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Mahindra Lifespace 4QFY2014 performance highlights and results update

April 29, 2014, Tuesday, 10:25 GMT | 05:25 EST | 13:55 IST | 16:25 SGT
Contributed by Angel Broking

Mahindra Lifespace Developers (MLIFE) reported a mixed set of numbers with profitability coming in line with the consensus estimate. Its standalone revenue reported a decline of 15.6% yoy to Rs.86cr in 4QFY2014, mainly on account of yoy decline in sale of SEZ plots. The standalone EBITDA decreased by 71.2% yoy to Rs.5cr, owing to decline in revenues and increase in staff cost (up 22.6% yoy) during the quarter. In spite of the lower EBITDA, the company reported only a 17.5% yoy decline in its PAT to Rs.19cr (in-line with consensus estimate), mainly on account of higher other income. On a consolidated level, MLIFE reported a revenue of Rs.189cr and PAT of Rs.30cr, suggesting a profit for its subsidiaries at the net level.

New launches to drive sales growth: Currently, MLIFE has a project pipeline of 6.6mn sqft and the Management indicated launch of 6 new projects in FY2015 itself, subject to obtaining various clearances. Although a couple of projects may get delayed, we believe MSDL still has a robust project pipeline which provides strong revenue visibility over FY2015 and FY2016. Going forward, we expect strong sales numbers along with improving realizations in the coming quarters on the back of new launches anticipated in the current financial year.

Outlook and valuation: We remain positive on MLIFE given its diversified geographic exposure in terms of ongoing and forthcoming real estate projects. We expect strong sales numbers over the coming quarters on back of new projects expected to be launched in FY2015 as well as improvement in demand. The stock is currently trading at a P/BV of 1.0x FY2015 estimate. We value MLIFE on a SOTP basis to arrive at a NAV of Rs.531/share, and apply a 10% discount to our SOTP value to arrive at a target price of Rs.478, suggesting a 26% upside from the current levels. We maintain our Buy rating on the stock.