Anjuman-i-Islams

Allana Institute of Management Studies

Group-3
Realty Sector Analysis and Portfolio Management
Submitted to
Prof. Chinmay Chopade
Subject: SAPM
MMS-III Sem-Finance
Sr. No.

Name

Roll No.

Humaira Ahmedji

01

Hitesh Gurav

02

Rameez Ikkera

03

Muhibuddin Shaikh

37

Date: 16th Oct 2014

1)
2)
3)
4)

Table of Content
Executive Summary
Company overview
Company Analysis
Conclusion and Recommendation

Page 1

 ECONOMIC OVERVIEW
In the last couple of years, the Indian economy witnessed a slowdown across various
sectors, resulting in the GDP growth slipping to 4.7% in 2013 from 9.7% in 2010.
Such economic downdraft was largely attributed to slowdown in policy initiatives
especially during the run up to the parliamentary elections of 2014. Besides that, high
interest regime, enforced to rein in inflation had an impact on slowing down of
investments. Last Financial year was also marked by a tough period of economic
uncertainty, owing to tapering of quantitative easing of liquidity in United States and
resultant volatile movements in INR-USD exchange rate.
Reserve Bank of Indias (RBI) policy stance has been to stay firrmly focused on
keeping Indian economy on a disinflationary glide path that is intended to hit 8 per
cent Consumer Price Inflation (CPI) by January, 2015 and 6 per cent by January,
2016. According to RBI and contingent upon the desired inflation outcome, real GDP
growth is projected to pick up from a little below 5 per cent in 2013-14 to more
sustained levels which will help in bringing more growth to the overall economy.
There has been a regime change in Indias federal government with a firm and
decisive mandate in favour of an alliance, which is seen as progressive and
development friendly. The new government has provided signals of moving along
development agenda that will push for reforms that were so far left on the back burner
and are much needed to revitalize the economy. With the legislature and the executive
getting back to the business of good governance, investments in various businesses
and sectors of the economy are expected to pick up pace, all of which will bode well
for the real estate sector. The Company visualizes a pickup in real estate demand
beginning from the second half of FY15.
THE INDIAN REAL ESTATE SECTOR
The year 2013-14 proved to be a challenge for the real estate sector mainly due to
poor macro-economic conditions, slowing income growth, and the consumer and the
sky-rocketing inflation. RBI continued to focus on keeping the inflation level under
Page 2

check due to which the borrowing costs continued to remain at high levels, thus
limiting growth for both, consumers as well as businesses. Going forward, we believe
that the Indian real estate sector would benefit from the formation of a stable
government, positive market sentiment and growth prospects for all businesses.
According to the Economic Survey of India, 2012-13, the real estate sector
contributed 5.9% of the Indias total GDP in 2011-12, registering a growth of 7.2%
from the previous year, which clearly signifies the important contribution of the sector
towards the economy.

Residential Segment
Absorption in major metro cities remained at subdued levels; however certain
affordable markets such as Kolkata, Bengaluru and certain emerging locations near
urban cities witnessed better absorption rates. According to the Cushman & Wakefield
research, demand for urban housing will scale up by nearly 12 million units by 2017
and around 23% of this total demand would be generated from the top 8 cities. The
increase in demand will certainly prove to be a boost to the residential segment.
Absorption across markets with the exception of Bengaluru witnessed a decline versus
last year. Overall sales volumes (units) came down by 15% y-o-y in FY 2013-14, after
an 8% decline seen in FY 2012-13. This can be attributed to lower launch activity and
overall weak macro environment. Launch activity (down 27% y-o-y) has been muted
across most markets except Bengaluru.

Commercial Segment
Vacancy rate for 2013 signs off at around 18.2%, rising from 17.4% as of end 2012.
Hyderabad and Delhi-NCR were the biggest contributors in terms of vacancy levels.
This was largely due to increased new supply as against a fall in absorption. On the
other hand, the heavyweight cities of Mumbai and Bengaluru witnessed marginal fall
in vacancy. Both these cities saw reduction in the growth of new stock supply, while
absorption of office space recovered. Overall, pan-India supply rose by 10.4% y-o-y
Page 3

in 2013, whereas the fall in absorption was less severe (-1.1% y-o-y) as against the fall
of over 26% seen last year. (Source: Indian Real Estate: A Review of 2013 and
Outlook for 2014, JLL).

Real Estate Investment Trust (REIT) Code

Securities and Exchange Board of India (SEBI) has notified guidelines for
introduction of Real Estate Investment Trust. This has laid the foundation for
introduction of these instruments in the country, which shall help real estate
developers and large real estate owners raise long term capital from investors both in
India and abroad. However, the code still needs consideration of Ministry of Finance,
Government of India in terms of resolving various tax issues/FDI related issues before
it can be implemented.

Page 4

Building India
DLF Ltd Overview
In FY14, DLF reported consolidated revenues of ` 9,790 crore, an increase of 8%
over
9,096 crore in FY13. EBIDTA stood at 3,977 crore, an increase of 1% from 3,949
crore in the previous year. Net profit after tax, minority interest and prior period items
was at 646 crore, a decline of 9% from 712 crore. The EPS for FY14 stood at 3.65 as
compared to 4.19 for FY13.
The cost of revenues including cost of land, plots, development rights, constructed
properties and others increased to 3,880 crore as against 3,356 crore in FY13. Staff
costs decreased marginally to 576 crore versus 596 crore. Depreciation, amortization
and impairment charges were at
663 crore versus 796 crore in FY13. Finance costs increased to 2,463 crore from
2,314 crore in FY13. The overall debt witnessed a significant decrease; however the
increase in cost of borrowing impacted the finance costs.

