BUY KAMANWALA HOUSING CONSTRUCTION
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Smart Profit
Feb 27, 2013, 5:18:11 AM2/27/13
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BUY KAMANWALA HOUSING CONSTRUCTION
CMP: 27;
Target: 60 in 4 months
COMPANY DESCRIPTION:-
Kamanwala Housing Construction Limited (KHCL) constructs, sells,
finances and develops commercial and residential buildings, is a
company with a 25- year track record. It’s based at Mumbai, the
commercial capital of India. The construction sector has shown
mercurial growth.
The company launched its public issue in March 1986 through which Rs.
18mn were raised.
From the low cost housing project housing projects it started out
with, the company has now transitioned to executing prestigious
projects of high quality in prime location. The projects that the
company has planned to execute in the future are characterized by
larger areas being taken up for development than has been the case in
the past. The company has now changed its name to Kamanwala Housing
Construction Limited, to reflect the focus on its core activity,
construction.
Demand in this sector is driven by the increasing level of
urbanization, the above-average economic growth in India, the thrust
on infrastructure, rapid expansion in the retail sector, the
accelerating demand for office space, and the ever-widening demand for
residential properties. Apart from this, increasing foreign and mutual
fund investment in this sector is bringing in large capital inflows,
thus catalyzing growth.
It has consolidated its position and established itself. The
foundations for taking off into a higher scale of operations been
laid.
INVESTMENT HIGHLIGHTS:-
Kamanwala Housing Construction Limited (KHCL) is a Mumbai based
listed Real Estate and Construction Company with a track record of
making profits. The company has more than 25 years of standing in the
industry.
The company has been delivering value and quality to its customers.
The organization structure is lean and efficient.
High and sustainable growth forecast for real estate and
construction sector with all demanded drivers expected to grow
unimpaired in the fore seeable future.
Begin economical and interest rate environment has given a fillip to
buyer confidence and the appetite for residential projects.
KHCL has executed 18 projects with a saleable area of about one
million sq.ft. Valued at about Rs.120 Crores.
The company is in the process of reducing its debt.
Approx. Amount receivable in next 18 months from projects under
implementation is Rs 225 Cr
The projects currently being implemented are located in prime areas
of Mumbai, the commercial capital of India. The construction and
design are futuristic, incorporating. Both aesthetics as well as
functionality.
The ample land bank insulates the company from an increase in land
prices for the projects that are in the pipeline.
KHCL has drawn up a growth model that is de-risked through
diversification across segments, projects and locations. There is a
shortfall in both residential as well as commercial properties in
Mumbai, where most of the company’s projects are located.
The company is therefore well positioned to take advantage of the
industry growth potential, having laid the foundations for taking off
into a higher scale of operations.
As the new projects are executed, steep growth in revenue can be
expected, which in turn would result in an expansion in profitability
margins.
DETAILS OF PROJECTS & LAND BANK
Kamanwala have projects spread across the prime location of Mumbai
like -Bandra Kurla Complex, Malad and Mahim.
It owns the famous Filmistan studio in partnership and has been in
news recently that it is selling the land for a whooping amount of Rs.
600 cr. Kamanwala is in a process of completing a commercial project
“Pinnacle Corporate Park” at Mumbai’s most developing commercial hub
Bandra Kurla Complex. Kamanwala’s Savoy Residence, a residential
project of 60000 sq ft. in Santacruz West has been completed. Work at
Savoy chambers, a commercial project of 67000 sq.ft in Santacruz West
is completed. Kamanwala is constructing 5 towers residential project
in Malad West .They are developing SRA project at Mahim. They are soon
starting with development of 35 acres of land in Hyderabad.
Thus it diversified across projects, segments and locations. It will
continue to identify and implement projects which underline our
vision: Quality and Value to the Customer. It is this vision which
will help KHCL into an exponential growth trajectory, and fulfill the
aspirations of all the stakeholders.
