'Add' Unitech for target of Rs 63/share: India Info

MUMBAI: Unitech has been on a surge ever since it managed to raise $325 million via QIP. IIFL, institutional equities division of India Infoline, has upgraded its rating on the scrip to ���Add��� from ���Sell��� and expects the scrip to hit a target of Rs 63 per share.

���Unitech has closed a QIP to raise US $325 million. The offering was priced at Rs 38.5 per share, resulting in 20.5 per cent dilution. The QIP will provide an immediate breather from the Rs 6 billion of debt owed to mutual funds, maturing in April.

The surplus Rs 10 billion could be used to pay a portion of the annual interest outgo and fund working capital in new launches. Unitech���s net debt post the dilution will fall to about Rs 52 billion, resulting in net debt-to-equity of 0.85x.

Further funds of Rs 5 billion from Unitech Realty Fund (already committed) along with Rs 5 billion-7 billion from potential asset sales will significantly alleviate pressures on cash flows in FY10ii.

The funds will allow Unitech to pursue its ���affordable housing��� strategy at lower prices, albeit at a pace significantly slower than management guidance, in our opinion. We feel the equity raised will serve as a lifeline for the company to resume its real-estate development business. We upgrade the stock to ADD from Sell with target price of Rs63/share,���the note said.