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Mahindra Lifespaces Developers 3QFY2013 performance highlights and results update

Contributed by Angel Broking

Mahindra Lifespaces Developers (MLIFE) reported a weak set of numbers for 3QFY2013 mainly owing to delay in project launches due to pending approvals since FY2012 end. MLIFE’s standalone revenue for the quarter came in at Rs.61cr, i.e a decline of 60.1% yoy. Standalone EBITDA decreased by 80.4% yoy to Rs.9cr, owing to lower-than-expected revenue recognition. PAT for the quarter decreased by 65.7% yoy to Rs.14cr. On a consolidated level, MLIFE reported a revenue of Rs.126cr and PAT of Rs.21cr, suggesting a profit for its subsidiaries at net level. We recommend Accumulate on the stock.

Sales expected to pick up in following quarters: MLIFE launched its first residential project Ashvita in Hyderabad and has sold ~100 units during the quarter. Further, the company sold 0.39msf (new sales; real estate business) for a total transaction value of Rs.155cr, implying a realization of ~Rs.3,969/sqft, and 7.7 acres in its Chennai MWC. Going forward, we expect strong sales numbers along with improving realizations in the coming quarters on the back of sharp pick up in approvals and new launches during the quarter.

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, following new project launches in Pune and Hyderabad, along with robust execution. The stock is currently trading at 1.3x and 1.2x on our FY2013E and FY2014E book value compared to its 3 year average of 1.3x. We value MLIFE on a SOTP basis and slightly adjust our NAV to Rs.495/share, and apply a 10% discount to our SOTP value to arrive at a target price of Rs.446, suggesting a 7% upside from the current levels. We recommend an Accumulate rating on the stock.