The Projects that have being implemented as well as those that are in
the pipeline, add up to a land bank of about 10.46 lacs sqft.
RISK FACTOR & MARGIN OF SAFETY:-
As regards the margin of safety concern it is considered in the
following point:-
a) Company acquires only non agriculture land.
b) BMC/local authority plan approved for particular development of
land.
c) Land should be in a metropolitan city and the area is heavily
populated and the demand for sale immediately.
d) Sale:
(a) 50% sale take place immediately within three to
six months
(b) balance 50% within a year.
By all the facts as mentioned above the following are benefits to
the company:-
Less cost of interest to the company.
No litigation of finance to the company.
Less involvement of finance to the company.
Quality control and immediate sale to be taken place. Housing
development activity depends on development of basic infrastructures.
Now the government also looking forward to the housing industry as a
core sector it is encouraging and initiating to develop the
infrastructure roads, bridges and flyovers which is the necessity for
the metropolitan’s cities to develop at an international level. So
housing industry having very least risk factors however, its having a
very bright future up to 25 years in India.
VALUATION:-
KHCL is expected to register robust growth in revenues and earnings
going forward. They are also reducing their debt and aim to be a debt
free company soon. The stock has succumbed to the market. With a
strong project pipeline to drive revenue and earnings growth, the
stock has potential to deliver handsome returns to the investors over
a period of next one year. With market capital of Rs.45 cr & total
land asset of more than Rs.1000 cr, market is severely undervalued at
32. Hence, we recommend a STRONG BUY on Kamanwala with target of 60 in
4 months and more than Rs.100 within a year.
Disclaimer: - This document has been prepared by Smart Profit (Stock &
Derivatives consultancy) and is meant for sole use by the recipient
and not for circulation. This document is not to be reported or copied
or made available to others. It should not be considered to be taken
as an offer to sell or a solicitation to buy any security. The
information contained herein is from sources believed reliable. We do
not represent that it is accurate or complete and it should not be
relied upon as such. We may have from time to time positions or
options on, and buy and sell securities referred to herein. We may
from time to time solicit from, or perform investment banking, or
other services for, any company mentioned in this document
CMP: 27;
Target: 60 in 4 months
COMPANY DESCRIPTION:-
Kamanwala Housing Construction Limited (KHCL) constructs, sells,
finances and develops commercial and residential buildings, is a
company with a 25- year track record. It’s based at Mumbai, the
commercial capital of India. The construction sector has shown
mercurial growth.
The company launched its public issue in March 1986 through which Rs.
18mn were raised.
From the low cost housing project housing projects it started out
with, the company has now transitioned to executing prestigious
projects of high quality in prime location. The projects that the
company has planned to execute in the future are characterized by
larger areas being taken up for development than has been the case in
the past. The company has now changed its name to Kamanwala Housing
Construction Limited, to reflect the focus on its core activity,
construction.
Demand in this sector is driven by the increasing level of
urbanization, the above-average economic growth in India, the thrust
on infrastructure, rapid expansion in the retail sector, the
accelerating demand for office space, and the ever-widening demand for
residential properties. Apart from this, increasing foreign and mutual
fund investment in this sector is bringing in large capital inflows,
thus catalyzing growth.
It has consolidated its position and established itself. The
foundations for taking off into a higher scale of operations been
laid.
INVESTMENT HIGHLIGHTS:-
Kamanwala Housing Construction Limited (KHCL) is a Mumbai based
listed Real Estate and Construction Company with a track record of
making profits. The company has more than 25 years of standing in the
industry.
The company has been delivering value and quality to its customers.
The organization structure is lean and efficient.
High and sustainable growth forecast for real estate and
construction sector with all demanded drivers expected to grow
unimpaired in the fore seeable future.
Begin economical and interest rate environment has given a fillip to
buyer confidence and the appetite for residential projects.
KHCL has executed 18 projects with a saleable area of about one
million sq.ft. Valued at about Rs.120 Crores.
The company is in the process of reducing its debt.
