Anjuman-i-Islam’s

Allana Institute of Management Studies

Group-3

Realty Sector Analysis and Portfolio Management

Submitted to

Prof. Chinmay Chopade

Subject: SAPM

MMS-III Sem-Finance

Sr. No. Name Roll No.

1 Humaira Ahmedji 01

2 Hitesh Gurav 02

3 Rameez Ikkera 03

4 Muhibuddin Shaikh 37

Date: 16th Oct 2014

Table of Content 1) Executive Summary2) Company overview3) Company Analysis4) Conclusion and Recommendation

Page 1

ECONOMIC OVERVIEW

In the last couple of years, the Indian economy witnessed a slowdown across various

sectors, resulting in the GDP growth slipping to 4.7% in 2013 from 9.7% in 2010.

Such economic downdraft was largely attributed to slowdown in policy initiatives

especially during the run up to the parliamentary elections of 2014. Besides that, high

interest regime, enforced to rein in inflation had an impact on slowing down of

investments. Last Financial year was also marked by a tough period of economic

uncertainty, owing to tapering of quantitative easing of liquidity in United States and

resultant volatile movements in INR-USD exchange rate.

Reserve Bank of India’s (RBI) policy stance has been to stay firrmly focused on

keeping Indian economy on a disinflationary glide path that is intended to hit 8 per

cent Consumer Price Inflation (CPI) by January, 2015 and 6 per cent by January,

2016. According to RBI and contingent upon the desired inflation outcome, real GDP

growth is projected to pick up from a little below 5 per cent in 2013-14 to more

sustained levels which will help in bringing more growth to the overall economy.

There has been a regime change in India’s federal government with a firm and

decisive mandate in favour of an alliance, which is seen as progressive and

development friendly. The new government has provided signals of moving along

development agenda that will push for reforms that were so far left on the back burner

and are much needed to revitalize the economy. With the legislature and the executive

getting back to the business of good governance, investments in various businesses

and sectors of the economy are expected to pick up pace, all of which will bode well

for the real estate sector. The Company visualizes a pickup in real estate demand

beginning from the second half of FY’15.

THE INDIAN REAL ESTATE SECTOR

The year 2013-14 proved to be a challenge for the real estate sector mainly due to

poor macro-economic conditions, slowing income growth, and the consumer and the

sky-rocketing inflation. RBI continued to focus on keeping the inflation level under

check due to which the borrowing costs continued to remain at high levels, thus

Page 2

limiting growth for both, consumers as well as businesses. Going forward, we believe

that the Indian real estate sector would benefit from the formation of a stable

government, positive market sentiment and growth prospects for all businesses.

According to the Economic Survey of India, 2012-13, the real estate sector

contributed 5.9% of the India’s total GDP in 2011-12, registering a growth of 7.2%

from the previous year, which clearly signifies the important contribution of the sector

towards the economy.

Residential Segment

Absorption in major metro cities remained at subdued levels; however certain

affordable markets such as Kolkata, Bengaluru and certain emerging locations near

urban cities witnessed better absorption rates. According to the Cushman & Wakefield

research, demand for urban housing will scale up by nearly 12 million units by 2017

and around 23% of this total demand would be generated from the top 8 cities. The

increase in demand will certainly prove to be a boost to the residential segment.

Absorption across markets with the exception of Bengaluru witnessed a decline versus

last year. Overall sales volumes (units) came down by 15% y-o-y in FY 2013-14, after

an 8% decline seen in FY 2012-13. This can be attributed to lower launch activity and

overall weak macro environment. Launch activity (down 27% y-o-y) has been muted

across most markets except Bengaluru.

Commercial Segment

Vacancy rate for 2013 signs off at around 18.2%, rising from 17.4% as of end 2012.

Hyderabad and Delhi-NCR were the biggest contributors in terms of vacancy levels.

This was largely due to increased new supply as against a fall in absorption. On the

other hand, the ‘heavyweight’ cities of Mumbai and Bengaluru witnessed marginal

fall in vacancy. Both these cities saw reduction in the growth of new stock supply,

while absorption of office space recovered. Overall, pan-India supply rose by 10.4%

y-o-y in 2013, whereas the fall in absorption was less severe (-1.1% y-o-y) as against

Page 3

the fall of over 26% seen last year. (Source: Indian Real Estate: A Review of 2013 and

Outlook for 2014, JLL).

Real Estate Investment Trust (REIT) Code

Securities and Exchange Board of India (SEBI) has notified guidelines for

introduction of Real Estate Investment Trust. This has laid the foundation for

introduction of these instruments in the country, which shall help real estate

developers and large real estate owners raise long term capital from investors both in

India and abroad. However, the code still needs consideration of Ministry of Finance,

Government of India in terms of resolving various tax issues/FDI related issues before

it can be implemented.

Page 4

Building India

DLF Ltd Overview

In FY’14, DLF reported consolidated revenues of ` 9,790 crore, an increase of 8%

over

9,096 crore in FY’13. EBIDTA stood at 3,977 crore, an increase of 1% from 3,949

crore in the previous year. Net profit after tax, minority interest and prior period items

was at 646 crore, a decline of 9% from 712 crore. The EPS for FY’14 stood at 3.65 as

compared to 4.19 for FY’13.

The cost of revenues including cost of land, plots, development rights, constructed

properties and others increased to 3,880 crore as against 3,356 crore in FY’13. Staff

costs decreased marginally to 576 crore versus 596 crore. Depreciation, amortization

and impairment charges were at

663 crore versus 796 crore in FY’13. Finance costs increased to 2,463 crore from

2,314 crore in FY’13. The overall debt witnessed a significant decrease; however the

increase in cost of borrowing impacted the finance costs.

Review of Operations

DLF’s Balance Sheet as at 31st March, 2014 reflected a healthy position with a net

worth of 29,194 crore. The net worth of DLF witnessed an increase of 1,666 crore

from FY’13. Net debt was 18,526 crore as compared to 21,731 crore as of 31st March,

2013. The net debt to equity ratio was at 0.64. During the year, the credit rating of

DLF improved, with outlook changing from negative to stable. The year 2013-14

proved to be difficult for the real estate sector mainly due to poor macro-economic

conditions, slowing income growth, continuing high borrowing costs both for industry

and the consumer and the rising inflation.

