BNP Paribas puts 'reduce' on HDIL
BNP Paribas initiates coverage on Housing Development & Infrastructure (HDIL) with a counter-consensus ‘reduce’ rating.
By ET Bureau |
RESEARCH: BNP PARIBAS
RATING: Reduce
CMP: RS 224
BNP Paribas initiates coverage on Housing Development & Infrastructure (HDIL) with a counter-consensus ���reduce��� rating.
HDIL focuses on the lucrative Mumbai slum rehabilitation segment, which is characterised by high margins and high entry barriers.
Slum rehabilitation projects account for 34.5% of its land bank. However, funding constraints and delays due to state elections next year are likely to slow its progress.
The company���s target of rehabilitating 15,000 slum tenements annually starting in FY09 is ambitious, since the best it has done so far is 3,000 tenements annually.
BNP Paribas��� channel checks with slum dwellers indicate that the company is likely to face several roadblocks, especially in the Mumbai airport slum redevelopment project.
HDIL���s earnings stream is highly volatile and there are significant risks in achieving the estimates of the market, which is yet to factor in execution delays.
BNP Paribas would like to gain more comfort on the company���s ability to scale up its operations and execution before turning positive.
RATING: Reduce
CMP: RS 224
BNP Paribas initiates coverage on Housing Development & Infrastructure (HDIL) with a counter-consensus ���reduce��� rating.
HDIL focuses on the lucrative Mumbai slum rehabilitation segment, which is characterised by high margins and high entry barriers.
Slum rehabilitation projects account for 34.5% of its land bank. However, funding constraints and delays due to state elections next year are likely to slow its progress.
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The company���s target of rehabilitating 15,000 slum tenements annually starting in FY09 is ambitious, since the best it has done so far is 3,000 tenements annually.
BNP Paribas��� channel checks with slum dwellers indicate that the company is likely to face several roadblocks, especially in the Mumbai airport slum redevelopment project.
HDIL���s earnings stream is highly volatile and there are significant risks in achieving the estimates of the market, which is yet to factor in execution delays.
BNP Paribas would like to gain more comfort on the company���s ability to scale up its operations and execution before turning positive.
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