihalli 3,260 1,300
Hoskote 4,792 2,030
Total Road
Projects 8,052 3,330
Construction and EPC Business (Orders in Hand):
The Construction and EPC order book position as on December 31st 2009 is Rs.209,024 million.
The break‐up of the current order book is as follows:
Projects Rs Million
Power Projects
Amarkantak – I & II 1,043
Amarkantak – III & IV 55,240
Teesta VI – Sikkim 18,340
Anpara 14,163
Udupi (Nagarjuna) 8,141
Kondapalli Expansion 1,073
Kondapalli (Phase III) 21,060
Vidharbha 56,760
Others 4,577
Total Power Projects 180,398
Building Projects 18,448
Road Projects 4,454
Irrigation Projects 621
Transmission Line Projects 4,566
Chimneys 536
Total Order Book 209,024
• Award of Contracts
Lanco Infratech Ltd was awarded Contracts totalling value of Rs 5,675 Crores (Rupees Five
Thousand Six Hundred and Seventy Six Crores)
(a) One Contract for Offshore Supplies equivalent to Rs. 2,160.00 Crores
(b) The Second for Civil Works of Rs. 1,021.68 Crores,
(c) The Third for Onshore Supplies of Rs. 1,756.44 Crores
(d) The Fourth for Services of Rs. 283.80 Crores
(e) and the Fifth for Non‐EPC of Rs. 454.08 Crores by Lanco Mahanadi Power Pvt. Ltd, a
Subsidiary of the Company, in connection with the setting up of their Pulverized Coal Fired
Power Plant of 2 x 660 MW Capacity to be located in the State of Maharashtra.
• Lanco signs MOU for 1980MW coal fired power plants
Lanco Infratech Ltd has entered into a Memorandum of Understanding(MOU) with the
Government of Uttar Pradesh to set up a 2x660 MW coal fired power plant at Fatehpur.
Lanco Anpara, a group company of Lanco Infratech Ltd, has also entered into an MOU with
the Government of Uttar Pradesh to enhance its existing capacity by 660MW.From its
earlier capacity of 1200 mw, Lanco Apna will now have a total capacity of 1860mw which it
will be developing in two phases.
According to the MOU and the UP Power policy, Lanco Anpara is entitled to sell 1430 mw
to UP Power Corporation and 430mw to third parties.
The signing of the MOU with the UP Government will enhance our power generation
capacity and this will enhance the power generation capacity and this will further add to
the growth and the bottom line of the company.
• Award of Contracts
The Company was awarded Three Contracts totalling value of Rs. 2,106 Crores (Rupees Two
Thousand One Hundred and Six Crores) –
(1). One Contract for Supply of Rs. 1,640 Crores,
(2). The Second for Services of Rs. 216 Crores,
(3) and the Third for Civil and Construction Works of Rs. 250 Crores ‐‐ by Lanco Kondapalli
Power Pvt. Ltd., a Subsidiary of the Company, in connection with their Stage‐III Expansion
of the Power Project of 2 x 371 MW, at Kondapalli, Near Vijayawada, Andhra Pradesh
• Approves stock spilt
Recently the board of directors of the company approved the Sub‐division of One Fully paid
up Equity Share of Face Value of Rs. 10/‐ each into Ten (10) Equity Shares of Face Value of
Re. 1/‐ (Rupee One Only) each fully paid up.
Company Profile
Lanco Infratech Limited's principal activities are construction and development of
infrastructure facilities, property development, generation of power and trading in power. It
operates in three business segments, Construction, Power, Property Development and
Infrastructure development. The Construction segment involved in development of
infrastructure facilities like water supply, mass housing, industrial structure, institutional
buildings and expressways. The Power segment consists of generation of power. The Property
development segment involved in development of IT park, residential buildings, retail and
commercial complex.
Lanco’s operations have always been marked by creation of synergies, backward and forward
integrations and strategic innovations for competitive edge. Today, Lanco Infratech, through
twenty‐two subsidiaries has operations across a synergistic span of verticals.
The Major business segments of Lanco infra are as follows
Construction
Lanco Infratech Ltd has an excellent track record in Construction projects. Its project
expertise spans:
Power plants based on Gas, Coal, Bio‐mass, Hydro and Wind.
Irrigation and water supply projects, including dams, tunnels, lift irrigation, sewerage
schemes and marine works.
Civil construction including commercial and residential buildings, mass housing projects and
townships, industrial structures, information technology parks, Corporate offices, Hospitals
and more and transportation engineering projects including roads, highways, bridges and
flyovers.