Review of Operations
DLFs Balance Sheet as at 31st March, 2014 reflected a healthy position with a net
worth of 29,194 crore. The net worth of DLF witnessed an increase of 1,666 crore
from FY13. Net debt was 18,526 crore as compared to 21,731 crore as of 31st March,
2013. The net debt to equity ratio was at 0.64. During the year, the credit rating of
DLF improved, with outlook changing from negative to stable. The year 2013-14
proved to be difficult for the real estate sector mainly due to poor macro-economic
conditions, slowing income growth, continuing high borrowing costs both for industry
and the consumer and the rising inflation.
DLF completed approximately 4.26 msf of commercial and residential projects in
FY14 while adding approximately 9.76 msf to new construction. As a result, the total
Page 5

area under construction was 59 msf as on 31st March, 2014.This includes

approximately 10.06 msf of saleable area pursuant to certain joint venture
arrangements. Handover of 4.26 msf were commenced across the cities comprising
plots, commercial complexes and commercial offences.
The development business comprising primarily the residential segment, followed by
commercial complexes has a combined area of 55.51 msf under construction as of
31st March, 2014. The rental business has approximately 2.81 msf of area under
construction as of 31st March, 2014. DLFs aggregate net debt amounted to ` 18,526
crore as of 31st March 2014. On account of lack of any significant reductions in bank
rates by RBI, DLFs average cost of debt has continued to range between 12.5% and
13% in FY14. DLF believes that its present level of debt is comfortable even as it
will strive to reduce them further over the medium term. DLF realized proceeds of
approximately 4,067 crore during FY14 from the divestment of non-core assets and
businesses.
DLF intends that any capital expenditure to be incurred in the financial year 2014-15
shall be met through selective divestitures and target to maintain the net debt at the
similar levels, even though there may be some intra year variations. DLF met all
stakeholder commitments in time during the year, including those to the lending
institutions despite tight liquidity conditions.

Issue of Shares under IPP & ESOP

During the year under review, the Company has issued and allotted 8,1018,417 equity
shares of face value of 2 each at an issue price of ` 230 per share, aggregating to
1,863.42 crore through Institutional Placement Programme (IPP) and also allotted
17,13,813 equity shares of 2 each fully paid upon exercise of stock options by the
eligible employees under the Employee Stock Option Scheme, 2006 thereby
increasing the paid-up share capital by 16.55 crore.

Page 6

 Future Outlook
DLF plans to primarily focus on the development of luxury and premium residential
projects in certain key locations in India such as the cities of Delhi, Gurgaon, Mumbai,
the Chandigarh Tri-City and certain areas in and around Chennai and Bengaluru. In
addition, DLF also intends to continue with the development and sale of its existing
projects at several locations in India including Lucknow, Indore, Kochi, Kolkata and
other cities.

Credit Rating
ICRA has reaffirmed rating of [ICRA] A for ` 4,000 crore - NCD programme. It has
also reaffirmed rating at [ICRA] A for ` 11,329 crore line of Credit (Term Loan 7,589
crore, Fund Based Limits 2,580 crore and Non-fund Based Limits 1,160 crore).
CRISIL has reaffirmed rating of CRISIL A for 5,000 crore NCD Programme.
Further, for total bank loan facilities of 15,730 crore, it has assigned CRISIL
A/Stable for Long Term facilities and CRISIL A2+ for Short Term facilities.

Page 7

FINANCIAL REVIEW

Revenue & Profitability

Page 8

In FY14, DLF reported consolidated revenues of 9,790 crore, an increase of 8% over

9,096 crore in FY13. EBIDTA stood at 3,977 crore, an increase of 1% from 3,948
crore in the previous year. Net profit after tax, minority interest and prior period items
was at 646 crore, a decline of 9% from 712 crore. The EPS for FY14 stood at 3.65 as
compared to 4.19 for FY13.
The cost of revenues including cost of land, plots, development rights, constructed
properties and others increased to 3,880 crore as against 3,355 crore in FY13. Staff
costs decreased marginally to 575 crore versus 595 crore. Depreciation, amortization
and impairment charges were at 663 crore versus 796 crore in FY13. Finance costs
increased to 2,463 crore from 2,314 crore in FY13. The overall debt witnessed a
significant decrease; however the cost of borrowing impacted the finance costs.

Balance Sheet
Page 9

DLFs Balance Sheet as on 31st March, 2014 reflected a healthy position with a net
worth of 29,194 crore. The net worth of DLF witnessed an increase of 1,666 crore
from FY13. Net debt was 18,526 crore as compared to 21,731 crore as of 31st
March, 2013. The net debt to equity ratio was at 0.64. During the year, the credit
rating of DLF improved, with outlook changing from negative to stable.

Page 10

Narration

Mar-10

Mar-11

Sales

7,459.08

9,560.57

Expenses
Operating

3,847.26

Profit

3,611.82

Other Income

255.65

EBIDT

3,867.47

Depreciation

324.93

EBIT

3,542.54

Interest
Profit before

Mar-12

Mar-13

Mar-14

9,629.38

7,772.84

8,298.04

5,725.07

5,146.63

5,812.80

3,752.66

3,904.31

2,626.21

2,485.24

583.88

594.48

1,322.90

1,491.55

4,498.79

3,949.11

3,976.79

688.83

796.24

662.93

3,705.82

3,809.96

3,152.87

3,313.86

1,110.04

1,705.62

2,246.48

2,314.04

2,463.25

tax

2,389.56

2,000.20

1,563.48

838.83

850.61

Tax

702.25

459.41

369.35

125.11

-83.63

Net profit
Price to

1,719.83

1,639.61

1,200.82

711.92

646.21

earning

33.34

30.40

30.56

51.71

45.79

5,807.91

4,336.54
630.72

RATIOS:
Dividend
Payout
OPM

21.03%
48.42%
TRENDS:
Sales
Growth
OPM
Price to
Earning

43.00%
39.25%

41.78%
40.55%

72.76%
33.79%

80.35%
29.95%

10Years

7Years

5Years

3Years

47.56%

17.94%
47.41%

-3.75%
38.34%

-4.61%
35.08%

33.59

Page 11

33.59

39.50

43.32

DLF Ltd. Profit and Loss Account

DLF LTD. Standalone Balance Sheet
Narration
Equity Share

Mar-10

Mar-11

Mar-12

Mar-13

Mar-14

Capital

339.48

339.51

339.68

339.74

356.29

25,388.

27,038.5

75

17,836.

15,639.4

29

24,
Reserves

154.39

24
,182.32

19,
Secured Loans

301.59

Loans

19

375.06

1,714.08

,718.16

,256.15

128.82

47

20,

10
,234.44

505.20

8,

Working Capital

995.77

277.14

Total

,073.11

,718.16

45,979.7

.97

19,848.

18,834.6

59

7,834.3
2

17,

891.23

17,990.

