Puravankara Projects Limited
| Summary |
|
The Issue: With so many real estate IPO’s entering the capital market will there be reasonable returns from this stock in long term? |
| The Solution: Hopefully yes. This company is backed by decent financials, good experience and strong marketing network. |
Puravankara Projects Limited is a Bangalore based real estate developer company with more than 30 years of presence in Mumbai, Bangalore, Kochi, Chennai, Coimbatore, Hyderabad, Mysore, Colombo and the United Arab Emirates (U.A.E). Its public issue opens July 31, 2007 and closes on August 3, 2007.
Business Overview:
The operations of the company include identification/acquisition of land, planning, executing and marketing of real estate projects. Both residential and commercial projects are executed. Residential projects consist of apartment complexes, villas and townhouses while commercial projects include retail and office premises.
The company was originally incorporated as Puravankara Constructions Private Limited in 1986 at Mumbai. In 1992 it was made a public limited company and the name was changed as Puravankara Projects Limited.
The total land area available is 38.07 million square foot, developable area is 116.24 million square foot and saleable area is 106.80 million square foot.
The company’s real estate development is concentrated primarily in southern India i.e. Bangalore, Chennai and Kochi. It has also acquired roughly 1.06 million square foot of land in Colombo for luxury residential project consisting of independent villas and townhouses.
The list of completed projects so far is given below:
At Mumbai:
| Project Name | Saleable area |
| Uran Park, Mora Road | 0.02 |
At Bangalore:
| Project Name | Saleable area |
| Purva Park, Cox Town | 0.50 |
| Castlemaine, Jayamahal Road | 0.02 |
| Purva Nest, Cambridge Road | 0.01 |
| Purva Graces, Yelahanka | 0.17 |
| Purva Iris, Cox Town | 0.06 |
| Purva Heights, Bannerghatta Road | 0.35 |
| Purva Paradise, Domlur | 0.05 |
| Purva Fairmont, Koramangala | 0.41 |
| Purva Pavilion, Hebbal | 0.24 |
| Purva Parkridge, Marathahalli | 0.35 |
| Purva Carnation, Cox Town | 0.08 |
| Whitefield Bouganvilla | 0.07 |
| Purva Riviera, Marathahalli | 1.26 |
Saleable area is in million square foot.
The company has also completed a commercial project, The Pavilion, on M.G. Road, Bangalore and it is ready for occupation. One more commercial project is being undertaken at Chennai with a saleable area of 0.35 million square foot.
There are 4 residential projects currently under execution at Bangalore on land that is owned by the company with a saleable area of 6.41 million square foot. These are Purva Grande (Lavelle Road), Purva Fountainsquare (Marathalli Junction), Purva Venezia (Yelehanka) and Purva Highlands (Kanakapura Road).
Similarly there are two ongoing projects at Chennai. These are Purva Swanlake (Old Mahabalipuram Road), Purva Jade (Arcot Road) with a total saleable area of 0.92 million square foot. In addition, at Kochi, there are three more projects currently in progress. These are Purva Grand Bay (Marine Drive), Purva Eternity (Kakkanad), Purva Moonreach (Airport Road) with saleable area of 1.86 million square foot.
The company also executes 5 more projects at Bangalore on joint development basis with a total saleable area of 1.44 million square foot.
A view of the Purva Fairmont, HSR Layout, Koramangala, Bangalore
The company has entered into a joint venture (Keppel Puravankara Projects Private Limited) with Keppel Investment Mauritius Private Limited, a subsidiary of the Singapore based Keppel Land Limited. Elita Promenade, a residential project in Bangalore, is being executed with a saleable area of 1.22 million square foot by this joint venture.
Through its IPO the company plans to mobilize Rs.1,125 crores at the upper price band of Rs.525, which shall broadly be used for repayment of loan of Rs.420 crores and Rs.351 crores for acquiring 43.56 million square foot land in and around Sriperumbudur and Kancheepuram near Chennai. After the IPO promotors shall have 89.95% stake in the company.
Financial data:
| Item | 2003 | 2004 | 2005 |
| Income | 41.35 | 76.38 | 151.03 |
| Expenditure | 32.29 | 59.94 | 110.60 |
| Profit before tax | 9.06 | 16.44 | 40.43 |
| Net profit | 6.49 | 15.44 | 38.02 |
| Item | 2006 | 2007 |
| Income | 280.42 | 416.86 |
| Expenditure | 197.81 | 284.53 |
| Profit before tax | 82.61 | 132.33 |
| Net profit | 73.45 | 130.40 |
All figures in Rs. Crores.
Comparison with some listed companies:
| Company | EPS | P/E | Book value |
| BLKASHYAP | 43.80 | 35.00 | 237.80 |
| PENINLAND | 57.00 | 8.60 | 104.80 |
| ANSAL ** | 9.40 | 29.90 | 80.50 |
| PURVA ** | 6.80 | 77.20 * | 11.50 |
* At the upper price band.
** Face value of Ansal and Puravankara is Rs.5.
IPO Details:
Issue Period: July 31, 2007 to August 03, 2007
Issue Size: 21,467,610 Equity Shares
Face Value: Rs. 5
Price Band: Rs. 500 to Rs. 525
Market Lot: 10 shares
Minimum Quantity: 10 shares
Retail Investor Limit: Rs.100,000
Click here to download application form.
Click here for Red Herring Prospectus.
Conclusion:
Puravankara has a strong presence in southern India, where lot of IT companies have set up their operations. After Sobha Developers, Puravankara is the second Bangalore based realty major to enter the capital markets. The company sells the real estate properties directly to the customers with marketing offices in India and UAE. The strong marketing network will help the company to reach the large NRI population in Gulf countries.
Puravanakara has the industry experience and technical expertise. Moreover, it owns nearly 43% of the developable land which gives a distinct advantage.
At the upper price band Rs.525, EPS of 6.80 and P/E of 77.20, the stock may be slightly expensive but there seems to be some considerable upside, based the growing demand in real estate industry and company’s ongoing / proposed projects.