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| Unitech: Back in business
Unitech’s results for the September 2009 quarter were disappointing, with both revenues and profits falling below expectations. Revenues dropped by 48 per cent year-on-year while earnings fell 50 per cent year-on-year.
On a sequential basis too, the numbers were slightly lower than what analysts had hoped for—the pre-exceptional net profit was up 9 per cent. The company is now back in action; analysts point out that the average number of workers at construction sites rose 85 per cent sequentially.
Having raised around Rs 4,400 crore through placements, the company’s balance sheet is in a better shape now and the debt at the end of September was down to Rs 6,600 crore. The company has pre-sold around 10 million sq ft of the 21 million sq ft of space that it had launched in the first half of the current year, of which around 5 million sq ft is believed to be for the Unihomes project.
It has managed to sell Rs 4,000 crore worth of property in six months to September and the benefits of this will flow through in subsequent quarters. Unitech is also considering some new projects in Mumbai and it’s possible there could be some launches in areas such as Parel and Chembur.
Analysts, however, feel execution could be faster though the management is targeting around 30 million sq ft over the next three years. The company’s joint venture in Mumbai has acquired land for a slum rehabilitation project. At the current price of Rs 85 the stock trades at close to the net asset value of Rs 88, as arrived at by Citigroup, which believes that valuations are not compelling.
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