20,275.1

36

47,006

45,979.7

.97

421.07
4

8,559.46

47

5,978.69

1,333.7

126.76

18

52

47,006

992.81
1,

18,

943.85

338.83

5,
Investments

,879.48

19

11,

1,240.9

186.49

8,559.46

806.99

Capital Work in
Progress

036.42
1,

17,
Net Block

19,

2,

52
Total

097.04

,938.08

Unsecured

25,

,879.48

1,653.2
Debtors
Inventory

1,618.96

1,725.73

Page 12

1,765.91

1,561.23

17,645.

18,511.2

12,480.59

15,038.76

16,175.57

53

Debtor Days
Inventory

79.22

65.88

66.94

77.63

68.67

Turnover

0.60

0.64

0.60

0.44

0.45

Equity
Return on

7%

7%

5%

3%

2%

Capital Emp

8%

9%

9%

8%

9%

Return on

Page 13

 Company Overview
HDIL known as one of Indias largest real estate companies.
They believe however, that they are really in the business of development. Seeking to
meet the needs of the present generation, without compromising the future of the
generations to come.
Housing Development & Infrastructure Limited (HDIL) has established itself as one
of Indias premier real estate development companies, with significant operations in
the Mumbai Metropolitan Region. HDIL is a public listed real estate company in India
with shares traded on the BSE & NSE Stock Exchanges. HDIL group has completed
more than 100 million sq.ft of construction in all verticals of real estate and has
rehabilitated around 30,000 families in last one decade.
With operations spanning every aspect of the real estate business, from residential,
commercial and retail projects, to slum rehabilitation to land development, HDIL was
ranked as Indias fastest growing real estate company by Construction WorldNICMAR in October 2007. Our residential projects range from apartment complexes
to towers to townships. Our commercial projects comprise premium office spaces as
well as multiplex cinemas. In retail, we focus on building world-class shopping malls.
We also handle slum rehabilitation projects under a Government scheme administered
by the Slum Rehabilitation Authority (SRA), offering development rights in exchange
for clearing and redeveloping slum lands, while providing replacement housing for the
displaced slum dwellers.
As Indias largest slum rehabilitation company, HDIL has been awarded the Mumbai
International Airport Slum Rehabilitation project in October 2007, a critical
Page 14

component of the modernization and expansion plan for Mumbai airport and one of
the largest urban rehabilitation projects in India. HDIL has also diversified into
energy, hospitality and the development of SEZs.

HDIL Ethos
To be an icon in infrastructure and real estate development, by defining quality,
marksmanship and customer satisfaction.
The honeycomb and cube symbol captures the macro and micro aspects of HDILs
business. It conveys that while there are multiple facets to our business, each aspect
gets the focus it deserves. It conveys that we create living spaces, working spaces and
infrastructure for mass and premium customers and institutions but each customer gets
individual attention.

Leaders of HDIL

A highly effective management. A vision for consistent growth. Moving purposefully

towards our goal of building HDIL into a professionally managed corporate, we have
re-structured our board of directors, to include luminaries from diverse fields and
areas of expertise. With people from the banking, legal and finance fields as
independent directors, HDIL now has an ideal mix of executive and independent
directors.
The current board members are:

Mr. Rakesh kumar Wadhawan

Executive Chairman

Mr. Sarang Wadhawan

Vice Chairman & Managing Director

Page 15

Mr. Waryam Singh

Director

Mr. Ashok Kumar Gupta

Director

Mr. Shyam Sunder Dawra

Independent Director

Mr. Lalit Mohan Mehta

Independent Director

Mr. raj Kumar Aggarwal

Independent Director

HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. Profit and Loss Account

Narration

Mar-10

Mar-11

Mar-12

Mar-13

Sales

1,502.12

1,849.99

2,006.41

1,025.24

872.27

Expenses
Operating
Profit
Other
Income

234.41

204.69

500.53

-247.68

-21.28

1,267.71

1,645.30

1,505.88

1,272.92

893.55

33.23

49.89

51.25

39.99

81.38

EBIDT
Depreciati
on

1,300.94

1,695.19

1,557.13

1,312.91

974.93

72.31

83.76

85.83

84.54

78.57

EBIT

1,228.63

1,611.43

1,471.30

1,228.37

896.36

Interest
Profit
before tax

523.39

625.36

624.94

692.30

707.29

705.15

985.99

846.37

536.07

189.06

Tax

132.97

159.12

29.04

20.52

11.37

Net profit
EPS
Price to
earning
Price

548.80

821.76

809.81

73.32

177.57

16.63

10.51

5.68

51.85

RATIOS:
Dividend
Payout
OPM

0.00%
84.39%
TRENDS:
Sales
Growth

0.00%
88.94%
10Years

0.00%
75.05%

Mar-14

0.00%
124.16%

0.00%
102.44%

7Years

5Years

3Years

-4.50%

-12.78%

-22.17%

Page 16

OPM
Price to
Earning

81.60%
17.45

84.42%
17.45

Page 17

90.76%
20.05

94.07%
24.38

Standalone Balance Sheet of HDIL

Narration
Equity Share
Capital

Mar-10

Mar-11

Mar-12

Mar-13

Mar-14

358.84

415.00

419.00

419.00

419.00
9,

10,140.
05

3,

Reserves

6,606.03

8,812.83

9,890.67

963.71

Secured Loans

4,101.72

4,319.80

2,728.90

124.40

2,767.3
8

14.03

14.43

3.04

Unsecured Loans
Total
Net Block
Capital Work in
Progress
Investments

1
1,144.59

1
3,811.46

13,059.7
0

442.06

447.77

1,466.32
242.91

Working Capital

8,993.30

Total

1
1,144.59

13,
528.80

13,336
.85

375.23

291.33

228.88

3,205.83

6.86

8.48

6.91

52.01

58.05

77.44

64.79

10
,105.86

1
2,619.56

13,1
51.55

13,036.
26

1
3,811.46

13,059.7
0

13,
528.80

13,336
.85

Debtors

202.99

361.10

868.58

806.12

381.40

Inventory

8,756.65

11,415.24

11,671.71

12,042.98

12,467.
85

Debtor Days
Inventory
Turnover

49.32

71.24

158.01

286.99

159.60

0.17

0.16

0.17

0.09

0.07

Return on
Equity
Return on
Capital Emp

8%

9%

8%

1%

2%

12%

14%

11%

9%

7%

Page 18

 Past Performance
The stock price of Mumbai-based real estate developer HDIL has been on an uptrend
in the last few months. Price has more than doubled from 45 in early March to 75
currently. There are two factors driving this rally, reduction in the companys debt and
improving prospects of the Mumbai real estate market. But has HDIL the company
really turned the corner? Here is a reality check on the company.
HDILs stock price zoomed by 50 per cent on the back of a series of block deals in
March and April this year. Kotak Securities bought 0.5 per cent stake, Nomura
Singapore 1 per cent and Credit Suisse 0.5 per cent stake in the company in this
period. Shareholding by foreign institutional investors has also increased from around
28 per cent in June 2013 to an estimated 38 per cent currently, with promoter holdings
steady at 36 per cent.