Major business segments
Construction
Power
EPC
Infrastructure
Property development
Wind energy
Power
Lanco has proven expertise in power generation from conventional and non‐conventional
sources of energy including gas, coal, biomass, hydro and wind. Lanco has operational and
under execution projects amounting to over 8000MW.
EPC
The EPC group at Lanco ensures project delivery cycles, greater capital expenditure control,
sourcing the best service and technology providers and most importantly allows its clients to
focus on their core business.The core competence of Lanco is its experienced team for
managing contracts during all phases of a project, while meeting the highest international
standards.
Lanco provides engineering, procurement, construction, project management and
commissioning services on a Turnkey basis to the Power Sector leveraging on the experience
and expertise of its Group companies, its construction capability and competent manpower.
Lanco has ongoing projects across India and has in place an established network of
resources. The completed list of power projects includes Thermal, Hydro and Non
conventional Energy.
Infrastructure
Lanco Infratech Ltd has executed many challenging infrastructure projects across India
including Highways. Lanco is currently executing the Varanasi Non Metro Airport Project and
has emerged winner for the Vizhinjam Trans shipment Port Project in Kerala, India
Property development
Lanco's property development is all set to change the skyline of major metros with some of
the finest mixed property townships and realty projects incorporating state of the art
features and amenities. Lanco Hills, one such project, is a 100 acre township coming up in
Hyderabad. Lanco Ville in the IT corridor of Chennai is scheduled to commence shortly
Wind energy
Lanco has undertaken wind‐turbine manufacturing and project development activities in
India, Europe and the AmericasIt is launching its best‐in‐class 2 MW wind turbine in April
2009 with technology from a German engineering company of international repute.On the
project development front, Lanco has already acquired quality wind sites for development of
wind farms in excess of 6,000 MW and aims to achieve 15,000 MW over the next three
years.
Peer Group Comparison
Name of the
company
CMP
(As on 5
Feb, 2010)
Market
Cap.
(Rs. Mn.)
EPS
(Rs.)
P/E
(x)
P/BV
(x) Dividend(%)
Lanco Infratech
Ltd 42.00 101127.8 2.03 20.69
5.37 ‐
GVK Power &
Infra Ltd 42.65 67353.3 0.13 328
3.84 ‐
GMR
Infrastructure Ltd 52.40 192169.4 0.07 748.5
3.37 ‐
Reliance
Infrastructure Ltd 1034.55 233053.3 53.2 19.4
2.21 70
Key Concerns
• Rise in the prices of petroleum products and the increasing cost of power
• Highly competitive with diverse players
• Government policies.
• The increase in the excise duty on cement, will affect construction players.
• Delay in power projects
Financials
12 Months Ended Profit & Loss Account (Consolidated)
Particulars FY 08 A FY 09 A FY 10 E FY11 E
(Rs.Mn) 12m 12m 12m 12m
Net Sales 32,412.57 60,719.62 74721.87 85930.15
Other Income 952.93 562.44 1019.63 1121.59
Total Income 33,365.50 61,282.06 75741.50 87051.74
Expenditure ‐25507.41 ‐51846.05 ‐62425.89 ‐71789.77
Operating Profit 7,858.09 9,436.01 13315.61 15261.97
Interest ‐832.19 ‐1,772.89 ‐2307.31 ‐2538.04
Gross Profit 7,025.90 7,663.12 11008.29 12723.92
Depreciation ‐775.74 ‐1,073.39 ‐1435.30 ‐1578.8
Exceptional Items ‐ ‐1,059.61 ‐625.55 ‐656.8
Profit before Tax 6,250.16 5,530.12 8947.45 10488.27
Tax ‐1,404.52 ‐1,690.40 ‐3309.05 ‐3775.8
Profit after Tax 4,845.64 3,839.72 5638.40 6712.49
Minority Interest ‐1303.93 ‐1036.15 ‐957.46 ‐1005.34
Net Profit 3,541.71 2,803.57 4680.94 5707.16
Equity Capital 2,197.93 2,198.34 2,382.50 2,382.50
Reserves 16,135.48 18,777.85 23,458.79 29,165.94
*Face Value 10 10 1 1
EPS 16.11 12.75 1.96 2.40
*Face value has been changed from Rs.10/‐ to Re.1/‐
Quarterly Ended Profit & Loss Account (Consolidated)
Particulars June 09 A Sep 09 A Dec 09 A Mar 10 E
(Rs.Mn) 3m 3m 3m 3m
Net Sales 21,953.50 19,265.60 16,107.10 17395.67
Other Income 376 187.3 222.6 233.73
Total Income 22,329.50 19,452.90 16,329.70 17629.40
Expenditure ‐19184.8 ‐16143.2 ‐13007.4 ‐14090.49
Operating Profit 3,144.70 3,309.70 3,322.30 3538.91
Interest ‐605.2 ‐518.8 ‐568.9 ‐614.41
Gross Profit 2,539.50 2,790.90 2,753.40 2924.49
Depreciation ‐328.3 ‐332.3 ‐377.9 ‐396.80
Exceptional Items ‐29.2 ‐207.8 ‐204.5 ‐184.05
Profit before Tax 2,182.00 2,250.80 2,171.00 2343.65
Tax ‐813.2 ‐769.3 ‐859.4 ‐867.15
Profit after Tax 1,368.80 1,481.50 1,311.60 1476.50
Minority Interest ‐210.3 ‐255.9 ‐243.2 ‐248.06
Net Profit 1,158.50 1,225.60 1,068.40 1228.44
Equity Capital 2,198.30 2,382.50 2,382.50 2382.50
*Face Value 10 10 10 1
EPS 5.27 5.14 4.48 0.52
*A=Actual, E=Estimated
*Face value has been changed from Rs.10/‐ to Re.1/‐
Charts
Comparative Graph
LANCO INFRATECH BSE SENSEX
Outlook and Conclusion
• At the current market price of Rs.42.00, the stock trades at a P/E of 21.38x and 17.53x for
FY10E and FY11E respectively.
