HSBC puts underweight rating on Anant Raj Industries
HSBC Global Research initiates an ‘underweight’ rating on Anant Raj Industries with a target price of Rs 50, which is at a 50% discount to ’09E NAV of Rs 100.
By ET Bureau |
ANANT RAJ INDUSTRIES
RESEARCH: HSBC GLOBAL RESEARCH
RATING: UNDERWEIGHT
CMP: Rs 76
HSBC Global Research initiates an ���underweight��� rating on Anant Raj Industries (ARIL) with a target price of Rs 50, which is at a 50% discount to ���09E NAV of Rs 100.
ARILs owns residential land parcels in upmarket locations in Delhi, and has four hotel properties near Delhi airport. Its land bank of 61 million square feet has been aggregated at a cheap value of Rs 200 per share. Execution has faltered, despite a healthy balance sheet.
With consistent capital raising, ARIL has maintained a healthy balance sheet with marginal debt and has a net cash position of Rs 500 crore. Also, 90% of its land is paid for, so the carrying cost of land on its balance sheet is not a cause for concern. Despite these factors, its execution track record does not inspire confidence.
There have been delays on its major projects, and only two projects have been delivered in the past 24 months. ARIL faces the daunting task of increasing the pace of execution in the wake of strong cash availability .
However, with the demand outlook getting bleaker, HSBC expects there to be limited room for ARIL to accelerate its project development.
RESEARCH: HSBC GLOBAL RESEARCH
RATING: UNDERWEIGHT
CMP: Rs 76
HSBC Global Research initiates an ���underweight��� rating on Anant Raj Industries (ARIL) with a target price of Rs 50, which is at a 50% discount to ���09E NAV of Rs 100.
ARILs owns residential land parcels in upmarket locations in Delhi, and has four hotel properties near Delhi airport. Its land bank of 61 million square feet has been aggregated at a cheap value of Rs 200 per share. Execution has faltered, despite a healthy balance sheet.
ADVERTISEMENT
With consistent capital raising, ARIL has maintained a healthy balance sheet with marginal debt and has a net cash position of Rs 500 crore. Also, 90% of its land is paid for, so the carrying cost of land on its balance sheet is not a cause for concern. Despite these factors, its execution track record does not inspire confidence.
There have been delays on its major projects, and only two projects have been delivered in the past 24 months. ARIL faces the daunting task of increasing the pace of execution in the wake of strong cash availability .
However, with the demand outlook getting bleaker, HSBC expects there to be limited room for ARIL to accelerate its project development.
Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
Bookmark or read stories offline -
Download ET Markets APP
Download ET Markets APP
ADVERTISEMENT
