Credit Suisse assigns 'underperform'to Parsvnath Developers

Parsvnath Developers
CMP: Rs 83.80
Target Price: Rs 75

Brokerage house Credit Suisse has assigned an 'underperform' rating to realty firm Parsvnath Developers, with a price target of Rs 75. "With an EBIT/interest cover of 0.9 times in FY09 and 0.6 times in FY10, Parsvnath will find it difficult to meet its interest commitments, let alone Rs 230 crore of debt repayments scheduled for FY10," said the Credit Suisse note to clients.

"Further, Parsvnath's strategy to continue with its land acquisitions for the SEZ projects and not exit from non-strategic land parcels will put considerable strain on its balance sheet. The wide geographic spread of its projects is also likely to make it difficult for Parsvnath to keep costs under control, as fixed costs from geographic diversification are very high," the note added.

Credit Suisse has forecast the company���s FY10 earnings per share at Rs 4.20 and that for FY11 at Rs 5.14.