Debt Reduction
So, what is driving buyer interest? According to Hariprakash Pandey, Vice-President Finance and Investor Relations, HDIL, reduction in debt has played a major part in
making the sentiment positive. We generated enough cash flow in a difficult macro
environment and repaid around 600 crore of debt last year. This is a 15 per cent
reduction," he says. The overall revival in sentiment is also helping.
HDIL plans to repay 600-800 crore, or nearly 20 per cent of its debt this year. The
companys cash receipts, that is aiding debt repayment, is also improving. In the
March 2014 quarter, net cash flow from operations was nearly 490 crore, which
enabled paying off 408 crore of debt during the quarter. The companys net debt as of
March 2014 was 3,511 crore, against 4,004 crore in March 2013.

Mumbai Market Revival

Hariprakash Pandey notes that there are signs of revival in the Mumbai property
market. One, there are more enquiries and interest in the commercial segment, after a
Page 19

three year lull. Next, land transactions are happening, which indicates developer
optimism. Last, better macro-economics and stock market performance will aid
consumption in the Mumbai market, he notes.
He says this is a positive for the company as its TDR (related to the land gained
through slum rehabilitation) sales, which commands margins of over 60 per cent, will
likely increase. Pandey expects operating margins to improve by 5-10 percentage
points, as the revenue mix tilts to 60 per cent property sales and 40 per cent TDR.
The company handed over possession of around 1,000 apartments, covering 1.5
million sq ft in 2013-14. The same is expected this year along with 2,000 flats
covering over 2.5 million sq ft in its township development in Virar East near
Mumbai. As the company recognises revenue only on project completion, as opposed
to the normal practise of percentage of completion, hand-over is positive for revenue
numbers.

Issues Remain
They continue to be cautious about the stock for three reasons. First, the companys
debt is still high and around 96 per cent of the promoter holdings (or around 35 per
cent of outstanding shares), are still pledged.
Second, while there may be signs of revival in the Mumbai market, how well the TDR
sale will increase for the company is yet to be seen.
Last, the companys share price has already zoomed, in anticipation of growth. The
stock trades at a price to FY14 earnings multiple of 25 times. This is higher than other
Mumbai-based realtors, but HDIL has always commanded a premium due to its high
margins from TDR sales in the past. While margins have improved in FY14,
compared to FY13, it is still at around 20 per cent levels and not yet at the 40 per cent
levels seen in the past.

Page 20

Future Plans of HDIL

Housing Development and Infrastructure (HDIL) is a Mumbai-based company

primarily engaged in the development of residential, commercial, retail properties and
is also involved in the slum rehabilitation scheme. Incorporated as a private limited
company on July 25, 1996 and converted into a public limited company with the
present name on Aug. 29, 2006, it is part of the Wadhawan Group (formerly known as
the Dheeraj Group), which has been involved in real estate development in the
Mumbai metropolitan region for almost three decades.
HDIL has completed a total of 24 projects aggregating approximately 11.3 million sq.
ft. of saleable area and has sold 5.7 million sq. ft. of land development in Virar and
Agashi to other real estate developers. It has constructed approximately 2.28 million
sq. ft. under the slum rehabilitation scheme. About 45.52 million sq. ft. of work is
under construction; residential includes Sasunavghar property in Vasai measuring
16.66 million sq. ft. and Kukatpally -I & II projects in Hyderabad admeasuring 7.32
million sq. ft. spread across 52.77 acres to be completed around 2011-2012;
commercial properties are at Kandivali and Worli comprising of 0.13 million sq. ft. of
lettable commercial real estate.

Recent Development
29-SEP-14
Promoters of Housing Development and Infrastructure (HDIL) have revoked all
shares earlier pledged with IL&FS Trust Company and now the entire 100 per cent
shares in the promoters category is non-pledged. IL&FS Trust Company has released
7, 54, 91,660 shares of promoters, including Rakesh Kumar Wadhawan, today.
03-JUL-14
Housing Development and Infrastructure announced that the company has entered into

Page 21

definitive agreements with respect to transfer of its 100% shareholding of its wholly
owned subsidiary company, viz HDIL Entertainment to Carnival Films.
14-AUG-13
Housing Development and Infrastructure (HDIL) said a substantial drop in
consolidated net profit for the quarter ended June 2013. During the quarter, the profit
of the company declined 84.58% to Rs 162.50 million from Rs 1,053.80 million in the
same quarter previous year.

Comparison Between BSE /NSE

As on 16/10/2014

BSE

NSE

2056.26

2010.17

Current Price

75.80

75.60

Face Value

10.00

10.00

113.85/38.70

113.80/38.70

Mrkt Capitalization in Cr.

52 weeks high/ low

Page 22

 Oberoi Realty Overview

Oberoi

Realty (Oberoi

Constructions)

is

a real

estate

developer based

in Mumbai, Maharashtra. It is led by billionaire Vikas Oberoi. It has completed 32

projects covering approximately 4.979 million square feet of saleable area spread
across the city of Mumbai. Its main interest is in Residential, Office Space, Retail,
Hospitality and Social Infrastructure properties in Mumbai, the commercial capital
of India.
Oasis Tower, The second tallest tower in India is developed by Oberoi Realty.