DLF completed approximately 4.26 msf of commercial and residential projects in

FY’14 while adding approximately 9.76 msf to new construction. As a result, the total

Page 5

area under construction was 59 msf as on 31st March, 2014.This includes

approximately 10.06 msf of saleable area pursuant to certain joint venture

arrangements. Handover of 4.26 msf were commenced across the cities comprising

plots, commercial complexes and commercial offences.

The development business comprising primarily the residential segment, followed by

commercial complexes has a combined area of 55.51 msf under construction as of

31st March, 2014. The rental business has approximately 2.81 msf of area under

construction as of 31st March, 2014. DLF’s aggregate net debt amounted to ` 18,526

crore as of 31st March 2014. On account of lack of any significant reductions in bank

rates by RBI, DLF’s average cost of debt has continued to range between 12.5% and

13% in FY’14. DLF believes that its present level of debt is comfortable even as it

will strive to reduce them further over the medium term. DLF realized proceeds of

approximately 4,067 crore during FY’14 from the divestment of non-core assets and

businesses.

DLF intends that any capital expenditure to be incurred in the financial year 2014-15

shall be met through selective divestitures and target to maintain the net debt at the

similar levels, even though there may be some intra year variations. DLF met all

stakeholder commitments in time during the year, including those to the lending

institutions despite tight liquidity conditions.

Issue of Shares under IPP & ESOP

During the year under review, the Company has issued and allotted 8,1018,417 equity

shares of face value of 2 each at an issue price of ` 230 per share, aggregating to

1,863.42 crore through Institutional Placement Programme (IPP) and also allotted

17,13,813 equity shares of 2 each fully paid upon exercise of stock options by the

eligible employees under the Employee Stock Option Scheme, 2006 thereby

increasing the paid-up share capital by 16.55 crore.

Page 6

Future Outlook

DLF plans to primarily focus on the development of luxury and premium residential

projects in certain key locations in India such as the cities of Delhi, Gurgaon,

Mumbai, the Chandigarh Tri-City and certain areas in and around Chennai and

Bengaluru. In addition, DLF also intends to continue with the development and sale of

its existing projects at several locations in India including Lucknow, Indore, Kochi,

Kolkata and other cities.

Credit Rating

ICRA has reaffirmed rating of [ICRA] A for ` 4,000 crore - NCD programme. It has

also reaffirmed rating at [ICRA] A for ` 11,329 crore line of Credit (Term Loan 7,589

crore, Fund Based Limits 2,580 crore and Non-fund Based Limits 1,160 crore).

CRISIL has reaffirmed rating of “CRISIL A” for 5,000 crore NCD Programme.

Further, for total bank loan facilities of 15,730 crore, it has assigned “CRISIL

A/Stable” for Long Term facilities and “CRISIL A2+” for Short Term facilities.

Page 7

FINANCIAL REVIEW

Page 8

Revenue & Profitability

In FY’14, DLF reported consolidated revenues of 9,790 crore, an increase of 8% over

9,096 crore in FY’13. EBIDTA stood at 3,977 crore, an increase of 1% from 3,948

crore in the previous year. Net profit after tax, minority interest and prior period items

was at 646 crore, a decline of 9% from 712 crore. The EPS for FY’14 stood at 3.65 as

compared to 4.19 for FY’13.

The cost of revenues including cost of land, plots, development rights, constructed

properties and others increased to 3,880 crore as against 3,355 crore in FY’13. Staff

costs decreased marginally to 575 crore versus 595 crore. Depreciation, amortization

and impairment charges were at 663 crore versus 796 crore in FY’13. Finance costs

increased to 2,463 crore from 2,314 crore in FY’13. The overall debt witnessed a

significant decrease; however the cost of borrowing impacted the finance costs.

Page 9

Balance Sheet

DLF’s Balance Sheet as on 31st March, 2014 reflected a healthy position with a net

worth of 29,194 crore. The net worth of DLF witnessed an increase of 1,666 crore

from FY’13. Net debt was 18,526 crore as compared to 21,731 crore as of 31st

March, 2013. The net debt to equity ratio was at 0.64. During the year, the credit

rating of DLF improved, with outlook changing from negative to stable.

Narration Mar-10 Mar-11 Mar-12 Mar-13 Mar-14

Sales 7,459.08 9,560.57 9,629.38 7,772.84 8,298.04

Expenses 3,847.26 5,807.91 5,725.07 5,146.63 5,812.80

Operating Profit 3,611.82 3,752.66 3,904.31 2,626.21 2,485.24

Other Income 255.65 583.88 594.48 1,322.90 1,491.55

EBIDT 3,867.47 4,336.54 4,498.79 3,949.11 3,976.79

Depreciation 324.93 630.72 688.83 796.24 662.93

EBIT 3,542.54 3,705.82 3,809.96 3,152.87 3,313.86

Interest 1,110.04 1,705.62 2,246.48 2,314.04 2,463.25

Profit before tax 2,389.56 2,000.20 1,563.48 838.83 850.61

Tax 702.25 459.41 369.35 125.11 -83.63

Net profit 1,719.83 1,639.61 1,200.82 711.92 646.21

Price to earning 33.34 30.40 30.56 51.71 45.79

RATIOS:

Dividend Payout 21.03% 43.00% 41.78% 72.76% 80.35%

OPM 48.42% 39.25% 40.55% 33.79% 29.95%

TRENDS: 10Years 7Years 5Years 3Years

Sales Growth 17.94% -3.75% -4.61%

OPM 47.56% 47.41% 38.34% 35.08%

Price to

Earning 33.59 33.59 39.50 43.32

Page 10

DLF Ltd. Profit and Loss Account

DLF LTD. Standalone Balance Sheet

Narration Mar-10 Mar-11 Mar-12 Mar-13 Mar-14

Equity Share Capital

339.

48

33

9.51

339.

68

339.74

356.29

Reserves

24,154.

39

24,182

.32

25,097.

04

2

5,388.75

27,0

38.58

Secured Loans

19,301.

59

19,938

.08

19,036.

42

1

7,836.29

15,6

39.46

Unsecured Loans

2,375.

06

1,71

4.08

1,186.

49

1,240.96

943.85

Total

52,718.

16

48,559

.46

47,879.

48

4

7,006.97

45,9

79.70

Net Block

17,806.

