26 April 2012
4QFY12 Results Update | Sector: Real Estate
Indiabulls Real Estate
BSE SENSEX
S&P CNX
17,151
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1,6,12 Rel. Perf. (%)
M.Cap. (INR b)
M.Cap. (USD b)
5,202
IBREL IN
474.0
142/40
-4/-12/-43
29.0
0.6
CMP: INR61
TP: INR85
Buy
Revenue booking healthy; New launches key to augment RoCE
Indiabulls Real Estate (IBREL) has reported in-line results for 4QFY12. Growth in revenue booking was healthy
at 22% QoQ, largely backed by stronger execution progress, as incremental sales during the quarter were
muted. EBITDA declined 6% YoY to ~INR1.1b, while EBITDA margin declined to 24% from 29% in 3QFY12.
Despite decline in EBITDA, PAT jumped 1.6x YoY due to lower tax rate.
For the full year, revenue declined 3% to INR13.9b. However, EBITDA grew 20% to INR3.9b, driven by higher
revenue contribution from Mumbai (Panvel) and Gurgaon projects.
During 4QFY12, sales volume declined sharply, though sale of commercial space in Mumbai (Worli) drove up
average realization and sales value QoQ. It sold 0.6msf (INR6.7b) v/s 0.9msf (INR4.5b) in 3QFY12. For the full
year, sales were 3.5msf (INR19.8b) v/s 5.9msf (INR48.4b) in FY11, almost 60% de-growth in value terms.
Leasing volume in IPIT commercial deteriorated QoQ to 0.06msf (v/s historical run rate of 0.18msf), taking the
total area under lease at IFC and Indiabulls One to 2.21msf.
Net debt was stable at INR18.6b, implying a net DER of 0.25x. However, considering the effective stake of
IBREL in IPIT’s debt, net debt works out to ~INR30.3b.
Valuation and view:
Recent developments such as (a) continuous stake increase by promoters, also with the
announcement of buyback, (b) warrant conversion at a high price, etc render positive sentiment for the stock,
especially due to prolonged valuation discount compared to peers. However, (a) approval hurdles and regulatory
headwinds, (b) slowdown in Central Mumbai market (IPIT and Worli projects account for ~45% of NAV), and (c)
delay in new launches would remain key concerns. IBREL’s continuous land acquisitions over the last couple of
years have raised concerns over effective utilization of surplus cash. The monetization of these land parcels over
FY13 would be a key factor to watch to augment RoCE. The stock trades at 0.4x FY13E BV, 14.6x FY13E EPS, and at
~40% discount to our NAV estimate.
Buy.
Sandipan Pal
(Sandipan.Pal@MotilalOswal.com); Tel: +9122 3982 5436