Over the past three decades they have built growth and high-stature through consistent
high-design and quality parameters that have truly made a significant difference to
ease, comfort and efficiency to lives that interact with or inhabit these spaces. They
have developed over 36 projects at strategic locations across the Mumbai skyline
aggregating about 6.5 million sq. ft. of spaces. With another 24 million sq. ft in the
making, they have aggressive plans for upcoming projects in various parts of Mumbai
and other regions.
Oberoi Realty is a real estate developer based in Mumbai, Maharashtra. It is led by
billionaire Vikas Oberoi. It has completed 32 projects covering approximately 4.979
million square feet of saleable area spread across the city of Mumbai.

Page 23

Stock price: OBEROIRLTY (NSE) Rs. 212.00 +5.10 (+2.46%)

Headquarters: Mumbai, India
Historic Prices & Simple Moving Averages
BSE

1 YEAR

CURRENT

%GAIN / LOSS

Open Price

173.10

209.75

High Price

176.00

213.30

Low Price

168.55

208.15

Last Price

169.45

213.00

25.70

Volume

9,742

5,837

-40.08

Simple Moving Averages

DAYS

BSE

NSE

30

234.87

234.93

50

238.78

238.97

150

234.52

234.70

200
226.95
Pre-Opening Session Prices 9:00 - 9:15

227.16

Game-changers of 2013-14
Entered into an agreement with The Ritz-Carlton to establish an iconic hotel, the first
for the global brand in Mumbai (Worli); The Ritz-Carlton to manage the residences
(residential tower adjacent to the hotel), providing occupants with a variety of bespoke
services. Successful bidder of ~25-acre property in Borivali (Mumbai) for H 1,155
crores Resolution of the private forest issue relating to the Mulund Property in favor
of the company by the order dated January 30, 2014 of the Honble Supreme Court of
India.

Page 24

Our proposed hotel and residential property in Worli is not just an attempt to launch
yet another project; it represents a showcase of our inspirational and iconic
philosophy. A philosophy that extends imagination, challenges the common place and
defines the future. With the objective to create something today that will be
remembered for generations to come. We brought to this hospitality and residential
project the aura of one of the most respected luxury hospitality brands in the world
The Ritz-Carlton. As a result, The Ritz-Carlton and luxury residences managed by The
Ritz-Carlton in Worli (Mumbai) will help create a new Indian benchmark in the niche
bespoke end of lifestyle exclusiveness, making it truly iconic. Oberoi Realty
announces The Ritz-Carlton as its hospitality partner for the iconic Worli
development. The Ritz-Carlton operates 85 hotels in the US, Europe, Asia, the Middle
East, Africa and the Caribbean. The Ritz-Carlton is the only service company to have
twice earned the prestigious Malcolm Baldridge National Quality Award. More than
30 The Ritz-Carlton hotels and residential projects are presently under development
across the world.

Page 25

11.55%

Net Worth Growth

During the year under review, your Companys consolidated total revenue stood at H
85,551.48 Lakh as compared to H 1, 14,752.00 Lakh for the previous year,
representing a decrease of 25.45%; profit before tax stood at H 46,437.71 Lakh for the
year under review as compared to H 68,306.18 Lakh for the previous year,
representing a decrease of 32.02%; profit after tax stood at H 31,106.23 Lakh as
compared to H 50,478.60 Lakh for the previous year, representing a decrease of
38.38%.

Page 26

 Standalone financials
During the year under review, the Total Revenue stood at H 70,585.58 Lakh as
compared to H 74,249.50 Lakh for the previous year, representing a decrease of
4.93%; profit before tax stood at H 41,074.95 Lakh for the year under review as
compared to H 44,362.20 Lakh for the previous year, representing a decrease of
7.41%; profit after tax stood at H 29,512.41 Lakh as compared to H 32,747.23 Lakh
for the previous year, representing a decline of 9.88%.
Transfer to reserves
It is proposed to transfer an amount of H 2,214.00 Lakh to the general reserves out of
the profits earned during FY2013-14.

Dividend
Despite challenging business environment, sluggish industry volume numbers and
increased costs, taking into consideration the stable performance of your Company
and in recognition of the trust in the management by the members of the Company,
your Directors are pleased to recommend a dividend at the rate of H 2 per Equity
Share, i.e. 20% of the paid up Equity Share value for the year ended March 31, 2014
(previous year: H 2 per Equity Share, i.e. 20% of the paid up Equity Share value). The
proposed dividend (excluding the dividend distribution tax) will absorb an amount of
H 6,564.67 Lakh.

Page 27

Page 28

 Oberoi Realty Profit and Loss Account

Narration
Sales
Expenses
Operating Profit
Other Income
EBIDT
Depreciation
EBIT
Interest
Profit before tax
Tax
Net profit
EPS
Price to earning
Price
RATIOS:
Dividend Payout
OPM

Mar-10
789.88
316.21
473.67
15.62
489.29
9.06
480.23
0.21
480.02
22.62
458.18

Mar-11
996.04
418.71
577.33
62.73
640.06
23.69
616.37
0.26
616.12
98.28
517.18

Mar-12
824.69
341.20
483.49
150.10
633.59
26.94
606.65
0.31
606.34
142.18
462.87

Mar-13
1,047.58
435.52
612.06
99.94
712.00
28.51
683.49
0.37
683.13
178.28
504.79

16.06

16.98

17.27

Mar-14
798.45
363.67
434.78
57.06
491.84
27.15
464.69
0.31
464.38
153.31
311.06
21.87

1.26%
59.97%

6.35%
57.96%

14.18%
58.63%

13.01%
58.43%

21.11%
54.45%

TRENDS:
Sales Growth
OPM
Price to Earning

10Years

7Years

5Years

57.92%
19.68

57.92%
19.68

57.92%
19.68

3Years
-7.11%
57.30%
20.59

Future prospects of Oberoi Realty

Focused approach
The cornerstone of Oberois strategy has been its riveted focus on the premium end of
the housing and commercial real estate market, from day one. The Kandivili project,
Oberoi Gardens, for instance, had three towers of 27 floors each and all 324
apartments were 3-bedroom ones. We wanted to tell people they can get luxury even
in the suburbs, says Oberoi. It isnt just add-ons like tennis courts and air-conditioned
lobbies that made the difference, though in Mumbais tough real estate market,
Oberoi Realty has managed to build a reputation of delivering apartments on time.
Except for a six month delay here and there, all our projects have been delivered on
time, claims Oberoi, pointing that outsourcing construction to firms like L&T and
Samsung C&T has helped ensure quality and timely delivery in its high-profile
projects. Oberois quality has met the expectation of buyers, because of which they
Page 29

make slightly higher realization than their peers, avers Arun Agarwal, an analyst with
Religare Securities. Moreover, the company commands a premium of 20-25% in
every project it builds. An Oberoi property is the costliest in the area it is in, says
Oberoi.
Analysts agree that Oberoi is way ahead of builders such as
While other

