Wednesday, March 5, 2014

Purvankara Projects - Avoid

Company Background :

Puravankara Projects Limited is an India-based company. The Company is engaged in the development and construction of residential and commercial properties. The Company operates primarily in India. The Company has projects across Bangaluru, Chennai, Coimbatore, Kochi, Hyderabad, Kolkata, Mysore, Mumbai and Colombo. Its completed projects includes purva fountainsquare, purva jade, purva vantage, purva grande, purva Riviera, purva panorama, purva carnation, purva pavilion, purva fairmont, purva heights, purva iris, purva graces, purva park, purva paradise, castlemaine, purva nest, whitefield bougainvilla and uran park-Mumbai. As of March 31, 2012, the Company had 19 subsidiaries.

Performance 

A comparative chart with its peers in Bangalore segment reveals interesting facts.  It has fallen way ahead of others in the recent slide sinking to a new 52 week low.  A consolidation in Rs.45-50 is expected sooner than later.  While Sobha, Prestige and Brigade scrips have fallen around 18% Purvankara had steepest fall of 47% clearly indicate the weakness in the fundamentals of the share.


52 Week Low :

Will you buy this stock ? No The investors are exiting the stock since the expectation is that there will be fall in total sales and revenue in next 2 quarters.  The Realty scene in major cities in India is down since there is contraction in the income levels of the users and tepid increase in the annual salaries of the workforce.

Provident Housing :

The company forayed into low cost housing projects with a 100% subsidiary which is yet to turn green.  The large size of units that remain unsold is a cause for worry.

Buying Opportunity :

During last year the company raised money through QIP at Rs.80 levels to raise INR 1.84 Billion hence the book value continues to remain high.  The debt levels are also manageable.  The scrip becomes a compelling buy only after we review the performance in Q4 quarterly results and management perception of the realty scenario in major markets they have projects.  

Smart Investor
Equity Research Division

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