HDIL has commenced handing over 1336 tenements to Mumbai Corp of Greater Mumbai (MCGM) that have been built for rehabilitation of slum dwellers under the SRA scheme at the Premier compound in Kurla (West). With the commencement of the handover process, HDIL has started to receive outstanding transferable development rights (TDR) for the project.
Generation of TDR will open another avenue of cash generation for HDIL. We now incorporate sale of 1 million sqft, based on total TDR generation ability, over FY16e and FY17e. We estimate net debt of HDIL to reduce to R2,500 crore by end-FY16 and R2,000 crore by end-FY17E. Debt reduction will enable accelerated construction of its ongoing residential projects.
We adjust our FY15-17 EPS estimates by -11%/+8%/-4%. We lower our estimates post updates on the projects’ timeline, while incorporating the sale of TDRs lead to the increase in our FY16E EPS estimate. Our updated 12-month target price stands at R128.
Downside includes execution/approval delays while the upside lies is improvement in approval scenario in Mumbai, faster realisation of receivables and lower interest rates.
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