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The real estate sector in India has come a long way by becoming one of the fastest growing markets in the world. It is not only successfully attracting domestic real estate developers, but foreign investors as well. The growth of the industry is attributed mainly to a large population base, rising income level, and rapid urbanization. However, last couples of years have not been the best of the years for Indian real estate. While long–term factors are likely to work in favour of the real estate developers, the outlook for the short term remains subdued. The lukewarm sales and rising costs have had an impact on the profitability of real estate majors. Although, we saw some monetary easing by the Reserve Bank of India during the year, banks remain cautious towards issuing fresh loans to real estate companies. A silver lining for the sector, though, was that approval and clearances for the projects that were stuck for last few years, have started coming in, albeit slowly.
Notwithstanding the prevailing uncertainty, your Company has emerged resilient by balancing caution with diligence, evaluating all the potential opportunities with pragmatism. Not only have we managed to outperform our peers in the sector in terms of new project launches, speedy execution, and moderate debt, but have achieved spectacular sales together with a healthy bottom line. All this is reflected in the company's financials for the year gone by as also for the quarter ended 30th June, 2013. It's a sign of turning the corner that your company paid a dividend of Rs.2 per share for the year 2012–13, and also declared an interim dividend of Re. 1 per share for the quarter ended 30th June, 2013.
Undeterred by the slow down
Despite the ongoing global uncertainties and spillover effect of slowdown of Indian economy, strong brand of Indiabulls has helped us achieve total Sales of Rs.3,002 Crores in FY'13 vs.Rs.1,982 Crores for FY'12. Profit after Tax (PAT) increased to Rs.175.47 Crore from Rs.168 Crore a year ago. The total income from operations for the FY'13 stood at Rs.1,300.56 crores. These sales and profitability figure have to be seen in the context of overall economic slowdown as well sluggishness in the real estate sector, and they compare favourably with all the industry peers. Some of the key highlights that I'll like to share with you are as follows:
Annualized rental income increased to Rs.486 Cr. in FY'13 vs.Rs.354 Cr. in FY'12.
Added 220 acres to the land bank in Gurgaon and Panvel.
While other real estate companies got downgraded, IBREL retained its A+ rating for long term debt and A1+ (highest possible) for short term debt.
Revenue recognition of only Rs.1,110 crores in FY'13 compared to Sales of Rs.3,002 crore in same period, thereby creating large funnel for future revenues.
First quarter of current financial year (April to June 2013) was marked by extremely robust sales across all our residential projects (Rs. 1600 crore) with more than Rs.1200 crore worth of sales being clocked by Western region alone, comprising IB Panvel, Savroli, and Sky range of projects.
There was a good pick up in the sales of Chennai OMR project with more than 100 units being sold in the last quarter.
The outlook for the coming year, therefore, looks much brighter with several new launches planned in the next few months.
Focused on expansion and execution
Strategic land acquisition over the years has helped your company to aggregate a land bank of 3,598 acres (including Nashik SEZ) across India. Out of a total saleable area of 19.44 msft currently under execution, we have already sold 11.98 msft, which corresponds to Rs.8,370 crore of sales, with Rs.12,215 crore of unsold inventory at current market prices. Your company has been steadily expanding its footprint in its chosen geographies, particularly in the Tier 1 locations in the three main macro markets of Mumbai, Chennai and NCR.
Presently, your company is developing both residential and commercial projects, mainly concentrating in the metros and the tier I cities. The projects range from mid–income housing projects to high–end to ultra luxury residential projects. Both the residential and the commercial projects are located in the areas of high growth with regard to infrastructure, connectivity and have high future potential. These projects are located in the Metros i.e. South Mumbai and Panvel (Mumbai Metropolitan Region), Chennai, Gurgaon (NCR), and other prime Tier I cities like Ahmedabad, Madurai and Hyderabad etc. The total Area under Development (AUD) stood at 72.86 msft at the end of FY 2012–13.
