Developers Limited Disclaimer This report is prepared for the Valuepickr meet on January 22 2017 This is not a recommendation to invest This report is meant for discussion purposes only ID: 550032
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Slide1
Poddar Developers Limited
(Disclaimer: This report is prepared for the
Valuepickr
meet on January 22,
2017
. This
is not a recommendation to invest. This report is meant for discussion purposes only) Slide2
Poddar Developers Limited (PDL)
Real Estate company focused only on affordable housing in and around Mumbai
The
company is promoted by
Dipak
Kumar
Poddar
Huge market for affordable housing in India – estimated shortage of 21 million units
BUT
Tough business model to crack – company needs an “affordable housing mindset”
Lower margins, higher volumes AND velocity of
sales
O
ver
3000 homes
delivered mainly
in
Badlapur
.
Company has
a large land
bank
Has negligible
debt plus sitting on funds from a Rs125 crore QIP to deploy for buying landSlide3
Financial Analysis
2011-12
2012-13
2013-14
2014-15
2015-16
NA 9.20%8.90%19.82%18.81%
PAT
MarginSlide4
Balance Sheet and Financials
2015-16
2014-15
2013-14
2012-13
2011-12Equity + Reserves225.22209.56*66.8559.76
52.9
Debt
2.95
7.37
20.17
33.73
14.53
PAT
16.64
21.64
7.87
7.52
-0.83Slide5
MOAT?
Product Moat
Good quality houses – fixtures from reputed names like Godrej,
Cera
etc.
Fixtures come with a guarantee --- 3 brands Poddar Svakam (Rs60-90 lakhs), Poddar Anantah (Rs15-50 lakhs) and Poddar Spraha (Rs7.5-15 lakhs)Affordable housing mindset- unlikely to stray into more expensive housing when demand picks upFinancial MoatExcellent unleveraged balance sheet with land bank in place. Possible that the company can keep buying land from its cash flows and may never need to take on significant debt (except for construction finance)RisksInability to launch projectsSlow demandGrowing competitionincrease in raw material prices (mainly cement and steel)Slide6
Valuation
Present Price
Hovers around Rs1000 --- Rs630 crore market cap (illiquid stock
)
In
valuing the company I would look at Prof Sanjay Bakshi’s formula, to value the business at 20 times expected earnings on the exit date (10 years) Expect the company to make Rs80-120 crore profit every year over the next five years – (Number could be higher as the government had announced lesser tax on profits for certain types of affordable housing companies --- for Poddar new rate is MAT) Company could be valued at Rs1600-2400 crore five years from now