Peninsula Land

Peninsula Land’s strong presence in the Mumbai realty market and increasing evidence of a revival in real-estate demand in this metro improves the earnings visibility for the company.

Its projects in centrally-located areas for which it acquired land/development rights from loss-making textile mills also provide the company with a lucrative portfolio. Timely fund-raising strategies made before the downturn, also ensured that the company manoeuvred its way through the liquidity crunch of 2008.

Investors with a two-year perspective can consider buying the stock of Peninsula Land. At the current market price of Rs 83 the stock trades at eight times its expected per share earnings for FY11. Its capital can expand after the planned qualified institutional placement. The earnings growth is however, likely to keep pace.

Peninsula Land nevertheless remains a risky bet given its regional concentration and distressed land deals with respect to mill land. For this reason, it may not be the right stock for a long-term portfolio of, say, five years or more.

Investors may, therefore, consider setting target returns and exit the stock if it meets their return expectations in the next couple of years.
Early mover into mills

Peninsula Land is a real-estate developer, part of the Ashok Piramal group, with exposure to commercial, residential and retail projects located predominantly in Mumbai.

The company, although mid-sized with revenue of about Rs 540 crore for FY-09, stands out in the realty listed space for some of its unique business strategies. Peninsula Land was among the earliest players to commercialise the textile mill lands in Mumbai.

While mill lands are often embroiled in litigation, Peninsula Land has been successful in either buying out stakes in such mills and consolidating them (Dawn Mills being a case in point), or purchasing development right of such land and entering into revenue sharing agreements (Swan Mills).

Being an early bird in the strategy to monetise mill land, Peninsula Land could procure land at low cost. It, therefore, managed to buy out land parcels through internal accruals or by raising equity and avoided excessive leveraging.

We view this as a discreet strategy as the recent downturn in real estate was a standing example of developers suffering from mounting debt as a result of borrowing for land purchase rather than for execution.

The company has also tapped effectively into its group companies’ land resources and developed them.
Strong sales

This strategy has left the company with two key residential projects in Parel, of which 95 per cent has been sold, although project completion is slotted for December 2009. Its commercial project, Techno Park, in Kurla, which has reached about 50 per cent completion, is already fully sold out.

These are indicators that the company has largely been managing its working capital through these sales; it does not appear to have faced the problem of sitting on built inventory.

However, massive space sold to a single customer is not always free of risk. In its Dawn Mills land, for instance, Peninsula would receive 50 per cent of its tower 1 (of 2 towers) revenue from a single customer, Alok Industries, over a three-year time frame ending December 2010.

While Alok Industries has made some payments, it has been trying to rope in private equity players to meet this commitment.

Such long-drawn large deals may distress Peninsula’s cash flows. Sales made on the above projects aided a 57 per cent growth in revenue in FY-09, at a time when most realty players witnessed a decline in sales.

Net profits, however, expanded by 13 per cent to Rs 163 crore, as a result of higher cost of development and higher staff expenses arising out compensation for voluntary retirement.

While the June quarter sales has remained flat compared to a year ago, operating profit margins have improved by over 2 percentage points to 32 per cent, perhaps as a result of a good part of the revenue coming from the residential space.

Going forward, 4.1 million square of projects under execution are expected to be completed over FY 10 and FY11, while 11.4 million sq ft of projects planned are expected to yield revenues over the next six years.

The projects in the pipeline are interestingly more diversified across other cities such as Nasik, Goa, Pune, Nagpur and Hyderabad.

As most of these are not too away from its primary market, Mumbai, the company may not suffer the risk of treading into unchartered territory.

via BL

Maruti Suzuki,Peninsula Land,Sona Koyo,Lupin,Voltas

Maruti Suzuki,Peninsula Land,Sona Koyo,Lupin,Voltas

Peninsula Land

Peninsula Land

Peninsula Land & Arrow Webtex enter into JV

Peninsula Land Ltd has informed that the Company and Arrow Webtex Ltd have decided to enter jointly into the Hospitality Business. A SPV will be created which will be held 50-50 by both the JV partners to build Business Hotels.