Indiabulls Real Estate
Key results highlights
Revenue in-line, up 22% QoQ – sign of stronger execution:
Growth in revenue
booking was healthy at 22% QoQ, largely backed by stronger execution progress,
as incremental sales during the quarter were muted. However, revenue declined
~27% YoY to INR4.4b (our estimate was INR4b). The key projects driving revenue
recognition continue to be (a) Indiabulls Green (Panvel, Mumbai), (b) Centrum
Park (Gurgaon), and (c) Chennai Green.
Core EBITDA margin declined 510bp QoQ:
EBITDA declined 6% YoY to ~INR1.1b,
while EBITDA margin declined to 24% from 29% in 3QFY12. The decline in EBITDA
margin could be attributed to revenue mix getting skewed towards low margin
projects and cost inflation.
PAT above estimate due to lower tax:
Despite decline in EBITDA, PAT jumped 1.6x
YoY due to lower tax rate (due to reversal impact). Effective tax rate for FY12 was
27.6%.
FY12 EBITDA grew 20% though revenue declined 3%:
For the full year, revenue
declined 3% to INR13.9b. However, EBITDA grew 20% to INR3.9b, driven by higher
revenue contribution from high margin Mumbai (Panvel) and Gurgaon projects.
PAT grew 4% to INR1.7b. However, full year numbers are not entirely comparable,
given that Indiabulls Power (IPL) was demerged during FY12.
Key operating highlights
Sales volume declined QoQ, value up due to commercial sales at Worli:
In 4QFY12,
IBREL sold 0.6msf (INR6.7b) v/s 0.9msf (INR4.5b) in 3QFY12. In the absence of any
major new launches, Indiabulls Green, Panvel (INR3,500-4,500/sf), and Centrum
and Enigma, Gurgaon (INR3,500-5,000/sf) remain the major sales drivers, along
with Chennai projects. However, average realization increased sharply in 4QFY12
to INR10,743/sf (v/s INR4,934/sf in 3QFY12) due to the sale of commercial space
(~0.15msf) at Worli (Bharat Mill land) at average realization of ~INR25,000/sf.
~60% sales de-growth in FY12:
For the full year, sales were 3.5msf (INR19.8b) v/s
5.9msf (INR48.4b) in FY11, almost 60% de-growth in value terms. While massive
slowdown in Central Mumbai residential projects (IPIT projects) was the primary
reason, broadbased torpidity across other markets also contributed to this.
Guides strong launch pipeline for FY13; time ripe to monetize acquired land:
Post
a subdued FY12, IBREL has guided a strong launch pipeline of ~10 projects across
tier-I/II locations over FY13, including the launch of Indiabulls Bleu and Savroli
(Mumbai), and Enigma (Gurgaon) over 1HFY13. New launches would be critical to
mitigate concerns over (a) declining sales trend in the last 3-4 quarters, and (b)
monetization of idle land parcels, justifying the massive land acquisition/
aggregation by the company over FY11-12. However, timely approval remains a
key concern. We estimate sales of 5.2msf (INR26.7b) for FY13.
Leasing
run rate deteriorates:
Leasing volume in IPIT commercial has declined
sharply QoQ to 0.06msf (v/s the historical run rate of 0.18msf), taking total area
under lease at IFC and Indiabulls One to 2.21msf. Major share of leasing at IFC
happened at average rental of INR110-125/sf/month.
Net debt-equity at 0.25x:
Net debt was stable at INR18.6b, implying a net debt-
equity of 0.25x. However, considering IBREL’s effective stake in IPIT’s debt, net
debt works out to ~INR30.3b.
2
26 April 2012

Indiabulls Real Estate
Sales declined 33% QoQ (msf)
However, commercial sales at Worli drove the uptick in sales value (INR b) and
average realization (INR/sf)
Sales Value
(INR b)
Average realization
(INR/sf)
Leasing volume (msf) declines QoQ
Net debt steady at 0.25x
Expect sales uptick in FY13 on the back of
new launches
Source: Company/MOSL
Warrant conversion has infused ~INR3b
Among the key balance sheet changes, Reserves and Surplus increased by INR3.8b
QoQ, largely due to cash infusion through 28.7m of warrant conversion concluded in
4QFY12. However, due to continuous investments in land acquisition (acquired ~334
acres in 4QFY12, and a total of 420 acres in FY12) and slower sales, the cash balance (+
current investments) declined to ~INR1.8b, which appears insufficient for maximum
buyback target (~INR4.5b for buyback of 60m shares @ INR75/share), although
minimum buyback at current price requires ~INR915m.
IBREL’s Warrant History since 2007
Date
Warrant
issue (m)
Ex price Payment Remarks
(INR/sh) (INR m)
115.1
300
540
165
165
165
1,151
450
2,322
1,184
159
1,025
3,076
10% upfront payment made earlier
Money forfeited later with lapse of option
Money forfeited later with lapse of option
25% paid during warrant issue
Transfer of proportionate liability to IBWSL
Shown as warrant in IBREL’s book
Recent warrant conversion
Source: Company/MOSL
Nov-07
10
Aug-07
15
Nov-07
43
Aug-10
28.7
Apr-11
3.8
O/S warrant to IBREL
26.4
Balance infusion in IBREL
26 April 2012
3

