Unitech Ltd.
CMP: Rs465.40
Not Rated
Unitech is India’s largest listed real estate company with a market cap of Rs284bn. The company has a land bank of 10,332 acres (400mn sq ft)
spread across north, south and east India. The company is one of the leader in developing residential complexes and commercial/IT parks in India. Unitech has also ventured into SEZ development and is expected to develop a large SEZ of 20,000 acres in Kundli (Haryana) and another 38,000 acres development in Kolkota. Apart from the real estate development, the company is involved in executing industrial projects on a turnkey basis both in India and overseas. It also has a tie up with Carlson Hospitality to manage Radisson hotels and with Marriot International to manage 3 hotels.
As a management philosophy, Unitech does not believe in trying to get a foothold in established areas. The management is clear that it prefers to enter into a city into the city suburbs, and develop integrated townships, thereby developing the area. This is seen in Unitech’s policy in Gurgaon, where the company along with few other large players have capitalized on the early mover advantage in creating integrated townships.
The company is clear that it would rather prefer to accumulate land though open market purchases and agricultural land, than bid for high cost properties at public tender process. While this process is cumbersome, it benefits the company through lower land prices.
In line with industry trend, majority of Unitech’s completed projects have been in the residential segment. Incrementally, 77% of the total planned development space is expected to come from residential segment. This also helps the company’s cash flows as residential segment is a very low working capital intensive business.