Puravankara Projects

 

 

Debt To Equity Ratio, At 0.54, Is A Little Higher Than The Past Year's 0.5

 

PURAVANKARA Projects lost 1.18% on Thursday as against the half a percent fall in the benchmark Sensex. Besides the overall bearish sentiment in the market, the stock is witnessing some profit booking, post its March 2010 quarter results.

   The stock's overall fall in the past one week had been negligible as against the 5% drop in the market. The stock has gained about 54% in the past one year as against the 44% gains clocked by Sensex and 43%. This was lower than the returns posted by its peers in the same period.

   Puravankara is mostly present in the southern parts of the country with 115-million sq ft of saleable area primarily in the residential segment. Going ahead, the company plans to launch 18 million sq ft of new projects in calendar year 2010 and another 30 million sq ft in the next two years as it believes demand will come back from IT & ITeS and manufacturing sectors. Out of the current year launches, 6 million sq ft will be housed under its affordable housing subsidiary, Provident Housing. The balance would be under the parent company across four projects in Bangalore, Chennai and Coimbatore. Out of these, one high-end project was launched in April 2010 in Bangalore. Typically, housing projects under the Provident brand range between Rs 15-20 lakh and upwards of Rs 55 lakh under the Puravankara brand. Additionally, the company has formed a JV with Homex of Mexico in Chennai and Bangalore. They will build houses in the range of Rs 8-12 lakh.

   The company reported an 80% increase in revenue for the quarter ended March 31, 2010, at Rs 123 crore compared to Rs 68 crore in the same quarter last year. It completed three residential projects as well. The Bangalore-based builder has been able to cut down its operational expenses, thus boosting EBIDTA margins from 16% in the corresponding quarter previous year to 27% in the present quarter. Net profit for the same period registered a 200% growth at Rs 43 crore compared to Rs 14.5 crore. This was aided by a negative effective tax rate owing to some prior period adjustments. The company is regularly looking at reducing its leverage; currently, its debt to equity ratio stands at 0.54, a little higher over the past year's 0.5.

   At an annual EPS of Rs 6.8 and current price of Rs 104.5, the company is valued at 15 times its earnings. Investors holding the stock can continue to do so for further upside.