In the 1st phase, an equity infusion of about Rs 100 Cr. is envisaged by both the JV partners in equal proportion; and the JV intends to build 10 Hotels of 100 rooms each, aggregating to 1000 rooms. The Company plans to enter into the state of Maharashtra in cities such as Mumbai, Pune, Nagpur, Nashik, Kolhapur, the state of Gujarat in cities such as Ahmedabad, Surat, Jamnagar, Mundra port and the state of Goa. The Hotels in the 1st phase are expected to be operational in the next 30 months. Phase 2 will see the penetration in the Southern Markets targeting the states of Karnataka, Tamil Nadu, Andhra Pradesh and Kerala.

This is subject to necessary approvals including Board approval from both the JV partners.

UTV, Cadila, Peninsula Land, Nicholas Piramal - BUY; Bank of Maharashtra - HOLD; MindTree - SELL

UTV, Cadila, Peninsula Land, Nicholas Piramal - BUY; Bank of Maharashtra - HOLD; MindTree - SELL

IPO makes DLF's KP Singh richest realtor

DLF promoter K P Singh has emerged as the richest real estate baron after his company’s initial public offering closed on June 14.

Promoters of the dozen top listed real estate developers in the country, including DLF Ltd, which will be listed next month, are worth a massive Rs 125,845 crore (or over $30 billion).

However, the lion’s share of this net worth (derived on the basis of the latest m-cap) lies with DLF’s K P Singh and his family — Rs 77,915 crore (around $19 billion) based on the allotment price of Rs 525 per share and their shareholding of around 87.3 per cent in the company.

According to BS research, this makes K P Singh the fourth richest Indian by today’s market capitalisation, after Mukesh Ambani, Anil Ambani and Sunil Mittal. He overtakes Wipro’s Azim Premji, who ranks immediately after him. In effect, the DLF promoter family accounts for around 60 per cent of the realty wealth as denoted by market cap.

Promoter	Net worth (Rs crore)
KP Singh & Associates (DLF Ltd)	77,915
Ramesh Chandra & Associates (Unitech)	30,544
Sobha Menon & Associates (Sobha Developers)	5,277
Pradeep Jain & Associates (Parsvnath Developers)	4,768
Shah family & Associates (Akruti Nirman)	2,075
Pranav, Sushil Ansal & Associates (Ansal Properties & Infrastructure)	1,965
Piramal Family & Associates (Peninsula Land)	1,291
Mahindra Gesco Developers	1,076

Second, and by a distant margin, is the Unitech Ltd promoter family —which includes Ramesh Chandra and his sons Sanjay and Ajay. Their net worth is about half of DLF’s — at Rs 30,544 crore (around $7.4 billion).

The Unitech promoters hold a 74.33 per cent stake in the listed entity. Last August, Business Standard had valued Ramesh Chandra’s net worth at Rs 12,670 crore.

In March, Forbes ranked Chandra as the world’s 114th richest billionaire.

The substantial difference between the net worth of DLF and Unitech promoters is significant because the two companies are considered comparable in terms of their land assets, among other things.

The Bangalore-based Menon family and associates own just under 87 per cent of Sobha Developers. At Rs 5,277 crore ($1.28 billion), the Menons’ net worth is nearly a fifth of the Unitech family’s.

Parsvnath Developers’ Pradeep Jain and family are ranked fourth — with Rs 4,768 crore ($1.16 billion) of net worth on the basis of their 80.33 per cent stake in the company.

The list also includes Mumbai-based Akruti Nirman, promoted by the Shah family, whose net worth stands at Rs 2,075 crore.

Emkay - Peninsula Land

Emkay - Peninsula Land

Religare - Peninsula Land - Visit Note

Religare - Peninsula Land - Visit Note

Emkay - Morning Notes, Peninsula Land

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Emkay Morning Notes + Peninsula Land

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Ambit Capital - Peninsula Land

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Thanks Bharat