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Sunday, December 21, 2008

HDIL - Emkay brokerage report

With recent guidelines from RBI regarding restructuring of commercial real estate loans, HDIL’s liquidity position would improve. Emkay brokerage reports on recent happenings and target price of investment in HDIL.

Reco price: Rs 145
Current market price: Rs 154.3
Target price: Rs 170
Upside: 10.2%
Brokerage: Emkay Global Financial Services

Housing Development & Infrastructure (HDIL) has admitted that the real estate market is going through tough times and would consider price cuts in order to boost demand. The company is willing to sell Transferable Development Rights (TDR) at Rs 1,500 per sq ft vis-à-vis Rs 2,500 per sq ft it had sold few quarters back. The airport slum rehabilitation project has been on track and the company has sold 2.3 million sq ft of TDR generated from the project. HDIL intends to generate another 2 million sq ft of TDR by March 2009. On its slum rehabilitation scheme (SRA), work is progressing in all seven projects at Bandra, Andheri, Versova and Malad.

In the current environment where it has been difficult to sell real estate to end consumers HDIL is expected to generate Floor Space Index from its SRA projects and will yield 5-6 million sq ft of FSI over the next two years. Due to tight liquidity conditions and lack of buyers, the company has delayed its launch plans in projects at Ghatkopar and Navi Mumbai. With recent guidelines from RBI regarding restructuring of commercial real estate loans, HDIL’s liquidity position would improve. However, the brokerage expects the loans repayable to increase from Rs 65 crore (by March 2009) to Rs 1,200 crore in FY10. The stock is trading at 0.8x FY09 book value (industry peers trading at 1.1-1.4x).
Maintain buy.
.

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