Started in 1990, Puranik Builders Limited is a Thane based prominent residential real estate developers in Mumbai Metropolitan Region ('MMR') and Pune Metropolitan Region ('PMR'). Company has a longstanding presence of over 28 years in the real estate market in India, developing residential projects in the mid-income affordable housing segment in the MMR and the PMR real estate markets. As of March 31, 2018, company had completed 29 projects in the MMR and PMR. Company has established a track record of successfully executing projects in the MMR and the PMR, particularly in the mid-income affordable housing segment, through theme-based developments and additional amenities. As of March31, 2018, they had developed 4,21,422 square meters (45,36,184 square feet) of Developable Area across 29 Completed Projects. Certain of the key completed and ongoing theme-based projects include Rumah Bali, Puraniks City Reserva and Tokyo Bay in the MMR, and Aldea Espanola and Abitante in the PMR. As of March 31, 2018, company had 24 Ongoing Projects with an aggregate Developable Area of 9,88,149 square meters (1,06,36,435 square feet) with ticket sizes ranging between '4.20 million and '11.50 million in the MMR and between '3.20 million and '10.00 million in the PMR, for mid-income affordable housing segment, and between '1.10 million to '2.52 million for low-income affordable housing segment. In addition, as of March 31,2018, they had 23 Forthcoming Projects with an aggregate estimated Developable Area of 12,96,086 square meters (1,39,51,066 square feet). Company's projects are primarily carried out through joint development or joint venture arrangements with land-owners, as well as through the development management (DM) model. They also acquire land directly for certain projects. The Land Reserves comprise land on which no development activity has commenced and no plan for development has been initiated but which they intend to develop in future, subject to various factors including marketability, receipt of regulatory clearances and development of adequate infrastructure. As of March 31, 2018, they had Land Reserves of 70.09 acres. As of March 31, 2018, company engaged 551 permanent employees and 1,838 contract labourers. As per financial performance, ICFL has posted total income/net profits of Rs. 396.91 cr. / Rs. 112.13 cr. (FY14), Rs. 528.06 cr. / Rs. 149.04 cr. (FY15), Rs. 644.05 cr. / Rs. 191.64 cr. (FY16) and Rs. 719.92 cr. / Rs. 210.80 cr. (FY17). For upto Q3 of FY18, it has reported net profit of Rs. 164.08 cr. on total revenue of Rs. 585.95 cr. So company has posted consistent growth over last couple of years. ICFL has posted an average EPS of Rs. 25.53 and average RoNW of 11.62% for last three fiscals. Issue is priced at a P/BV of 2.17 as per NAV of 263.96 on 31.12.17. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 24. As per RHP, industry average P/E ratio is 28.66 and listed peers comparison shown in above table. So issue looks fully priced. On BRLM's front, five merchant bankers associated with this issue and have handled 58 public issues in the past three years. When we take recent 10 IPOs of each BRLM then out of those 6 issues opened below their offer price and 4 opened at par on listing dates. As per financials, company's growth is consistent and very good, RoNW is 11.62% for last three fiscals and issue is priced at P/E of around 24 as per latest earnings. Company is an NBFC with principal lines of business, namely corporate lending, SME lending, vehicle financing and housing financing. Last two business segments (Vehicle Finance & Housing Finance) are started in recent past and it may give further boost to company's growth, but increasing bond yields and FD rates may put pressure on margins. So we give "SUBSCRIBE FOR LONG TERM" rating to this IPO.
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