Indian Stock Market

Thanks Danny, this is helpful
On Sep 13, 6:40 pm, Danny wrote: > I dont track Unitech. I have DLF in my portfolio from 600 levels. > Citigroup has set a PT of 725 and Merryl Lynch also has strongly > recommended it. Excerpts from Citigroup report dated 10 September 2007 > below > > — Danny > > — Quote > > Buy/Medium Risk 1M > Price (10 Sep 07) Rs626.45 > Target price Rs725.00 > Expected share price return 15.7% > > 1 Aggressive build-out schedule; with a commercial asset bias DLF > remains committed to an aggressive execution schedule seeks to > deliver 16m and 23m sq ft of completed assets over the current and > next year, with ~50m sq ft underconstruction. Suggests it is on > schedule, well ahead of peers, even as executionremains the > challenging, and differentiating, feature of real estate in India.? > 2 Is not a low-cost land bank story. Management suggests market > perceptionthat DLF’s value lies in old low-cost land bank is > incorrect. Only about 40m sq ft(7% of land bank) is historic with an > average cost of Rs275psf the rest, about575m, has been acquired in > the last 3-4 years; effective cost slightly higher atRs350psf. > Suggests its high margins largely viewed as a 2-3 yearphenomenon, > will sustain and not diminish once its older land is exhausted. > 3 Commercial asset bias, with significant market demand and price > momentum DLF sees itself well leveraged to the strong commercial/ > retail assetenvironment; 50-55% of its assets are in this space, it > has over 12m sq ft in preleasedcommitments on its books, with 42m sq > ft of space under execution. Theprice environment remains robust an > over 100% increase in such rentals(substantially more for short-term > and small leases), should support revenuemomentum, and also provide > earnings cushion. > 4 Mid-income housing rollout over the rest of the year DLF has an > aggressivelaunch schedule in the mid-income housing space, spread > across various citiesin the country. Suggests reasonable price points > reflect specific productpositioning, rather than under-cutting. > > Investment thesis > We rate DLF Buy/Medium Risk (1M), with a target price of Rs725. DLF’s > focuson scale, integrated development with execution record, and a > large landholding spread across top-tier growth cities differentiates > it from its peers. Itsdiversified portfolio of ~615m sq.ft is > relatively leveraged toward commercial/ITParks/Retail mall (35% of > total development) assets, which should provide agood hedge > particularly in the near-term, when the residential segment is > seeingsome slowdown. Strong cash flows (Rs94.7bn) and a de-leveraged > balancesheet give it a competitive advantage in this liquidity > strained environment. Weexpect its new joint ventures in construction > and hotels to complement the corebusiness, aid growth and offer > valuation upside. > > Valuation > Our target price of Rs.725 is based on a 25% premium to an estimated > coreNAV of Rs530, and Rs62 for other asset holdings and new JV > businesses(Rs45/share for the existing 4.6m sq.ft leased assets and > 7.2m sq.ft plot, andRs17/share for DLF’s share in construction and > hotel JVs). We believe an NAVbasedvaluation methodology is most > appropriate for developers, as it factors thevaried development > projects and spread out time frame. Our NAV estimate ofRs530 is based > on the following assumptions: 1) current market prices willpersist, > without any price inflation; 2) development volume will be 606m > sq.ft(as ~9m is already recognized as revenue in FY07); 3) a cap rate > of 9% forcommercial/IT Park, IT SEZs in Super Metros and Metros, and > 10% for otherlocations; 4) all projects undertaken by DLF will be > completed largely onschedule; though given the scale of the roll-out, > we expect risk of delays; 5) anaverage cost of capital of 14%; and 6) > a tax rate of 25%. > — Unquote > > On Sep 13, 7:26 am, StockMan wrote: > > > > > Hi All, > > > How would you rate Unitech and DLF as compared to other construction > > stocks. Is worth holding these stocks > > > Regards, > > SM- Hide quoted text - > > - Show quoted text -