| We recently visited Anant Raj Industries' (ARIL) hotel sites, IT parks and a few of its residential plots which are scheduled for launch shortly. Construction work at the Manesar and Rai IT parks is proceeding apace – the former being in the fit-out stage and the latter to conclude phase I by April – while three hotel properties are nearing completion. Considering the swift pace of project execution, we expect ARIL's lease revenue to surge from Rs 450mn in FY10 to Rs 1.5bn in FY11. We thus revise our NAV-based target price for the stock from Rs 188 to Rs 198 and reiterate a Buy.
Three more hotels to be ready by April: We visited all of ARIL's hotel sites,numbering eight in all, in Delhi. Three hotels (Grand, Papilon and Tricolor) are expected to earn lease revenues starting April '10, while three others (Parkland, Retreat and Hilton) have already been rented out, and the remaining two (located near the Delhi International Airport) are still in the planning stage. We believe hotel rentals are likely to rise sharply from FY11 onwards and expect the company to earn Rs 465mn from its properties.
Maneswar and Rai IT parks fast approaching completion: The Manesar IT parkcomprises five towers, of which two have been handed over for fit-outs while construction of the others is complete. Rental revenue from the project has started flowing in from Q1FY10. We estimate revenues to the tune of Rs 90mn and Rs 287mn in FY10 and FY11 respectively. Construction at the Rai IT park is also well underway, with phase I (1.6msf) to be completed by April. The company has secured an IT major as anchor client for 0.6msf.
Rental income to exceed Rs 1.5bn in FY11: With project execution ramping up,we expect income from lease rentals to triple to Rs 1.5bn in FY11 and rise further to Rs 2bn in FY12. We are revising our NAV-based target price for the company to Rs 198 from Rs 188, factoring in a stronger annuity business based on the robust pace of execution at the IT parks and near-completion status of the hotel properties. We reiterate a Buy on the stock. Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice. |
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