99

19,256

.15

20,338.

83

1

9,848.59

18,8

34.63

Capital Work in

Progress

11,128.

82

10,234

.44

8,992.

81

7,834.32

5,

978.69

Investments

5,505.

20

99

5.77

1,126.

76

1,333.71

891.23

Working Capital

18,277.

14

18,073

.11

17,421.

07

1

7,990.36

20,2

75.14

Total

52,718.

16

48,559

.46

47,879.

48

4

7,006.97

45,9

79.70

Debtors

1,618.96

1,725.73

1,765.91

1,653.25

1,561.23

Inventory

12,480.59

15,038.76

16,175.57

17,645.53

18,511.20

Debtor Days

79.22

65.88

66.94

77.63

68.67

Inventory Turnover

Page 11

0.60 0.64 0.60 0.44 0.45

Return on Equity 7% 7% 5% 3% 2%

Return on Capital

Emp 8% 9% 9% 8% 9%

Page 12

Company Overview

HDIL known as one of India’s largest real estate companies.

They believe however, that they are really in the business of development. Seeking to

meet the needs of the present generation, without compromising the future of the

generations to come.

Housing Development & Infrastructure Limited (HDIL) has established itself as one

of India’s premier real estate development companies, with significant operations in

the Mumbai Metropolitan Region. HDIL is a public listed real estate company in India

with shares traded on the BSE & NSE Stock Exchanges. HDIL group has completed

more than 100 million sq.ft of construction in all verticals of real estate and has

rehabilitated around 30,000 families in last one decade.

With operations spanning every aspect of the real estate business, from residential,

commercial and retail projects, to slum rehabilitation to land development, HDIL was

ranked as India’s fastest growing real estate company by Construction World-

NICMAR in October 2007. Our residential projects range from apartment complexes

to towers to townships. Our commercial projects comprise premium office spaces as

well as multiplex cinemas. In retail, we focus on building world-class shopping malls.

We also handle slum rehabilitation projects under a Government scheme administered

by the Slum Rehabilitation Authority (SRA), offering development rights in exchange

for clearing and redeveloping slum lands, while providing replacement housing for the

displaced slum dwellers.

As India’s largest slum rehabilitation company, HDIL has been awarded the Mumbai

International Airport Slum Rehabilitation project in October 2007, a critical

Page 13

component of the modernization and expansion plan for Mumbai airport and one of

the largest urban rehabilitation projects in India. HDIL has also diversified into

energy, hospitality and the development of SEZs.

HDIL Ethos

To be an icon in infrastructure and real estate development, by defining quality,

marksmanship and customer satisfaction.

The honeycomb and cube symbol captures the macro and micro aspects of HDIL’s

business. It conveys that while there are multiple facets to our business, each aspect

gets the focus it deserves. It conveys that we create living spaces, working spaces and

infrastructure for mass and premium customers and institutions but each customer gets

individual attention.

Leaders of HDIL

A highly effective management. A vision for consistent growth. Moving purposefully

towards our goal of building HDIL into a professionally managed corporate, we have

re-structured our board of directors, to include luminaries from diverse fields and

areas of expertise. With people from the banking, legal and finance fields as

independent directors, HDIL now has an ideal mix of executive and independent

directors.

The current board members are:

Mr. Rakesh kumar Wadhawan Executive Chairman

Mr. Sarang Wadhawan Vice Chairman & Managing Director

Mr. Waryam Singh Director

Mr. Ashok Kumar Gupta Director

Mr. Shyam Sunder Dawra Independent Director

Mr. Lalit Mohan Mehta Independent Director

Mr. raj Kumar Aggarwal Independent Director

Page 14

HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. Profit and Loss Account

Narration Mar-10 Mar-11 Mar-12 Mar-13 Mar-14

Sales 1,502.12

1,849.99

2,006.41

1,025.24

872.27

Expenses 234.41

204.69

500.53

-247.68

-21.28

Operating Profit

1,267.71

1,645.30

1,505.88

1,272.92

893.55

Other Income 33.23

49.89

51.25

39.99

81.38

EBIDT 1,300.94

1,695.19

1,557.13

1,312.91

974.93

Depreciation 72.31

83.76

85.83

84.54

78.57

EBIT 1,228.63

1,611.43

1,471.30

1,228.37

896.36

Interest 523.39

625.36

624.94

692.30

707.29

Profit before tax

705.15

985.99

846.37

536.07

189.06

Tax 132.97

159.12

29.04

20.52

11.37

Net profit 548.80

821.76

809.81

73.32

177.57

EPS Price to earning

16.63

10.51

5.68

51.85

-

Price RATIOS: Dividend Payout 0.00% 0.00% 0.00% 0.00% 0.00%OPM 84.39% 88.94% 75.05% 124.16% 102.44%

TRENDS: 10Years 7Years 5Years 3YearsSales Growth -4.50% -12.78% -22.17%

OPM 81.60% 84.42% 90.76% 94.07%Price to Earning

17.45

17.45

20.05

24.38

Page 15

Standalone Balance Sheet of HDIL

Narration Mar-10 Mar-11 Mar-12 Mar-13 Mar-14

Equity Share Capital 35

8.84 41

5.00 41

9.00 419.

00

419.00

Reserves 6,60

6.03 8,81

2.83 9,8

90.67 9,963.

71 10,140.05

Secured Loans 4,10

1.72 4,31

9.80 2,7

28.90 3,124.

40 2,767.38

Unsecured Loans -

-

14.03

14.43

3.04

Total 11,144

.59 13,811

.46 13,05

9.70 13,528.

80 13,336.85

Net Block 44

2.06 44

7.77 37

5.23 291.

33

228.88 Capital Work in Progress

1,466.32

3,205.83

6.86

8.48

6.91

Investments 24

2.91 5

2.01

58.05 77.

44

64.79

Working Capital 8,99

3.30 10,105

.86 12,61

9.56 13,151.5

5 13,036.26

Total 11,144

.59 13,811

.46 13,05

9.70 13,528.