Sunteck Realty, which sells a third of what Oberoi does,

developers

despite offering lower rates. While others developers spread

spread their

their projects across segments, Oberoi Realty has been

projects across

strictly focused on high-income housing. Its ticket size is

segments,

also much higher, since it doesnt sell anything less that a 3-

oberoi realty

BHK, with prices starting at Rs 2.5 crore. While residential

has been strictly

projects have been its mainstay, bringing in about 80% of

focused on high-

revenues, so far, the company has executed 35 projects

income housing

apartments, malls, hotels and commercial properties

totaling 6 million sq ft of developed space. It has sold about

7.12 million sq ft (this includes part of its under-construction properties already sold)
and leased an area of 1.14 million sq ft. It currently has five projects totaling around
8.5 million sq ft, under construction, with an order book of Rs 1,600 crore. Granted,
this is a small fraction of market leader DLFs 62 million sq ft under construction, but
its not bad, considering that Oberoi Realty is a Mumbai-centric player unlike DLF,
which has been a pan-India developer.

Page 30

 Prestige company overview

The Prestige Group owes its origin to Mr. Razack Sattar, who envisioned a success
story

waiting

to

take

shape

in

the Retail

Business in 1956 itself.

Since

its formation in 1986, Prestige Estates Projects has grown swiftly to become one
of South India's leading Property Developers, helping shape the skyline across
the Residential, Commercial, Retail, Leisure & Hospitality sectors.
Prestige Court on K.H. Road in Bangalore set the pace for the Group's rapid growth
which now stands at over 169 Completed Projects spanning a total developed area of
over 51.37 million sq ft. It also has another 65 ongoing projects comprising around
56.94 million sq ft & 28 upcoming projects totaling 31.15 million sq ft., which include
Apartment Enclaves, Shopping Malls and Corporate Structures, spread across all asset
classes.
Prestige Constructions, an ISO 9001:2000 certified company is the only Real Estate
Developer in Bangalore to have won the reputed FIABCI Award for its software and
residential facilities. Prestige was also recently awarded the Crisil DA1 Developer
Rating in recognition of the quality of their projects and the ability to deliver
completed projects in a timely manner, making them the ONLY Property Developer
across India to have received this distinction.
Today, Prestige stands as a giant and with aggressive growth plans across
the Residential,

Commercial,

Retail and Hospitality

Sectors in Bangalore,

Hyderabad, Mangalore, Cochin and Chennai, lies a bright future ahead

Financial highlights
Brisk new sales

Page 31

Goa,

4486 residential units and 0.22 Mn sft of commercial space were sold during the year,
which totals to 7.5 Mn sft and corresponds to a potential revenue of Rs.44,348
million. This represents an increase of 19% in sales over the previous financial year
and an increase of 26% in terms of number of units sold.
The Companys share of sales is 3699 residential units and 0.22 Mnsft of commercial
space totalling to 6.14 Mnsft This corresponds to a potential revenue of Rs.36,323
million and an increase of 16% over the previous year.
Burgeoning collections
The Company collected a total of Rs.29,408 million during the year. Of this the
Companys share is Rs.24,753 million, which is an increase of 26% over the previous
financial year.
Booming launches
The Company has launched a total of 15.67 Mnsft of developable area during the
year, an increase of 51%

over the previous year. Of this, 0.70 Mnsft is being

developed in Chennai while the remaining is in Bangalore. This corresponds to a total

of 7527 residential units, of which the Companys share is 5644 units. completed
Projects. The Company completed a total of 3.18 Mnsft of space during the year
including 1.16 Mnsft of retail space, 1.36 Mnsft of office space and 0.66 sft of
hospitality space. The Companys share of this is 1.92 Mnsft. leased areaThe
Company leased a total of 2.66 Mnsft of space during the year, of which 1.11 Mnsft its
share is. The cumulative leased area as on 31st March 2014 is 12.72 Msft of which
9.39 Msft is office space and 3.33 Mnfst is retail space. The current yielding area
(cumulative) is 5.29 Mnsft. rental income The Companys share of rental income is
Rs. 2,495 million during the year. Exit rentals as on 31st March 2014 is Rs. 2,950
million. High revenue growth. The Company has recorded significant growth in
revenues and profits, on both standalone and consolidated basis, over the previous
year.
Standalone
Page 32

Revenue at Rs.21, 525 million has increased by 34% as compared to the previous
year. EBIDTA at Rs.6, 498 million has increased by 27% as compared to the previous
year. PAT at Rs.3, 400 million has increased by 23% as compared to the previous year.
Consolidated
Revenue at Rs.26, 467 million has increased by 32% as compared to the previous
year. EBIDTA at Rs. 8,076 million has increased by 27% as compared to the previous
year. PAT before minority interest at Rs.3, 215 million has increased by 11% as
compared to the previous year. The Companys business performance during the
Financial Year 2013-14 has been characterized by high all round growth in new sales,
collections and new launches, as well as, revenues and profitability. The highlights are
encapsulated below.

Page 33

Balance sheet

Page 34

Profit and loss statement

Prestige Estates Projects said a good increase in standalone net profit for the quarter
ended June 2014. During the quarter, the profit of the company rose 20.06% to Rs
1,040.40 million from Rs 866.60 million in the same quarter last year. Net sales for
the quarter rose 13.01% to Rs 5,630.90 million, compared with Rs 4,983 million for
the prior year period.

