Wednesday, June 15, 2016

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"Unitech remains committed toward delivering its ongoing projects and has renewed its efforts to that end. The company has also mobilised sufficient resources to achieve this," the company said to BSE. 

"We are currently delivering over 300 units a month and expect to increase the pace further substantially. During the first 6 months of the current financial year, the company has already delivered 2.43 million sq ft of area and deliveries are on in 47 projects across regions," the company said.

The company has huge land banks and could be monetized to pay off the debts. 
Also, the real estate sector in India, according to the January 2016 sectoral report of the Indian Brand Equity Foundation, is the second largest employer after agriculture and is slated to grow at 30% a year over the next decade. It is considered to be one of the direct offshoots of the growth of corporate environment in the country. 

Moreover, according to a report by Bain & Company, titled "Residential real estate in India: A new paradigm for success", in 2015, the real estate demand in India amounted to 880 million square meters, with the largest proportion of this (85%) going to retail. 

By 2020, this is projected to grow to 1.35 billion square meters, although the mix of demand will change slightly. Residential real estate will continue to see strong growth at around 9% CAGR, commercial will see 7% to 8% growth rates, while retail will see the fastest paced growth at 25%.

According to the Khaleej Times, June 2, 2016
A huge growth potential and a string of investor-friendly legislations offer Indian property buyers an ideal opportunity to be part of the country's growth story, real estate experts said at the opening of the biggest Indian realty exhibition in Dubai on Thursday. 
With the Indian property market poised for a vibrant growth phase to reach $102 billion in 10 years, the time is ripe for investors to enter the market, property pundits said on the sidelines of Sumansa Exhibitions' flagship Indian Property Show, which opened in Zabeel Hall 5 of Dubai World Trade Centre.
Besides the bright growth prospects, the implementation of the long-awaited real estate bill is providing investors greater assurance on the safety of their capital while helping them make more informed decisions, said R. Srividya, General Manager, Corporate Sales & Brand Engagement, Sumansa Exhibitions.
Unitech Ltd is a leading real estate developer in India. Established in 1971 by a group of technocrats, Unitech Limited is one of India's leading Real Estate player. It started business as a consultancy firm for soil and foundation engineering and has grown to have the most diversified product mix in real estate comprising of world-class commercial complexes, IT/ITes parks, SEZs, integrated residential developments, schools, hotels, malls, golf courses and amusement parks.

So far Unitech has built more than 100 residential projects. Unitech continues to build hallmark and luxurious living spaces pan India. The Unitech Golf and Country Club, which offers 347 acres of ultra-luxury living with unparalleled views of a signature golf course, just off the expressway in Noida, is one of the upcoming prestigious address.

Unitech has experience in developing and leasing IT/ITes and commercial office spaces in its Grade 'A' complexes in Gurgaon like Cyber Park, Signature Towers, Global Business Parks, Unitech Business Park, Unitech Trade Centre, Millenium Plaza, Unitech Corporate Park, 

etc. Some recent launches have been Nirvana Courtyards II, Signature Towers II, Uniworld Towers and Infospace in Gurgaon, Bhubaneshwar 1 in Bhubaneshwar etc.

Unitech has also developed world-class malls like Metro Walk in Rohini, The Great India Place in Noida, and Central in Gurgaon have been hugely successful. Currently, 4.5 million sq.ft. of retail space is already under construction in cities like Mumbai, Kolkata, Bengaluru, Hyderabad, Chandigarh, Dehradun, Amritsar, Bhopal, Mysore, Mangalore, Lucknow, Kochi, Trivandrum and Siliguri. Some of the recent launches have been Gardens Galleria in Bengaluru, Noida and Mohali, Great India Place in Bhopal and Dehradun and Downtown in Mohali.

Unitech is continuously making an effort to reduce its debt exposure. The Company is further planning to reduce its debt by 15-20 % in the coming quarters by selling-off some of its non-core land parcel and by monetizing some of its commercial assets. By non-core land parcel, the Company means: the sale of some land for which it has no development plans in the near future.

In India, various factors like rapid urbanization, increase in nuclear families etc. continues to drive the real estate sector. In order to take advantage from the opportunities that the market is offering, Unitech develops properties across wide variety of segments, which extend across:

  • Low-rise, mid-rise and high-rise developments
  • Suburban as well as city centre developments
  • Affordable to luxury housing
The Company has a large diversified land bank which allows it to offer a wide variety of customized and market specific products. Whenever the market conditions improve, Unitech on the back of large and well diversified land bank will be able to develop and increase the speed of new launches and sales. The Company currently has nearly 100 ongoing projects covering to be constructed and delivered in the coming years.

Besides, the Reserve Bank of India (RBI) very recently offered a measure of relief to banks weighed down by bad loans and their stressed corporate clients, seeking to slow the build-up of sticky loans and, at the same time, ease the pressure on company balance sheets.

Reserve Bank of India (RBI) has allowed banks to convert up to half of the bank loans of stressed firms into equity or equity-like instruments. This is a positive for all the companies, who are reeling with debts on the books. 

Meanwhile, the shortage of urban houses stood at 18.8 million units in 2012, and it is expected to grow at a compounded annual growth rate of 6.6% for 10 years till 2022, when it will reach 34.1 million, according to a report by the research and consulting firm RNCOS and cited by the Press Trust of India.

"Rising inventory levels in a country where housing shortage is such a critical issue indicates that the supply that is available is unaffordable to many, according to property consultants. Mumbai has a shortage of more than 2 million homes, but is unable to sell half its inventory pile-up because of unaffordable prices. This means that sales can improve but at the right price. NCR, on the other hand, doesn’t have a price problem but 52% of the housing supply is in uninhabitable areas which doesn’t have adequate infrastructure for people to actually go and live,” said Pankaj Kapoor, managing director, Liases Foras.

The NDA government is trying to do something about reducing the shortage and improving affordability. In June, 2015 the government launched three schemes—the Smart Cities mission, Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and Housing for All mission at an expected cost of around Rs.4 trillion.

The Housing for All scheme aims to provide at least 20 million homes to lower-income earners. These apart, a real estate act that is aimed at primarily protecting consumer is likely to make the land acquisitions difficult, pushing its price. 

Currently, the real estate sector, seems to be in a transition stage, where it is gradually moving away from an investor-driven to an end-user-driven cycle. Interest rates are slowly coming down and affordability will improve.

In such a scenario it would be prudent to invest in the stock of Unitech Ltd (Rs.4.90) and keep holding for a target of over Rs.10, with occasional profit booking. The share of Unitech Ltd, has a face value of Rs.2, Market Cap of Rs.1,284.60 Cr and Book Value of Rs.38.37. This is going to give your multibagger returns in the short term. 
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