80 13,336.85

Debtors 202.99

361.10

868.58

806.12

381.40

Inventory 8,756.65

11,415.24

11,671.71

12,042.98

12,467.85

Debtor Days 49.32

71.24

158.01

286.99

159.60

Inventory Turnover 0.17

0.16

0.17

0.09

0.07

Return on Equity 8% 9% 8% 1% 2%Return on Capital Emp 12% 14% 11% 9% 7%

Page 16

Past Performance

The stock price of Mumbai-based real estate developer HDIL has been on an uptrend

in the last few months. Price has more than doubled from 45 in early March to 75

currently. There are two factors driving this rally, reduction in the company’s debt and

improving prospects of the Mumbai real estate market. But has HDIL the company

really turned the corner? Here is a reality check on the company.

HDIL’s stock price zoomed by 50 per cent on the back of a series of block deals in

March and April this year. Kotak Securities bought 0.5 per cent stake, Nomura

Singapore 1 per cent and Credit Suisse 0.5 per cent stake in the company in this

period. Shareholding by foreign institutional investors has also increased from around

28 per cent in June 2013 to an estimated 38 per cent currently, with promoter holdings

steady at 36 per cent.

Debt Reduction

So, what is driving buyer interest? According to Hariprakash Pandey, Vice-President -

Finance and Investor Relations, HDIL, reduction in debt has played a major part in

making the sentiment positive. “We generated enough cash flow in a difficult macro

environment and repaid around 600 crore of debt last year. This is a 15 per cent

reduction," he says. “The overall revival in sentiment is also helping.”

HDIL plans to repay 600-800 crore, or nearly 20 per cent of its debt this year. The

company’s cash receipts, that is aiding debt repayment, is also improving. In the

March 2014 quarter, net cash flow from operations was nearly 490 crore, which

enabled paying off 408 crore of debt during the quarter. The company’s net debt as of

March 2014 was 3,511 crore, against 4,004 crore in March 2013.

Mumbai Market Revival

Hariprakash Pandey notes that there are signs of revival in the Mumbai property

market. One, there are more enquiries and interest in the commercial segment, after a

three year lull. Next, land transactions are happening, which indicates developer

Page 17

optimism. Last, better macro-economics and stock market performance will aid

consumption in the Mumbai market, he notes.

He says this is a positive for the company as its TDR (related to the land gained

through slum rehabilitation) sales, which commands margins of over 60 per cent, will

likely increase. Pandey expects operating margins to improve by 5-10 percentage

points, as the revenue mix tilts to 60 per cent property sales and 40 per cent TDR.

The company handed over possession of around 1,000 apartments, covering 1.5

million sq ft in 2013-14. The same is expected this year along with 2,000 flats

covering over 2.5 million sq ft in its township development in Virar East near

Mumbai. As the company recognises revenue only on project completion, as opposed

to the normal practise of percentage of completion, hand-over is positive for revenue

numbers.

Issues Remain

They continue to be cautious about the stock for three reasons. First, the company’s

debt is still high and around 96 per cent of the promoter holdings (or around 35 per

cent of outstanding shares), are still pledged.

Second, while there may be signs of revival in the Mumbai market, how well the TDR

sale will increase for the company is yet to be seen.

Last, the company’s share price has already zoomed, in anticipation of growth. The

stock trades at a price to FY14 earnings multiple of 25 times. This is higher than other

Mumbai-based realtors, but HDIL has always commanded a premium due to its high

margins from TDR sales in the past. While margins have improved in FY14,

compared to FY13, it is still at around 20 per cent levels and not yet at the 40 per cent

levels seen in the past.

Page 18

Future Plans of HDIL

Housing Development and Infrastructure (HDIL) is a Mumbai-based company

primarily engaged in the development of residential, commercial, retail properties and

is also involved in the slum rehabilitation scheme. Incorporated as a private limited

company on July 25, 1996 and converted into a public limited company with the

present name on Aug. 29, 2006, it is part of the Wadhawan Group (formerly known as

the Dheeraj Group), which has been involved in real estate development in the

Mumbai metropolitan region for almost three decades.

HDIL has completed a total of 24 projects aggregating approximately 11.3 million sq.

ft. of saleable area and has sold 5.7 million sq. ft. of land development in Virar and

Agashi to other real estate developers. It has constructed approximately 2.28 million

sq. ft. under the slum rehabilitation scheme. About 45.52 million sq. ft. of work is

under construction; residential includes Sasunavghar property in Vasai measuring

16.66 million sq. ft. and Kukatpally -I & II projects in Hyderabad admeasuring 7.32

million sq. ft. spread across 52.77 acres to be completed around 2011-2012;

commercial properties are at Kandivali and Worli comprising of 0.13 million sq. ft. of

lettable commercial real estate.

Recent Development

29-SEP-14 

Promoters of Housing Development and Infrastructure (HDIL) have revoked all

shares earlier pledged with IL&FS Trust Company and now the entire 100 per cent

shares in the promoters category is non-pledged. IL&FS Trust Company has released

7, 54, 91,660 shares of promoters, including Rakesh Kumar Wadhawan, today.

03-JUL-14 

Housing Development and Infrastructure announced that the company has entered into

definitive agreements with respect to transfer of its 100% shareholding of its wholly

owned subsidiary company, viz HDIL Entertainment to Carnival Films.

Page 19

14-AUG-13 

Housing Development and Infrastructure (HDIL) said a substantial drop in

consolidated net profit for the quarter ended June 2013. During the quarter, the profit

of the company declined 84.58% to Rs 162.50 million from Rs 1,053.80 million in the

same quarter previous year.

Comparison Between BSE /NSE

As on 16/10/2014 BSE NSE

Mrkt Capitalization in Cr. 2056.26 2010.17

Current Price 75.80 75.60

Face Value 10.00 10.00

52 weeks high/ low 113.85/38.70 113.80/38.70

Page 20

Oberoi Realty Overview

Oberoi Realty (Oberoi Constructions) is a real estate developer based

in Mumbai, Maharashtra. It is led by billionaire Vikas Oberoi. It has completed 32

projects covering approximately 4.979 million square feet of saleable area spread

across the city of Mumbai. Its main interest is in Residential, Office Space, Retail,

Hospitality and Social Infrastructure properties in Mumbai, the commercial capital

of India.

Oasis Tower, The second tallest tower in India is developed by Oberoi Realty.

Over the past three decades they have built growth and high-stature through consistent

high-design and quality parameters that have truly made a significant difference to

ease, comfort and efficiency to lives that interact with or inhabit these spaces. They

have developed over 36 projects at strategic locations across the Mumbai skyline

aggregating about 6.5 million sq. ft. of spaces. With another 24 million sq. ft in the

making, they have aggressive plans for upcoming projects in various parts of Mumbai

and other regions.