Page 35

Earnings per share for the quarter stood at Rs 2.97, registering 19.76% growth over
previous year period. Shares of the company declined Rs 5.9, or 2.35%, to settle at Rs
244.65. The total volume of shares traded was 38,540 at the BSE (Friday)

Future prospects
Luxury Residential:
Bangalore is the third-largest hub for High Net worth Individuals (HNIs). It is
estimated to be home to over 10,000 individual dollar millionaires. Bangalore has a
large base of expatriates who live and work in the city. The residents are well
travelled, cultured and have sophisticated tastes.
There has been increased demand for high-end residential apartments in the city,
particularly in the Central Business District (CBD), Secondary Business District
(SBD), Whitefield, North Bangalore and Outer Ring Road sub-markets. We expect
consumer demand for high-end residential projects in these sub-markets to be steady
over the short term.
Bangalore is one of the most promising markets for villa projects in India. Villa and
row house developments are most active in the North Bangalore, ORR, Sarjapur Road
and Whitefield micro-markets. High-end residential property buyers in Bangalore are
very sensitive in terms of amenities, product quality and unit sizes.
Mid-Income Housing:
This segment is mainly driven by individuals working in the IT and ITES industry.
The main driving factors for this segment are social infrastructure, proximity to
workplaces, good physical infrastructure and access to medical and educational
facilities.
Because of these reasons, micro-markets such as Whitefield, the ORR IT corridor,
Electronic City and few areas in North Bangalore have witnessed a steady demand
from the mid-income segment.
Affordable Housing:
The demand from this segment comes from extremely price sensitive buyers
therefore, affordable projects are developed in the suburbs as these areas offer large

Page 36

land parcels at lower acquisition costs. Areas such as Mysore road, Hosur road,
Kanakapura road etc. have witnessed high demand for this segment.
The affordable housing concept has gained ground in Bangalore City, mainly due to a
few graded developers like Purvankara, Brigade Group, Shriram Properties, Golden
Gate Properties, Ozone Group and Nitesh Estate who are focusing their projects for
customer segment. In most cases, the housing units are made affordable by reduced
unit sizes, compromising on civic amenities and other USPs which were typically
provided as differentiators to the competing projects in the micro-market/city.
Affordable housing has seen constant demand on the outskirts of Bangalore, in all
directions. Availability of large land parcels at lower price points has encouraged these
developments. Also, the planned Metro Rail and Peripheral Ring Road have increased
the demand on the outskirts of Bangalore. VBHC Attibele and Patel Neo Town in the
South Bangalore, Provident Welworth and Sovereign Lakefront in North Bangalore,
and Provident Sunworth and VBHC Kengeri in West Bangalore are some of the
affordable housing projects in the city. The demand for affordable housing in East
Bangalore is lower when compared to Bangalores other micro-markets.
With increased demand, affordable housing projects have witnessed an increase in
the capital prices and are now priced higher than or similar to mid-income segment
projects.
These projects have also seen substantial rise in capital values because of increased
cost of land acquisition and construction. Developers have therefore resorted to
redesigning their projects to address the demand of a wider target segment looking at
the budget homes category. Major national level players and local developers have
plans to enter the affordable housing segment of Bangalore. These include Tata
Housing, Usha Breco Realty, Godrej Properties, Ashoka Group, Jannaadhar
Construction, CSC Builders, Brigade Group, etc.

Page 37

 Overall Demand Scenario:

The Bangalore market saw absorption of 6,519 units in 2Q13 against 6,689 units in
1Q13. Unsold stock in 2Q13 totalled 50,184 units in 2Q13 as compared to 46,823 in
1Q13, reflecting a vacancy rate of 53.4%, down from 54.2% in 1Q13.
Supply: A total of 21 residential projects were launched across Bangalore in 2Q13,
offering 9,889 units against 10,009 units in 1Q13. Meanwhile, eight residential
projects comprising 2,319 units in various sub-markets were withdrawn from active
stock as they were completely sold out. The major projects launched in 2Q13 included
Prestige Sunrise, Prestige Ivy Terraces, Shriram Sameeksha, Sobha Santorini and
Brigade Begonia.
Central (CBD) & Off Central (SBD): Low supply and high demand. Due to low
availability of large land parcels and high capital values, these micro-markets have
seen a limited supply of residential developments. These markets have very good
social and physical infrastructure. Nitesh Park Avenue, Prestige Kingfisher Towers,
Westcourt Cityview, ETA Beau Monde, 77 Degrees East, Sobha Indraprastha and
Prestige Edwardian are some of the high-end projects in these micro-markets.

Page 38

 Company overview
Indiabulls is an Indian company headquartered in Gurgaon (NCR Delhi), with
presence in the real estate, infrastructure, housing finance, securities, retail,
multiplex] and power sectors.
Indiabulls Real Estate Limited
Indiabulls Real Estate Limited is the Group's real estate arm. [3] Its stock is owned by
Indiabulls Properties Investment Trust, a Singapore-based holding company Chaired
by Chatri Trisipisal. [4]

Page 39

Financial results

BUSINESS UPDATE

Return on Equity (RoE) has grown to 27.75%. RoE expected to increase further with
growth in business.
450% of interim dividend of Rs. 9 per share of face value Rs. 2/- has been declared.
With this, the total dividend for FY 2013-14 (including interim dividend of Rs. 20/Already paid) is Rs. 29/- per share of face value of Rs. 2/- amounting to 1450%, total
outflow of Rs. 1,129.76 Crore (inclusive of Corporate Dividend Tax).

Page 40

FINANCIAL AND OPERATIONAL HIGHLIGHTS

Asset Growth
Assets continue to grow steadily on back of long-term, low-risk mortgage loans. The
total Assets under Management stood at Rs. 41,169.40 Crore, up 19.59% from Rs.
34,425.62 Crore.
During the year, loans amounting to Rs. 4,171 Crore. were sold down.
With the above sell down, outstanding securitized loanbook was Rs. 5,724 Crore. at
the end of FY 2013-14, on which a spread of 3.4% p.a. is to be earned over the life of
the loan.
Asset Composition
Home loans, which form the majority of incremental disbursals, are disbursed at an
average ticket size of Rs. 24 lacs and at average LTV of 70% at origination.
Loans against property, which form the remainder of the retail mortgage book, are
disbursed at an averageticket size of Rs. 68 lacs and at an average LTV of 49% at
origination.
The loan profiles of both the home loans and loans against property are conservative.
The loans are monthly amortizing, secured against mortgage on the property financed
and are given out at moderate LTV levels.
76% of retail mortgage loans, consisting of the above home loans and loans against
property, are sourced in-house. With improving productivity of in-house sourcing
team, over 80% of these retail mortgage loans will be sourced in-house in FY15.
Home Loans: Streamlined Loan Fulfillment
In FY 2014, the ISO certification (ISO 9001:2008) awarded to the Companys
document management system was reaffirmed.
The Company continues to grow its branch network and now has 205 branches
spread across the country.
The Company has a well-trained, in-house Direct Sales Team of over 2,000 people
to promptly attend to Prospective customers. Improving Liability Profile
Page 41

