Indiabulls Securities recommends to buy Unitech

By siliconindia   |   Tuesday, 07 July 2009, 22:15 IST   |    3 Comments
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Indiabulls Securities recommends to buy Unitech
Bangalore: Indiabulls Securities Research has recommended a buy rating on Unitech in its July 01 report. Unitech Limited operates as a real estate development company in India and internationally. Its real estate projects include residential complexes, golf course communities, integrated townships, amusement parks, commercial offices, IT parks, and retail malls Indiabulls report says, "Unitech's stock is currently trading at a 19.8 percent discount to our Net Asset Value (NAV) of 103. We believe that the stock has a long-term upside potential, primarily due to the increasing residential sales volume coupled with the company's comfortable liquidity position. Hence, we recommend buy rating on Unitech." The company performed very badly in Q4'09 due to stringent market condition and marginal sales booked during the period. Net sales of the company went down 66.8 percent year over year (YOY) and 21.2 percent quarter to quarter (QOQ) to 385.6 crore. In the financial year ended March 31, 2009, the net sales of the company were 2889.74 crore against 4140.4 crore in previous fiscal. According to Indiabulls, the easing liquidity situation along with lower interest rates and the continuation of the current policy measures introduced by the Central Government are expected to revive the demand in the coming quarters. However, the company has been raising funds from the beginning of this year to improve its cash flow and to reduce its massive debt. As a result, the company's debt decreased to 90.6 billion at the end of 31 March, 2009, (which was Rs109 billion at the end of 31 December, 2008) with a net debt-equity ratio of 1.65x. The company is also in the negotiation for the sale of its two hotels in Gurgaon and an office complex in Delhi. Besides, the Company has raised nearly 45 billion through two rounds of qualified institutional placement (QIP). Indiabulls report says, "The successful QIP's has brought positive triggers in the stock. We expect Unitech would be able to launch 35 million sq ft in next 2 years. The company plans to launch 40 projects at aggressive price points on which they have received a good response."