Leasing gained traction
Mirroring the market conditions, new leased area in FY ended March, 2013 stood at 0.40 msft as against 0.60 msft in the previous year. However, of late, there has been a significant momentum in leasing with the first quarter (April–June 2013) itself accounting for nearly 0.5 msft. The total cumulative leased area stood at more than 3 msft with some of the marquee clients including big corporate houses like Starbucks, Yes Bank, Deloitte, GE Shipping, Franklin Templeton etc. among others. Most recently, we have added a slew of prestigious global MNCs like HSBC Bank, KPMG and Cadbury etc in our list of clients. This performance has been accomplished as both our commercial properties have become ultimate benchmark in the corporate office space in the central business district of Mumbai.
Continue to add to land bank
Land reserves indicate the future development and expansion potential of the Company. The company intends to acquire land in the areas which are of strategic importance and high demand centers. Your company recently acquired a strategic land parcel of 210 acres in NCR, a good chunk of which is in the vicinity of Northern Periphery Road (NPR) and is billed to be the "New Gurgaon" in not too distant a future. Total land bank of Indiabulls (excluding Nashik SEZ) stands at 1003.54 acres in regions of Mumbai Metropolitan Region (MMR), National Capital Region (NCR) and Chennai, while the same in FY'12 stood at 836 acres. Out of total land bank of 1,003.54 acres, nearly 60% is in the NCR region, 22% in the MMR region and rest 18% in Chennai region. The size and location of the Company's land reserves allows it to respond quickly and effectively to the changes in the market conditions, regulatory environment and the overall demand.
Projects gained significant momentum
During the year under review, our various existing projects gained momentum, while we launched several new ones at strategic locations.
Almost entire Phase 1 of our integrated housing project at Panvel, called 'Indiabulls Greens' has been sold out, with very little inventory left out of the existing stock. We are all set to start delivery of the Phase 1 in Panvel by the end of next year.
Also, Phase 2 of Indiabulls Greens at Panvel re–launched recently has evoked an enthusiastic response, and the booking for the same, which was temporarily kept on hold last year, has been commenced.
Our ultra luxury project in South Mumbai, "Blu", got tremendous response post its re–launch in August, 2012, and is all set to establish new benchmark of high end residential living in the city. Having first launched at Rs.36,000 psft, it's currently commanding more than Rs.58,000 psft.
"Golf city" got launched with overwhelming response. Such a project is a scarce resource in the city of Mumbai. This 18 hole golf township is designed by Legendary Phill Ryan. Construction has started on the project and 1st phase will be ready in 2016. Phase 2 of the project too has been soft launched recently.
Significant scaling up of construction in both 'Indiabulls Enigma' and "Centrum"at Gurgaon. While Phase 1 of Enigma has been nearly sold out, Phase 2 of the same is in planning. Centrum will be the first project to be delivered starting end of this year, and Enigma likely to be delivered next year.
IB Greens at Chennai has been a stupendous hit with the end users community of the IT professionals; delivery for the first phase is already underway. Phase 2 of the project is witnessing steady sales at a considerably superior price point than what was at the time of first phase. Your company will be looking to expand its land bank in Chennai in the vicinity of its existing land bank, since it is strategic location on OMR, in close proximity to all IT majors.
Our credit rating reflects the robust financials
The Company has maintained its A+ (Single A Plus) rating for its long term debt (Term loans and NCDs) and A1+ (A One Plus) rating for its short term facilities for tenure up to one year (This is the highest rating that can be assigned for short–term debt). The ratings are a reflection of the track record of the management to execute and mobilize funds for the projects, Indiabulls Real Estate Limited's (IBREL's) recognized brand name and low financial leverage.
Share buy back
You may recall in my last year message, I had announced that your Company's Board had approved buy–back of its equity at a maximum price of Rs.75 per share from open market. I am glad to inform that your company has completed this buyback of 5 crore shares for Rs.273.2 crore in FY'13. We shall constantly strive to protect and maximize shareholders' value at all times to come.
Founder and Chairman