Indiabulls Real Estate
Valuation and view: Monetization of acquired land essential for operational
uptick
IBREL’s strong pre-sales of ~INR81b render robust cash flow visibility. Its revenue
booking run rates have been in tandem with sales accruals (INR3b-5b), which
suggests commensurate progress in execution.
Moreover, recent developments such as (a) continuous stake increase by
promoters, also with the announcement of buyback, (b) warrant conversion at a
high price, etc render positive sentiment for the stock, especially due to prolonged
valuation discount compared to peers.
However, (a) approval hurdles and regulatory headwinds, (b) slowdown in Central
Mumbai market (IPIT and Worli projects account for ~45% of NAV), and (c) delay in
new launches would remain key concerns. IBREL’s continuous land acquisitions
over the last couple of years have raised concerns over effective utilization of
surplus cash. The monetization of these land parcels over FY13 would be a key
factor to watch to augment RoCE. The stock trades at 0.4x FY13E BV, 14.6x FY13E
EPS, and at ~40% discount to our NAV estimate.
Buy.
Estimate NAV at INR102, Central Mumbai accounts for ~45%
NAV Calculations
Residential
IPIT-Residential
Add: IPIT Commercial
Add: Other land bank
Gross Asset Value (GAV)
Less:Tax
Less: Net Debt
Less: Operating Exp
Net Asset Value (NAV)
(INR m)
71,724
16,588
20,516
2,500
111,328
23,844
30,287
8,906
48,291
NAV/Share
151
35
43
5
235
50
64
19
102
% of NAV
149
34
42
5
231
49
63
18
100
% of GAV
64
15
18
2
100
21
27
8
43
Source: MOSL
26 April 2012
4

Indiabulls Real Estate
Indiabulls Real Estate: an investment profile
Company description
IBREL, the de-merged real estate arm of Indiabulls
Financial Services (IBFSL), listed on the Bombay Stock
Exchange and the National Stock Exchange in March
2007. It entered the real estate sector in 2005 after it
won two land parcels at auction bids of textile mill land
in central Mumbai. The company is focused on
development and sale of residential properties in tier-I
cities like the NCR, Mumbai and Chennai and rental of
commercial properties to be developed in Mumbai.
Recent developments
In 4QFY12, IBREL sold 0.6msf (INR6.7b) v/s 0.9msf
(INR4.5b) in 3QFY12.
Post a subdued FY12, IBREL has guided a strong launch
pipeline of ~10 projects across tier-I/II locations over
FY13, including the launch of Indiabulls Bleu and
Savroli (Mumbai), and Enigma (Gurgaon) over
1HFY13.
Valuation and view
Key investment arguments
High quality land bank at city centric locations.
Strong monetization visibility from robust pre-sales
and steady progress in execution;
Recovery in Central Mumbai market could be a key
trigger.
IBREL’s continuous land acquisitions over the last
couple of years have raised concerns over effective
utilization of surplus cash. The monetization of these
land parcels over FY13 would be a key factor to watch
to augment RoCE. The stock trades at 0.4x FY13E BV,
14.6x FY13E EPS, and at ~40% discount to our NAV
estimate.
Buy.
Key investment risks
Severe delay in new launches and approval risks.
Slower sales momentum in Central Mumbai projects
Sector view
RE sector has been a major underperformer over the
last 12 months with multiple operational and non-
operational headwinds such as volume slowdown
(due to declining affordability), monetary tightening,
pilling liquidity pressure etc. However, with a
buoyant macro-picture, likelihood of interest rate
cut and increasing focus on execution, we believe
the outlook will improve going forward.
Comparative valuations
P/E (x)
P/BV (x)
EV/Sales (x)
EV/EBITDA (x)
FY13E
FY14E
FY13E
FY14E
FY13E
FY14E
FY13E
FY14E
IBREL
14.6
9.7
0.4
0.4
2.8
2.2
10.3
8.0
Oberoi
15.1
9.8
2.1
1.7
6.1
3.7
10.6
6.2
Phoenix
23.0
10.8
1.6
1.4
9.2
4.4
13.4
7.5
EPS: MOSL forecast v/s consensus (INR)
MOSL
Forecast
4.2
6.3
Consensus
Forecast
5.6
7.4
Variation
(%)
-24.6
-14.8
FY12
FY13
Target price and recommendation
Current
Price (INR)
61
Target
Price (INR)
85
Upside
(%)
39.3
Reco.
Buy
Stock performance (1 year)
Indi abul l s Rea l Es tate
Sens ex - Reba s ed
160
Shareholding pattern (%)
Mar-12
Promoter
Domestic Inst
Foreign
Others
26 April 2012
38.5
0.2
37.1
24.2
Dec-11
34.8
0.2
35.0
30.0
Mar-11
23.0
2.2
59.5
15.4
120
80
40
0
Apr-11
Jul -11
Oct-11
Jan-12
Apr-12
5

Indiabulls Real Estate
Financials and Valuations
26 April 2012
6

Indiabulls Real Estate
N O T E S
26 April 2012
7

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Indiabulls Real Estate
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