Oberoi Realty is a real estate developer based in Mumbai, Maharashtra. It is led by

billionaire Vikas Oberoi. It has completed 32 projects covering approximately 4.979

million square feet of saleable area spread across the city of Mumbai. 

Page 21

Stock price: OBEROIRLTY (NSE) Rs. 212.00 +5.10 (+2.46%)

Headquarters: Mumbai, India

Historic Prices & Simple Moving Averages

BSE

 

  1 YEAR CURRENT %GAIN / LOSS

Open Price 173.10 209.75  

High Price 176.00 213.30  

Low Price 168.55 208.15  

Last Price 169.45 213.00 25.70

Volume 9,742 5,837 -40.08

Simple Moving Averages

DAYS BSE NSE

30 234.87 234.93

50 238.78 238.97

150 234.52 234.70

200 226.95 227.16

Pre-Opening Session Prices 9:00 - 9:15

Game-changers of 2013-14

Entered into an agreement with The Ritz-Carlton to establish an iconic hotel, the first

for the global brand in Mumbai (Worli); The Ritz-Carlton to manage the residences

(residential tower adjacent to the hotel), providing occupants with a variety of bespoke

services. Successful bidder of ~25-acre property in Borivali (Mumbai) for H 1,155

crores Resolution of the private forest issue relating to the Mulund Property in favor

of the company by the order dated January 30, 2014 of the Hon’ble Supreme Court of

India.

Page 22

Our proposed hotel and residential property in Worli is not just an attempt to launch

yet another project; it represents a showcase of our inspirational and iconic

philosophy. A philosophy that extends imagination, challenges the common place and

defines the future. With the objective to create something today that will be

remembered for generations to come. We brought to this hospitality and residential

project the aura of one of the most respected luxury hospitality brands in the world –

The Ritz-Carlton. As a result, The Ritz-Carlton and luxury residences managed by

The Ritz-Carlton in Worli (Mumbai) will help create a new Indian benchmark in the

niche bespoke end of lifestyle exclusiveness, making it truly iconic. Oberoi Realty

announces The Ritz-Carlton as its hospitality partner for the iconic Worli

development. The Ritz-Carlton operates 85 hotels in the US, Europe, Asia, the Middle

East, Africa and the Caribbean. The Ritz-Carlton is the only service company to have

twice earned the prestigious Malcolm Baldridge National Quality Award. More than

30 The Ritz-Carlton hotels and residential projects are presently under development

across the world.

Page 23

11.55%

Net Worth Growth

During the year under review, your Company’s consolidated total revenue stood at H

85,551.48 Lakh as compared to H 1, 14,752.00 Lakh for the previous year,

representing a decrease of 25.45%; profit before tax stood at H 46,437.71 Lakh for the

year under review as compared to H 68,306.18 Lakh for the previous year,

representing a decrease of 32.02%; profit after tax stood at H 31,106.23 Lakh as

compared to H 50,478.60 Lakh for the previous year, representing a decrease of

38.38%.

Page 24

Standalone financials

During the year under review, the Total Revenue stood at H 70,585.58 Lakh as

compared to H 74,249.50 Lakh for the previous year, representing a decrease of

4.93%; profit before tax stood at H 41,074.95 Lakh for the year under review as

compared to H 44,362.20 Lakh for the previous year, representing a decrease of

7.41%; profit after tax stood at H 29,512.41 Lakh as compared to H 32,747.23 Lakh

for the previous year, representing a decline of 9.88%.

Transfer to reserves

It is proposed to transfer an amount of H 2,214.00 Lakh to the general reserves out of

the profits earned during FY2013-14.

Dividend

Despite challenging business environment, sluggish industry volume numbers and

increased costs, taking into consideration the stable performance of your Company

and in recognition of the trust in the management by the members of the Company,

your Directors are pleased to recommend a dividend at the rate of H 2 per Equity

Share, i.e. 20% of the paid up Equity Share value for the year ended March 31, 2014

(previous year: H 2 per Equity Share, i.e. 20% of the paid up Equity Share value). The

proposed dividend (excluding the dividend distribution tax) will absorb an amount of

H 6,564.67 Lakh.

Page 25

Page 26

Oberoi Realty Profit and Loss AccountNarration Mar-10 Mar-11 Mar-12 Mar-13 Mar-14

Sales 789.88 996.04 824.69 1,047.58 798.45

Expenses 316.21 418.71 341.20 435.52 363.67

Operating Profit 473.67 577.33 483.49 612.06 434.78

Other Income 15.62 62.73 150.10 99.94 57.06

EBIDT 489.29 640.06 633.59 712.00 491.84

Depreciation 9.06 23.69 26.94 28.51 27.15

EBIT 480.23 616.37 606.65 683.49 464.69

Interest 0.21 0.26 0.31 0.37 0.31

Profit before tax 480.02 616.12 606.34 683.13 464.38

Tax 22.62 98.28 142.18 178.28 153.31

Net profit 458.18 517.18 462.87 504.79 311.06

EPS          

Price to earning - 16.06 16.98 17.27 21.87

Price          

           

RATIOS:          

Dividend Payout 1.26% 6.35% 14.18% 13.01% 21.11%

OPM 59.97% 57.96% 58.63% 58.43% 54.45%

TRENDS: 10Years 7Years 5Years 3Years

Sales Growth -7.11%

OPM 57.92% 57.92% 57.92% 57.30%

Price to Earning 19.68 19.68 19.68 20.59

Future prospects of Oberoi Realty

Focused approach

The cornerstone of Oberoi’s strategy has been its riveted focus on the premium end of

the housing and commercial real estate market, from day one. The Kandivili project,

Oberoi Gardens, for instance, had three towers of 27 floors each and all 324

apartments were 3-bedroom ones. “We wanted to tell people they can get luxury even

in the suburbs,” says Oberoi. It isn’t just add-ons like tennis courts and air-conditioned

lobbies that made the difference, though — in Mumbai’s tough real estate market,

Oberoi Realty has managed to build a reputation of delivering apartments on time.