• On the basis of EV/EBDITA, the stock trades at 8.27x and 7.87x for FY10E and FY11E
respectively.
• Price to Book Value of the stock is expected to be at 3.87 and 3.17 respectively for FY10E and
FY11E.
• The Sub‐division of One Fully paid up Equity Share of Face Value of Rs. 10/‐ each into Ten
(10) Equity Shares of Face Value of Re. 1/‐ (Rupee One Only) each fully paid up.
• The Net sales of the company are expected to grow at a CAGR of 38% over 2008 to 2011E.
• Lanco Infratech Ltd has entered into a Memorandum of Understanding (MOU) with the
Government of Uttar Pradesh to set up a 2x660 MW coal fired power plant at Fatehpur. The
signing of the MOU with the UP Government will enhance our power generation capacity
and this will enhance the power generation capacity and this will further add to the growth
and the bottom line of the company.
• We recommend ‘BUY’ in this particular scrip with a target price of Rs.54.00. for Medium to
Long Term Gains.
Industry Overview
The Infrastructure sector is currently going through tough phase due to the global slow
down. As the sector’s dependency on other sectors are much more, any slow down in other
sectors will affect the performance of this sector. Decline in the price of commodity and
easing interest rates will help the companies to come out from the troubles created by the
slowdown. But we expect that the effects of these factors will be seen only from the last
quarter of the current fiscal. Slow execution of orders is the main concern for the companies
in the sector. Even some companies in the sector are facing order cancellation also.
As a positive indication towards this, the country has witnessed a rapid increase in private
investment in infrastructure over the last five years. The estimated investment in
infrastructure has now been pegged at USD 500 billion by the end of the Eleventh Five Year
Plan. This is both a challenge and an opportunity for the Government as well as for the
private sector
The General Index for the month of November grew by 2.4% as compared to the level in the
month of November 2007. The cumulative growth for the period April‐November 2008‐09
stands at 3.9% over the corresponding period of the pervious year.
Hit by the global financial meltdown, the key infrastructure sector industries showed poor
performance during December, registering a dismal growth of 2.3 per cent, a trend which
economists feel is likely to continue during the remaining part of the fiscal year. With steel
and crude oil showing negative growth during the month, six infrastructure industries in
December recorded the second‐lowest growth during
2008‐09, marginally up from 1.8 per cent in November. For the nine‐month period of April‐
December, the growth of the infrastructure sector ‐ crude oil, petroleum refinery products,
coal, electricity, cement and finished steel ‐dropped to 3.5 per cent from 5.9 per cent in the
same period of 2007‐08.
However, now that the infrastructure sector is struggling with liquidity problem, high
interest rates and financing constraints.On the positive side, the government’s investment in
infrastructure sectors can receive a boost from the fiscal stimulus announced as part of the
package to boost economic growth.Despite strong estimated revenue growth of about 25‐30
per cent in Q4, net profit growth in the construction sector will only be about 8‐10 per cent.
This is primarily on the back of higher cost of funds of about 13‐14.5 per cent compared to
11‐12 per cent earlier.
Meanwhile, there is enough visibility in the infrastructure sector given the order book of 3‐
3.5 times FY08 revenue. Also, as interest rates are on a downtrend and liquidity is improving,
the funding and visibility of the projects could improve. Lastly, the lag effect of lower
commodity prices should reduce the pressure on the margins in the coming quarters.
