Buy Mahindra Lifespaces - Q4 FY 2011 Result Update - Motilal Oswal

Mahindra Lifespaces (MLIFE IN; Mkt Cap USD0.4b, CMP Rs392, Buy)

Mahindra Lifespaces reported lower than expected EBITDA for 4QFY11. Standalone EBITDA grew 36.5% YoY to Rs404m; EBITDA margin was 24.6%).

During 4QFY11, Mahindra Lifespaces sold ~0.21msf (Rs1.2b) from its existing inventory.

Sales volume declined sharply as against 0.34msf (Rs2.2b) in 4QFY10. However, the company has achieved 15.5% growth in annual sales volume.

The company signed up two more customers at its Chennai SEZ in 4QFY11, taking the total to 57 customers, with 35 already operational.

MLL has a strong focus on two business verticals - Residential and SEZ. Its (a) strong brand equity, (b) established client relationships, and (c) a strong balance sheet offer a robust growth outlook in both this verticals. With the potential acquisition of four more integrated development projects, we believe MLL is strongly positioned to augment the scalability of its business, significantly. Our one year forward SOTP value for MLL is Rs586/share. The stock trades at ~33% discount to one year forward SOTP value, 10.4x FY12E EPS of Rs37.6 and 6.9x FY13E EPS of Rs56.8. Maintain Buy.

Source : Equity Bulls

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