Approx. Amount receivable in next 18 months from projects under
implementation is Rs 225 Cr
The projects currently being implemented are located in prime areas
of Mumbai, the commercial capital of India. The construction and
design are futuristic, incorporating. Both aesthetics as well as
functionality.
The ample land bank insulates the company from an increase in land
prices for the projects that are in the pipeline.
KHCL has drawn up a growth model that is de-risked through
diversification across segments, projects and locations. There is a
shortfall in both residential as well as commercial properties in
Mumbai, where most of the company’s projects are located.
The company is therefore well positioned to take advantage of the
industry growth potential, having laid the foundations for taking off
into a higher scale of operations.
As the new projects are executed, steep growth in revenue can be
expected, which in turn would result in an expansion in profitability
margins.
DETAILS OF PROJECTS & LAND BANK
Kamanwala have projects spread across the prime location of Mumbai
like -Bandra Kurla Complex, Malad and Mahim.
It owns the famous Filmistan studio in partnership and has been in
news recently that it is selling the land for a whooping amount of Rs.
600 cr. Kamanwala is in a process of completing a commercial project
“Pinnacle Corporate Park” at Mumbai’s most developing commercial hub
Bandra Kurla Complex. Kamanwala’s Savoy Residence, a residential
project of 60000 sq ft. in Santacruz West has been completed. Work at
Savoy chambers, a commercial project of 67000 sq.ft in Santacruz West
is completed. Kamanwala is constructing 5 towers residential project
in Malad West .They are developing SRA project at Mahim. They are soon
starting with development of 35 acres of land in Hyderabad.
Thus it diversified across projects, segments and locations. It will
continue to identify and implement projects which underline our
vision: Quality and Value to the Customer. It is this vision which
will help KHCL into an exponential growth trajectory, and fulfill the
aspirations of all the stakeholders.
The Projects that have being implemented as well as those that are in
the pipeline, add up to a land bank of about 10.46 lacs sqft.
RISK FACTOR & MARGIN OF SAFETY:-
As regards the margin of safety concern it is considered in the
following point:-
a) Company acquires only non agriculture land.
b) BMC/local authority plan approved for particular development of
land.
c) Land should be in a metropolitan city and the area is heavily
populated and the demand for sale immediately.
d) Sale:
(a) 50% sale take place immediately within three to
six months
(b) balance 50% within a year.
By all the facts as mentioned above the following are benefits to
the company:-
Less cost of interest to the company.
No litigation of finance to the company.
Less involvement of finance to the company.
Quality control and immediate sale to be taken place. Housing
development activity depends on development of basic infrastructures.
Now the government also looking forward to the housing industry as a
core sector it is encouraging and initiating to develop the
infrastructure roads, bridges and flyovers which is the necessity for
the metropolitan’s cities to develop at an international level. So
housing industry having very least risk factors however, its having a
very bright future up to 25 years in India.
VALUATION:-
KHCL is expected to register robust growth in revenues and earnings
going forward. They are also reducing their debt and aim to be a debt
free company soon. The stock has succumbed to the market. With a
strong project pipeline to drive revenue and earnings growth, the
stock has potential to deliver handsome returns to the investors over
a period of next one year. With market capital of Rs.45 cr & total
land asset of more than Rs.1000 cr, market is severely undervalued at
32. Hence, we recommend a STRONG BUY on Kamanwala with target of 60 in
4 months and more than Rs.100 within a year.
Disclaimer: - This document has been prepared by Smart Profit (Stock &
Derivatives consultancy) and is meant for sole use by the recipient
and not for circulation. This document is not to be reported or copied
or made available to others. It should not be considered to be taken
as an offer to sell or a solicitation to buy any security. The
information contained herein is from sources believed reliable. We do
not represent that it is accurate or complete and it should not be
relied upon as such. We may have from time to time positions or
options on, and buy and sell securities referred to herein. We may
from time to time solicit from, or perform investment banking, or
other services for, any company mentioned in this document
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