The Indian construction industry
Construction activity is an integral part of a country’s infrastructure and industrial
development. It includes hospitals, schools, townships, offices, houses and other buildings;
urban infrastructure (including water supply, sewerage, drainage); highways, roads, ports,
railways, airports; power systems; irrigation and agriculture systems; telecommunications
etc. Covering as it does such a wide spectrum, construction becomes the basic input for
socio‐economic development. Besides, the construction industry generates substantial
employment and provides a growth impetus to other sectors through backward and forward
linkages. It is, essential therefore, that, this vital activity is nurtured for the healthy growth of
the economy.
With the present emphasis on creating physical infrastructure, massive investment is
planned during the eleventh Plan. The construction industry would play a crucial role in this
regard and has to gear itself to meet the challenges. In order to meet the intended
investment targets in time, the current capacity of the domestic construction industry would
need considerable strengthening.
In India, construction is the second largest economic activity after agriculture. Investment in
construction accounts for nearly 11 per cent of India’s Gross Domestic Product (GDP) and
nearly 50 per cent of its Gross Fixed Capital Formation (GFCF). Fund injection into the sector
could go up to US$ 124.65 billion by FY2010. Construction accounts for nearly 65 per cent of
the total investment in infrastructure and is expected to be the biggest beneficiary of the
surge in infrastructure investment over the next five years.
The Indian construction industry recorded a consistent double‐digit year‐on‐year growth
(12%) during 2000‐2005, and is expected to grow at 25‐30% during 2005‐2010. The key
drivers of this growth are government investment in infrastructure creation and real estate
demand in the residential and industrial sectors.
The industry is experiencing increasing polarisation between large and small players. These
players are increasing their market share through large‐scale contracts, joint ventures, and
foreign operations. Though an increasing number of small players are also entering the
market, most of them do not have the resources to bid for big contracts.
The construction segment constitutes a significant part of infrastructure development in the
economy. The following table shows the construction investments figures in the various
areas of infrastructure development:
(Rs. in billion)
FY02‐FY06 FY07‐FY11
Roads 1167 2306
Urban infrastructure 536 1150
Power 578 861
Irrigation 514 744
Railways 225 639
Others 193 429
Total 3,213 6129
Demand for construction has resulted in the following macro trends:
The increasing spend in the infrastructure sector has resulted in an increased order book for
construction companies thereby easing the supply – demand competitive pressure.
Margins of construction companies were adversely impacted by increase in prices of inputs
in the past especially steel, aggregate and now cement. Whilst commodity prices continue
to exhibit volatility, price escalation clauses are being used to allow for some protection.
Whilst partly mitigated, this remains an area of concern.
Construction companies are moving towards public‐private partnership, raising funds from
the market to finance these projects. Whilst some participants, especially the smaller ones,
have adopted a fragmented approach to the market, bidding aggressively, the more
established players who have financial strength, experience and access to technology and
an appetite to undertake large contracts are adopting a selective approach in their order
mix and client selection, leading up to risk management on margins. To accelerate and
increase public private partnerships in infrastructure, two major initiatives have been taken
by the GoI provision of viability gap funding and Establishment of India Infrastructure
Finance Company Limited.
These initiatives are designed to implement public projects to make them financially
feasible and involve either a one‐time grant or a deferred grant of funds to aid in the
respective project.The Indian construction industry is facing the challenges of outdated land
and property ownership regulations, infrastructural bottlenecks, and a shortage of civil
engineers.
The construction sector has major linkages with the building material industry since
construction material accounts for sizeable share of the construction costs.These include
cement, steel, bricks/tiles, sand/aggregates, fixtures/fittings, paints and chemicals,
construction equipment, petro‐products, timber, mineral products, aluminum, glass and
plastics.
Power
As the Indian economy continues to surge ahead, its power sector has been expanding
concurrently to support the growth rate. The demand for power is growing exponentially
and the scope of growth of this sector is immense.
India's total installed capacity of electricity generation has expanded from 105,045.96 MW
at the end of 2001–02 to 150,323.41 MW at the end of June 2009. In fact, India ranks sixth
globally in terms of total electricity generation.
Source‐wise, thermal power plants account for an overwhelming 63.9 per cent of the total
installed capacity, producing 96,044.24 MW. Hydel power plants come next with an
installed capacity of 36,916.76 MW, accounting for 24.6 per cent of the total installed
electricity generation capacity.
Besides thermal and hydel power, renewable energy sources contribute 8.8 per cent to the
total power generation in the country producing 13,242.41 MW.