Page 27

“Except for a six month delay here and there, all our projects have been delivered on

time,” claims Oberoi, pointing that outsourcing construction to firms like L&T and

Samsung C&T has helped ensure quality and timely delivery in its high-profile

projects. “Oberoi’s quality has met the expectation of buyers, because of which they

make slightly higher realization than their peers,” avers Arun Agarwal, an analyst with

Religare Securities. Moreover, the company commands a premium of 20-25% in

every project it builds. “An Oberoi property is the costliest in the area it is in,” says

Oberoi.

Analysts agree that Oberoi is way ahead of builders such as

Sunteck Realty, which sells a third of what Oberoi does,

despite offering lower rates. While others developers spread

their projects across segments, Oberoi Realty has been

strictly focused on high-income housing. Its ticket size is

also much higher, since it doesn’t sell anything less that a 3-

BHK, with prices starting at Rs 2.5 crore. While residential

projects have been its mainstay, bringing in about 80% of

revenues, so far, the company has executed 35 projects —

apartments, malls, hotels and commercial properties —

totaling 6 million sq ft of developed space. It has sold about

7.12 million sq ft (this includes part of its under-

construction properties already sold) and leased an area of 1.14 million sq ft. It

currently has five projects totaling around 8.5 million sq ft, under construction, with

an order book of Rs 1,600 crore. Granted, this is a small fraction of market leader

DLF’s 62 million sq ft under construction, but it’s not bad, considering that Oberoi

Realty is a Mumbai-centric player unlike DLF, which has been a pan-India developer.

Page 28

   

While other

developers

spread their

projects across

segments,

oberoi realty

has been strictly

focused on high-

income housing

   

Prestige company overview

The Prestige Group owes its origin to Mr. Razack Sattar, who envisioned a success

story waiting to take shape in the Retail Business in 1956 itself. Since

its formation in 1986, Prestige Estates Projects has grown swiftly to become one

of South India's leading Property Developers, helping shape the skyline across

the Residential, Commercial, Retail, Leisure & Hospitality sectors.

Prestige Court on K.H. Road in Bangalore set the pace for the Group's rapid growth

which now stands at over 169 Completed Projects spanning a total developed area of

over 51.37 million sq ft. It also has another 65 ongoing projects comprising around

56.94 million sq ft & 28 upcoming projects totaling 31.15 million sq ft., which include

Apartment Enclaves, Shopping Malls and Corporate Structures, spread across all asset

classes.

Prestige Constructions, an ISO 9001:2000 certified company is the only Real Estate

Developer in Bangalore to have won the reputed FIABCI Award for its software and

residential facilities. Prestige was also recently awarded the Crisil DA1 Developer

Rating in recognition of the quality of their projects and the ability to deliver

completed projects in a timely manner, making them the ONLY Property Developer

across India to have received this distinction.

Today, Prestige stands as a giant and with aggressive growth plans across

the Residential, Commercial, Retail and Hospitality Sectors in Bangalore, Goa,

Hyderabad, Mangalore, Cochin and Chennai, lies a bright future ahead

Page 29

Financial highlights

Brisk new sales

4486 residential units and 0.22 Mn sft of commercial space were sold during the year,

which totals to 7.5 Mn sft and corresponds to a potential revenue of Rs.44,348

million. This represents an increase of 19% in sales over the previous financial year

and an increase of 26% in terms of number of units sold.

The Company’s share of sales is 3699 residential units and 0.22 Mnsft of commercial

space totalling to 6.14 Mnsft This corresponds to a potential revenue of Rs.36,323

million and an increase of 16% over the previous year.

Burgeoning collections

The Company collected a total of Rs.29,408 million during the year. Of this the

Company’s share is Rs.24,753 million, which is an increase of 26% over the previous

financial year.

Booming launches

The Company has launched a total of 15.67 Mnsft of developable area during the

year, an increase of 51% over the previous year. Of this, 0.70 Mnsft is being

developed in Chennai while the remaining is in Bangalore. This corresponds to a total

of 7527 residential units, of which the Company’s share is 5644 units. completed

Projects. The Company completed a total of 3.18 Mnsft of space during the year

including 1.16 Mnsft of retail space, 1.36 Mnsft of office space and 0.66 sft of

hospitality space. The Company’s share of this is 1.92 Mnsft. leased areaThe

Company leased a total of 2.66 Mnsft of space during the year, of which 1.11 Mnsft

its share is. The cumulative leased area as on 31st March 2014 is 12.72 Msft of which

9.39 Msft is office space and 3.33 Mnfst is retail space. The current yielding area

(cumulative) is 5.29 Mnsft. rental income The Company’s share of rental income is

Rs. 2,495 million during the year. Exit rentals as on 31st March 2014 is Rs. 2,950

million. High revenue growth. The Company has recorded significant growth in

Page 30

revenues and profits, on both standalone and consolidated basis, over the previous

year.

Standalone

Revenue at Rs.21, 525 million has increased by 34% as compared to the previous

year. EBIDTA at Rs.6, 498 million has increased by 27% as compared to the previous

year. PAT at Rs.3, 400 million has increased by 23% as compared to the previous

year.

Consolidated

Revenue at Rs.26, 467 million has increased by 32% as compared to the previous

year. EBIDTA at Rs. 8,076 million has increased by 27% as compared to the previous

year. PAT before minority interest at Rs.3, 215 million has increased by 11% as

compared to the previous year. The Company’s business performance during the

Financial Year 2013-14 has been characterized by high all round growth in new sales,

collections and new launches, as well as, revenues and profitability. The highlights are

encapsulated below.

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Balance sheet

Page 32

Profit and loss statement

Prestige Estates Projects said a good increase in standalone net profit for the quarter

ended June 2014.  During the quarter, the profit of the company rose 20.06% to Rs

1,040.40 million from Rs 866.60 million in the same quarter last year. Net sales for

the quarter rose 13.01% to Rs 5,630.90 million, compared with Rs 4,983 million for

the prior year period.

Page 33

Earnings per share for the quarter stood at Rs 2.97, registering 19.76% growth over

previous year period. Shares of the company declined Rs 5.9, or 2.35%, to settle at Rs

244.65.  The total volume of shares traded was 38,540 at the BSE (Friday)

Future prospects

Luxury Residential:

Bangalore is the third-largest hub for High Net worth Individuals (HNIs). It is

estimated to be home to over 10,000 individual dollar millionaires. Bangalore has a

large base of expatriates who live and work in the city. The residents are well

travelled, cultured and have sophisticated tastes.