 In keeping with its stated strategy, the Company continues to maintain healthy levels
of liquidity with cash and bank balances and current investments adding up to Rs.
7,341.38 Crore at the end of FY 13-14.
Funds raised through bonds constituted 26% of the Companys incremental
borrowings in FY 13-14.
The Company has further reduced its reliance on short-term money to 8% of total
borrowings. Diversified Borrowing Program
Amongst its lenders, the Company now counts 108strong relationships: 26 PSU
banks, 16 Private and Foreign banks and 66 Mutual Funds, Provident Funds, Pension
Funds, Insurance Companies and others.
Optimally Matched Balance Sheet
The assets and liabilities have been optimally matched with no mismatch till 5 years.

Balance sheet

Page 42

Page 43

Future prospectus

Indiabulls Real Estate Ltd is set to launch as many as seven projects outside Mumbai
in the remaining part of 2012-13, a move that could help the company hedge against
the over-exposure to its core market. The firm will launch primarily residential as well
as office projects in Sonepat, Gurgaon, Indore and Chennai, according to a company
presentation released post its quarterly results announcement late Tuesday. Having
said that, Indiabulls still has a high-value portfolio of projects in and around Mumbai,
including a newly launched township in Savroli on the Mumbai-Pune expressway.
Mumbai and its neighbourhood constitute more than half of Indiabulls portfolio in
terms of project value. The strategy is to focus on metro markets such as Mumbai
and Greater Mumbai, NCR (National Capital Region that includes Delhi) and
Chennai, said Saurabh Mittal, co-founder and vice-chairman, Indiabulls Real Estate.
Page 44

While most of the firms Mumbai projects are in the luxury category, it has no specific
pricing for its projects outside the region. We are looking to do projects in both
premium and mid-market categories to cater to both kinds of buyers, depending on the
location, said Mittal. The projects are subject to regulatory approvals. Since April,
the Mumbai-based developer has launched two projectsa super-luxury residential
project, Blu, in south Mumbai, and IB Golf City in Savroli, a premium residential
township with a golf course. Indiabulls relaunched Blu earlier this year, and it is now
being sold at a base price of around Rs.45,000 per sq. ft. The project is coming up on
mill land that the firm bought in 2010 for about Rs.2,000 crore. Indiabulls plans to relaunch the first of its Sky projects in Lower Parel, Mumbai, as well by the end of 2012
with new specifications. According to the presentation, the company had a total
saleable area under construction of 19.44 million sq. ft as of 30 September. Of this,
10.35 million sq. ft has been sold for Rs.6,583 crore and the remaining space is
expected to sell at Rs.13,074 crore as per the current market rates. Indiabulls Real
Estate has done nearly Rs.1,200 crore of pre-sales in its projects across India, of which
Rs.900 crore was from projects in the Mumbai Metropolitan Region (MMR). The
company had a land bank of around 3,589 acres and added another 212.09 acres in the
September quarter. Most of it (the land) is for future development with a three-five
years horizon, said a person familiar with the development. Macquarie Research, in a
4 October India property report, said Indiabulls Real Estates over-exposure to highend residential property in Mumbai was a risk because of high speculative and
investor interest. If Indiabulls project portfolio outside MMR takes off well, it would
be a balancing factor because the dependence on the Mumbai property market would
cease and it would also boost its sales numbers, said an analyst with a domestic
brokerage, who didnt want to be named. For the September quarter, Indiabulls posted
a net profit of Rs.32.24 crore, down 17.43% from a year ago and down 14.59% from
the preceding June quarter. Total income from operations rose marginally by 0.7%
year-on-year to Rs.342.30 crore, and by 59.45% sequentially. In August, Canadabased Veritas Investment Research Corp. targeted Indiabulls Real Estate and
Indiabulls Power Ltd in a report saying the purpose of the former firm seemed to be to

Page 45

BSE V/S Realty Sector portfolio

bilk institutionalPerformance
and retail investors for the Oct-2013
benefit of select insiders. Indiabulls
retaliated by initiating legal proceedings.

BSE V/S Realty Sector portfolio Performance Oct-2013/2014

Conclusion
For middle class Indians, investing in property has been the surest bang for the buck.
On an average, property values have quadrupled in the last decade. Real estate
practitioners point to slowing sales and rising inventories.
Recent years have seen the Indian real estate sector grow, especially the commercial
real estate segment. According to a study by Knight Frank, Mumbai is the best city in
India for commercial real estate investment, with returns of 12-19 per cent likely in
the next five years. Bangalore and Delhi-National Capital Region (NCR) come second
and third on the list, with returns of 12 per cent and 8-11 per cent respectively.

Page 46

In order to bring back the enthusiasm of the investor community into the sector, real
estate companies will have to focus on factors such as improving cash flow position,
lowering inventory, reducing debt and increasing profit margins. Real estate stocks
were beaten down year 2010 due to tightening monetary policy. They have started
recovering on expectations of the rate cycle turning. Companies with good governance
standards and debt reduction strategies will do well. DLF seems to be on that path.
India has seen a dramatic slowing of growth over the past few years because of
uncertainty in the business environment, a slump in investor sentiment, heavy
bureaucracy, High Interest Rates and overburdened infrastructure.

Recommendations
The Indian real estate sector continues to be a favoured sector for investments from
international as well as private investors. In the upcoming years, the residential as well
as commercial segments of the real estate industry is set for major growth, aided in no
small part by the government's plans and initiatives to boost this sector.
Excise duty reduction on cement and steel will lower project costs and expansion of
the interest subsidy on loans will boost developers' interest in this segment. Moreover,
tax measures such as increasing the limit of interest deduction on home loans will
provide necessary motivation to consumers to increase buying activity and revive
demand in the value and affordable segment. Further, demand for space from sectors
such as education and healthcare has opened up ample opportunities in the real estate
sector.

Page 47

Page 48