HDIL is a leading infrastructure company which has been awarded the Mumbai International Rehabilitation project. On equity of Rs.358 crore, the company is executing projects worth Rs.8,00O crore which is shown under inventories. The book value of the company is very strong at Rs.210 and the current market price is Rs.265. The low discounting in the current scenario is due to excess liquidity which is likely to get adjusted in some more time. The company will manage to book sales of Rs.2,600 crore in FY2O1O-l1 and cash flows will be as high as Rs.1200 crore in the current fiscal.
The trailing twelve months (TTM) EPS is around Rs.18 and at current market price, the stock is trading at PE multiple of 15 as against the Agr PE multiple of 30 plus and Sensex PE of 22 for 2010-11. HDIL holds around 221 million sq.ft of which 65 million sq.ft is under development. Seventy-five per cent of it is in slum rehabilitation schemes (SRS) and re-development schemes. HDIL has expertise in execution of quality infrastructure projects like malls and multiplexes.
HDIL has investment of 500 crore in its subsidiaries out of which HDIL Leisure is building business and budget hotels in tier I and II cities. Another subsidiary, HDIL Oil and Gas Pvt. Ltd, will provide an opportunity for the company to create value in the stock.
By Kishor Ostwal, CMD, CNI Research Ltd, and analysts Ritin Shah and
Praveen Lalani
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