There has been increased demand for high-end residential apartments in the city,

particularly in the Central Business District (CBD), Secondary Business District

(SBD), Whitefield, North Bangalore and Outer Ring Road sub-markets. We expect

consumer demand for high-end residential projects in these sub-markets to be steady

over the short term.

Bangalore is one of the most promising markets for villa projects in India. Villa and

row house developments are most active in the North Bangalore, ORR, Sarjapur Road

and Whitefield micro-markets. High-end residential property buyers in Bangalore are

very sensitive in terms of amenities, product quality and unit sizes.

Mid-Income Housing:

This segment is mainly driven by individuals working in the IT and ITES industry.

The main driving factors for this segment are social infrastructure, proximity to

workplaces, good physical infrastructure and access to medical and educational

facilities.

Because of these reasons, micro-markets such as Whitefield, the ORR IT corridor,

Electronic City and few areas in North Bangalore have witnessed a steady demand

from the mid-income segment.

Affordable Housing: 

The demand from this segment comes from extremely price sensitive buyers –

therefore, affordable projects are developed in the suburbs as these areas offer large

Page 34

land parcels at lower acquisition costs. Areas such as Mysore road, Hosur road,

Kanakapura road etc. have witnessed high demand for this segment.

The affordable housing concept has gained ground in Bangalore City, mainly due to a

few graded developers like Purvankara, Brigade Group, Shriram Properties, Golden

Gate Properties, Ozone Group and Nitesh Estate who are focusing their projects for

customer segment. In most cases, the housing units are made affordable by reduced

unit sizes, compromising on civic amenities and other USPs which were typically

provided as differentiators to the competing projects in the micro-market/city.  

Affordable housing has seen constant demand on the outskirts of Bangalore, in all

directions. Availability of large land parcels at lower price points has encouraged

these developments. Also, the planned Metro Rail and Peripheral Ring Road have

increased the demand on the outskirts of Bangalore. VBHC Attibele and Patel Neo

Town in the South Bangalore, Provident Welworth and Sovereign Lakefront in North

Bangalore, and Provident Sunworth and VBHC Kengeri in West Bangalore are some

of the affordable housing projects in the city. The demand for affordable housing in

East Bangalore is lower when compared to Bangalore’s other micro-markets.  

With increased demand, ‘affordable’ housing projects have witnessed an increase in

the capital prices and are now priced higher than or similar to mid-income segment

projects.

These projects have also seen substantial rise in capital values because of increased

cost of land acquisition and construction. Developers have therefore resorted to

redesigning their projects to address the demand of a wider target segment looking at

the budget homes category. Major national level players and local developers have

plans to enter the affordable housing segment of Bangalore. These include Tata

Housing, Usha Breco Realty, Godrej Properties, Ashoka Group, Jannaadhar

Construction, CSC Builders, Brigade Group, etc. 

Page 35

Overall Demand Scenario: 

The Bangalore market saw absorption of 6,519 units in 2Q13 against 6,689 units in

1Q13. Unsold stock in 2Q13 totalled 50,184 units in 2Q13 as compared to 46,823 in

1Q13, reflecting a vacancy rate of 53.4%, down from 54.2% in 1Q13.

Supply: A total of 21 residential projects were launched across Bangalore in 2Q13,

offering 9,889 units against 10,009 units in 1Q13. Meanwhile, eight residential

projects comprising 2,319 units in various sub-markets were withdrawn from active

stock as they were completely sold out. The major projects launched in 2Q13 included

Prestige Sunrise, Prestige Ivy Terraces, Shriram Sameeksha, Sobha Santorini and

Brigade Begonia. 

Central (CBD) & Off Central (SBD): Low supply and high demand. Due to low

availability of large land parcels and high capital values, these micro-markets have

seen a limited supply of residential developments. These markets have very good

social and physical infrastructure. Nitesh Park Avenue, Prestige Kingfisher Towers,

Westcourt Cityview, ETA Beau Monde, 77 Degrees East, Sobha Indraprastha and

Prestige Edwardian are some of the high-end projects in these micro-markets. 

Page 36

Company overview

Indiabulls is an Indian company headquartered in Gurgaon (NCR Delhi), with presence in the real estate, infrastructure, housing finance, securities, retail, multiplex] and power sectors.

Indiabulls Real Estate Limited

Indiabulls Real Estate Limited is the Group's real estate arm.[3] Its stock is owned by Indiabulls Properties Investment Trust, a Singapore-based holding company Chaired by Chatri Trisipisal. [4]

Page 37

Financial results

BUSINESS UPDATE

• Return on Equity (RoE) has grown to 27.75%. RoE expected to increase further with growth in business.

• 450% of interim dividend of Rs. 9 per share of face value Rs. 2/- has been declared. With this, the total dividend for FY 2013-14 (including interim dividend of Rs. 20/-

Already paid) is Rs. 29/- per share of face value of Rs. 2/- amounting to 1450%, total outflow of Rs. 1,129.76 Crore (inclusive of Corporate Dividend Tax).

Page 38

FINANCIAL AND OPERATIONAL HIGHLIGHTS

Asset Growth

• Assets continue to grow steadily on back of long-term, low-risk mortgage loans. The

total Assets under Management stood at Rs. 41,169.40 Crore, up 19.59% from Rs.

34,425.62 Crore.

• During the year, loans amounting to Rs. 4,171 Crore. were sold down.

• With the above sell down, outstanding securitized loanbook was Rs. 5,724 Crore. at

the end of FY 2013-14, on which a spread of 3.4% p.a. is to be earned over the life of

the loan.

Asset Composition

• Home loans, which form the majority of incremental disbursals, are disbursed at an

average ticket size of Rs. 24 lacs and at average LTV of 70% at origination.

• Loans against property, which form the remainder of the retail mortgage book, are

disbursed at an averageticket size of Rs. 68 lacs and at an average LTV of 49% at

origination.

• The loan profiles of both the home loans and loans against property are conservative.

The loans are monthly amortizing, secured against mortgage on the property financed

and are given out at moderate LTV levels.

• 76% of retail mortgage loans, consisting of the above home loans and loans against

property, are sourced in-house. With improving productivity of in-house sourcing

team, over 80% of these retail mortgage loans will be sourced in-house in FY15.

