Kim Eng India recommends ‘Buy’ on HDIL

MUMBAI: Kim Eng India has a ‘ Buy’ recommendation on HDIL with a target price of Rs 376 per share. It is of the view that post the Bombay High Court order, the company’s EPS is likely to rise by 8 per cent.

“The court said that Mumbai could not increase the size of developable land in city suburbs. Consequently, there will not be an increase in the supply of construction rights and the cost of these may rise.

This is a positive development for Housing Development & Infrastructure (HDIL) as 50% of earnings are generated by the sale of construction rights. With a 10% increase in the cost of construction rights, EPS for HDIL rises by 8%. Our BUY rating for the stock is supported by FY11F earnings growth of 65%,” the report said.