Nuclear energy makes up the balance 2.7 per cent contributing 4,120 MW.
Growth Potential
According to a report by KPMG and CII, India's energy sector will require an investment of
around US$ 120 billion‐US$ 150 billion over the next five years.
The government has revised its target of power capacity addition to 90,000 MW in the 11th
Five‐Year‐Plan (2007‐12), up by 11,423 MW from the earlier estimate of 78,577 MW to
sustain the growth momentum of the economy.
Further, according to the Planning Commission estimates, renewable energy (RE) projects
worth US$ 16.50 billion, for the generation of 15,000 MW power, would come up in the
11th Plan.
Moreover, the government has earmarked a total capital subsidy of US$ 6.88 billion for
providing electricity connections and for the distribution of infrastructure to rural
households.
The Indian Real Estate Industry
Size
• Real Estate and Construction is a US$50 billion (2008) industry in India
• Rapid growth in the industry in the past few years
• FDI it is expected that the sector would witness inflows to the tune of US$ 8‐10 billion by FY
2010
• High demand growth has led to prices doubling over 3 years in many cities.
Outlook
• The Real Estate market is projected to grow to US$60 billion by 2010 at a CAGR of 40%
• Real Estate companies have been successfully tapping the country’s booming capital
markets for funds
• Companies have also raised equity internationally at the AIM in London
• Tier 2 cities (non metros) likely to experience faster growth in the future.
Opportunity
• Commercial and office complexes mushrooming in major Indian metros
• Over 20 million new housing units required in 5 years
Potential
• Several factors are expected to contribute to the rapid growth in Real Estate
• Large demand‐supply gap in affordable housing, with demand being fuelled by tax
incentives and a growing middle class with higher savings.
• Increasing demand for commercial and office space especially from the rapidly growing
Retail, IT/ ITeS and Hospitality sectors.
• The recently announced JNNURM expected to provide further impetus
• Investment opportunities exist in almost every segment of the business
• Housing: About 20 million new units expected to be built in five years
• Office space for IT/ITeS: Five‐fold increase in office space requirement over the next 3 year
• Commercial space for organized retailing: 200 million sq. ft. by 2010
• Hotels & Hospitality: Over 40,000 new rooms in the next 5 years.
• Investment opportunity of over US$75 billion in the next five years.
_______________________________________ _____________
Disclaimer:
This document prepared by our research analysts does not constitute an offer or solicitation
for the purchase or sale of any financial instrument or as an official confirmation of any
transaction. The information contained herein is from publicly available data or other
sources believed to be reliable but we do not represent that it is accurate or complete and it
should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s
affiliates shall not be in any way responsible for any loss or damage that may arise to any
person from any inadvertent error in the information contained in this report. This document
is provide for assistance only and is not intended to be and must not alone be taken as the
basis for an investment decision.
Firstcall India Equity Research: Email – [email protected]
B. Harikrishna Banking & Financial Services
B. Prathap IT
C.V.S.L.Kameswari Pharma
U. Janaki Rao Capital Goods; Real & Infra
D.Asha Kiran Kumar Auto
E. Swethalatha Oil & Gas
A.Rajesh FMCG
Rachna Twari Diversified
Kavita Singh Diversified
Nimesh Gada Diversified
Priya Shetty Diversified
Tarang Pawar Diversified
Neelam Dubey Diversified
Firstcall India also provides
Firstcall India Equity Advisors Pvt.Ltd focuses on, IPO’s, QIP’s, F.P.O’s,TakeoverOffers, Offer for Sale and
Buy Back Offerings.
Corporate Finance Offerings include Foreign Currency Loan Syndications,Placement of Equity / Debt with
multilateral organizations, Short Term Funds Management Debt & Equity, Working Capital Limits, Equity &
DebtSyndications and Structured Deals.
Corporate Advisory Offerings include Mergers & Acquisitions(domestic and cross-border), divestitures, spin-
offs, valuation of business, corporate restructuring-Capital and Debt, Turnkey Corporate Revival – Planning &
Execution, Project Financing, Venture capital, Private Equity and Financial Joint Ventures
Firstcall India also provides Financial Advisory services with respect to raising of capital through FCCBs,
GDRs, ADRs and listing of the same on International Stock Exchanges namely AIMs, Luxembourg, Singapore
Stock Exchanges and other international stock exchanges.
For Further Details Contact:
3rd Floor,Sankalp,The Bureau,Dr.R.C.Marg,Chembur,Mumbai 400 071
Tel. : 022-2527 2510/2527 6077/25276089 Telefax : 022-25276089
E-mail: [email protected]
www.firstcallindiaequity.com