Home Loans: Streamlined Loan Fulfillment

• In FY 2014, the ISO certification (ISO 9001:2008) awarded to the Company’s

document management system was reaffirmed.

• The Company continues to grow its branch network and now has 205 branches

spread across the country.

• The Company has a well-trained, in-house Direct Sales’ Team of over 2,000 people

to promptly attend to Prospective customers. Improving Liability Profile

Page 39

• In keeping with its stated strategy, the Company continues to maintain healthy levels

of liquidity with cash and bank balances and current investments adding up to Rs.

7,341.38 Crore at the end of FY 13-14.

• Funds raised through bonds constituted 26% of the Company’s incremental

borrowings in FY 13-14.

• The Company has further reduced its reliance on short-term money to 8% of total

borrowings. Diversified Borrowing Program

• Amongst its lenders, the Company now counts 108strong relationships: 26 PSU

banks, 16 Private and Foreign banks and 66 Mutual Funds, Provident Funds, Pension

Funds, Insurance Companies and others.

Optimally Matched Balance Sheet

• The assets and liabilities have been optimally matched with no mismatch till 5 years.

Balance sheet

Page 40

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Future prospectus

Indiabulls Real Estate Ltd is set to launch as many as seven projects outside Mumbai

in the remaining part of 2012-13, a move that could help the company hedge against

the over-exposure to its core market. The firm will launch primarily residential as well

as office projects in Sonepat, Gurgaon, Indore and Chennai, according to a company

presentation released post its quarterly results announcement late Tuesday. Having

said that, Indiabulls still has a high-value portfolio of projects in and around Mumbai,

including a newly launched township in Savroli on the Mumbai-Pune expressway.

Mumbai and its neighbourhood constitute more than half of Indiabulls’ portfolio in

terms of project value. “The strategy is to focus on metro markets such as Mumbai

and Greater Mumbai, NCR (National Capital Region that includes Delhi) and

Chennai,” said Saurabh Mittal, co-founder and vice-chairman, Indiabulls Real Estate.

Page 42

While most of the firm’s Mumbai projects are in the luxury category, it has no specific

pricing for its projects outside the region. “We are looking to do projects in both

premium and mid-market categories to cater to both kinds of buyers, depending on the

location,” said Mittal. The projects are subject to regulatory approvals. Since April,

the Mumbai-based developer has launched two projects—a super-luxury residential

project, Blu, in south Mumbai, and IB Golf City in Savroli, a premium residential

township with a golf course. Indiabulls relaunched Blu earlier this year, and it is now

being sold at a base price of around Rs.45,000 per sq. ft. The project is coming up on

mill land that the firm bought in 2010 for about Rs.2,000 crore. Indiabulls plans to re-

launch the first of its Sky projects in Lower Parel, Mumbai, as well by the end of 2012

with new specifications. According to the presentation, the company had a total

saleable area under construction of 19.44 million sq. ft as of 30 September. Of this,

10.35 million sq. ft has been sold for Rs.6,583 crore and the remaining space is

expected to sell at Rs.13,074 crore as per the current market rates. Indiabulls Real

Estate has done nearly Rs.1,200 crore of pre-sales in its projects across India, of which

Rs.900 crore was from projects in the Mumbai Metropolitan Region (MMR). The

company had a land bank of around 3,589 acres and added another 212.09 acres in the

September quarter. “Most of it (the land) is for future development with a three-five

years horizon,” said a person familiar with the development. Macquarie Research, in a

4 October India property report, said Indiabulls Real Estate’s over-exposure to high-

end residential property in Mumbai was a risk because of high speculative and

investor interest. “If Indiabulls’ project portfolio outside MMR takes off well, it would

be a balancing factor because the dependence on the Mumbai property market would

cease and it would also boost its sales numbers,” said an analyst with a domestic

brokerage, who didn’t want to be named. For the September quarter, Indiabulls posted

a net profit of Rs.32.24 crore, down 17.43% from a year ago and down 14.59% from

the preceding June quarter. Total income from operations rose marginally by 0.7%

year-on-year to Rs.342.30 crore, and by 59.45% sequentially. In August, Canada-

based Veritas Investment Research Corp. targeted Indiabulls Real Estate and

Indiabulls Power Ltd in a report saying the purpose of the former firm seemed to be to

Page 43

bilk institutional and retail investors for the benefit of select insiders. Indiabulls

retaliated by initiating legal proceedings.

BSE V/S Realty Sector portfolio Performance Oct-2013/2014

Conclusion

For middle class Indians, investing in property has been the surest bang for the buck.

On an average, property values have quadrupled in the last decade. Real estate

practitioners point to slowing sales and rising inventories.

Recent years have seen the Indian real estate sector grow, especially the commercial

real estate segment. According to a study by Knight Frank, Mumbai is the best city in

India for commercial real estate investment, with returns of 12-19 per cent likely in

the next five years. Bangalore and Delhi-National Capital Region (NCR) come second

and third on the list, with returns of 12 per cent and 8-11 per cent respectively.

Page 44

In order to bring back the enthusiasm of the investor community into the sector, real

estate companies will have to focus on factors such as improving cash flow position,

lowering inventory, reducing debt and increasing profit margins. Real estate stocks

were beaten down year 2010 due to tightening monetary policy. They have started

recovering on expectations of the rate cycle turning. Companies with good governance

standards and debt reduction strategies will do well. DLF seems to be on that path.

India has seen a dramatic slowing of growth over the past few years because of

uncertainty in the business environment, a slump in investor sentiment, heavy

bureaucracy, High Interest Rates and overburdened infrastructure.

Recommendations

The Indian real estate sector continues to be a favoured sector for investments from

international as well as private investors. In the upcoming years, the residential as well

as commercial segments of the real estate industry is set for major growth, aided in no

small part by the government's plans and initiatives to boost this sector.

Excise duty reduction on cement and steel will lower project costs and expansion of

the interest subsidy on loans will boost developers' interest in this segment. Moreover,

tax measures such as increasing the limit of interest deduction on home loans will

provide necessary motivation to consumers to increase buying activity and revive

demand in the value and affordable segment. Further, demand for space from sectors

such as education and healthcare has opened up ample opportunities in the real estate

sector.

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