The disconnect between the real estate market and the scripts is growing by the day. Real estate has more than recovered from the 2009 slump. Looking at recruitment ads, we sees that there is shortage of people from civil engineers, to karigars and bricklayers. A housing and construction boom is on. Yet the scripts are trading at 52 week lows. ( BTW, Unitech promoters have hiked their stake yesterday in their company. Insiders buying shares, and raising stakes, is one of the most bullish signs in a sector.)
Valuations are astonishing. Many of these stocks are trading at 50 to 60 % discounts to their net asset values (NAV). Now the NAV calculation is simple. If I take all the land and flats under construction and sell them, then pay of all the debts on the company’s books, I get the NAV. Consequently, most company shares should sell AT OR CLOSE TO, THEIR NAVs. Instead they are trading at massive discounts. The market is behaving as though some sort of nuclear bomb has gone off on these company’s properties. ( In fact, if there was a market for corporate control in India, it makes sense acquiring these companies, breaking them up, selling their assets and paying off their debts, to realize value).
Consider the following companies stock prices and their NAVs. IB Real current price of 130 vs NAV of 280. HDIL current price of 185 vs NAV of 370. Orbit current price of 80 vs NAV of 180. To trade at their NAVs implies a 100 % upside in these stocks from here. Remember the NAV itself is subject to upside revision particularly for IB Real, HDIL and Orbit.
Real estate companies with substantial presence around Mumbai will benefit particularly from the final clearance to the Panvel airport project, - and the transharbour link - done a few weeks back by the Environment Ministry. Land prices are already rising substantially in anticipation. The price on India Bulls Green, a 20 mln sq ft project in Panvel has doubled almost from 2200 psf to 4000 psf, a gain in potential sales of 4000 cr on a mkt cap of 5000 cr. ! Imagine India Bulls current NAV upside from current levels of Rs 280 with this project. Also imagine future upside as Panvel becomes a suburb like Santa Cruz. After all, the IB Real city project is four times the size of Nariman Point. Astonishing !!
The stock according to Motilal Oswal should do 16 per share earnings, leading to a multiple of 9 vs a market trading at 21 times. This is comfortable, actually dirt cheap given the upside. In India Bulls Real Estate's case the undervaluation reaches bizaare proportions. The company has a listed power subsidiary and IB Real's stake in the subsidiary is worth 100 per share. The current price is 135. So I get the entire real estate business with all the upside outlined earlier at 35 per share !!
LnT
ReplyDeleteSterlite
Hindalco
IDBI Bank
... geodesic..
ReplyDeleteAban offshore
ReplyDeleteRIL
ReplyDeleteTake Solution
ReplyDeleteFY10 REV 360 cr., Fy11E revenue 480 cr., FY12 Rev 800 cr plus
FY10 EPS 2.7, Fy11E EPS 5.1, FY12 EPS ~8
CMP 32
http://www.scribd.com/doc/46189956/Take-Solutions
Godrej Properties
ReplyDeleteyes bank
ReplyDeletesun pharma
ReplyDeletea long list of ANDA painding
The disconnect between the real estate market and the scripts is growing by the day. Real estate has more than recovered from the 2009 slump. Looking at recruitment ads, we sees that there is shortage of people from civil engineers, to karigars and bricklayers. A housing and construction boom is on. Yet the scripts are trading at 52 week lows. ( BTW, Unitech promoters have hiked their stake yesterday in their company. Insiders buying shares, and raising stakes, is one of the most bullish signs in a sector.)
ReplyDeleteValuations are astonishing. Many of these stocks are trading at 50 to 60 % discounts to their net asset values (NAV). Now the NAV calculation is simple. If I take all the land and flats under construction and sell them, then pay of all the debts on the company’s books, I get the NAV. Consequently, most company shares should sell AT OR CLOSE TO, THEIR NAVs. Instead they are trading at massive discounts. The market is behaving as though some sort of nuclear bomb has gone off on these company’s properties. ( In fact, if there was a market for corporate control in India, it makes sense acquiring these companies, breaking them up, selling their assets and paying off their debts, to realize value).
Consider the following companies stock prices and their NAVs. IB Real current price of 130 vs NAV of 280. HDIL current price of 185 vs NAV of 370. Orbit current price of 80 vs NAV of 180. To trade at their NAVs implies a 100 % upside in these stocks from here. Remember the NAV itself is subject to upside revision particularly for IB Real, HDIL and Orbit.
Real estate companies with substantial presence around Mumbai will benefit particularly from the final clearance to the Panvel airport project, - and the transharbour link - done a few weeks back by the Environment Ministry. Land prices are already rising substantially in anticipation. The price on India Bulls Green, a 20 mln sq ft project in Panvel has doubled almost from 2200 psf to 4000 psf, a gain in potential sales of 4000 cr on a mkt cap of 5000 cr. ! Imagine India Bulls current NAV upside from current levels of Rs 280 with this project. Also imagine future upside as Panvel becomes a suburb like Santa Cruz. After all, the IB Real city project is four times the size of Nariman Point. Astonishing !!
The stock according to Motilal Oswal should do 16 per share earnings, leading to a multiple of 9 vs a market trading at 21 times. This is comfortable, actually dirt cheap given the upside. In India Bulls Real Estate's case the undervaluation reaches bizaare proportions. The company has a listed power subsidiary and IB Real's stake in the subsidiary is worth 100 per share. The current price is 135. So I get the entire real estate business with all the upside outlined earlier at 35 per share !!
sun pharma
ReplyDeletea long list of ANDA painding
yes bank
ReplyDelete