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Peninsula Land Ltd. (PLL)
Thursday, June 14, 2007
(CMP: Rs 483, FY09E EPS: Rs 66.4, PE: 7.5x, Buy with Target Price: Rs 600)
The Event
Peninsula Land Ltd received the sanction of the Hon’ble High Court of Mumbai sanctioning the Scheme of Amalgamation of The Dawn Mills Company Ltd with the Company on 4th June’07
About the Dawn Mills Merger
PLL recently acquired the Dawn Mills situated in Lower Parel, Mumbai with a total area of 15 acres (built up area of 0.6 mn sq.ft).
The amalgamation between PLL & Dawn Mills is by way of offering PLL shares to Dawn shareholders. As per the terms of offer, every Dawn shareholder was offered 20 shares of PLL of Rs. 10 for every 1 equity share of Rs. 50 held by them.
This would increase PLL’s current equity placed at Rs 420 mn to Rs 472 mn after this merger.
Construction for 0.6 mn sq ft of Dawn Mills has already started in FY07 and the project is expected to complete by Dec’09.
Business Outlook
Peninsula Land is working on an area of 28.0 mn sq.ft spread in Mumbai, Pune and Goa. Peninsula land focuses on land development as its core activity. The company currently constructs projects on its own mill land or land acquired in joint venture with Swan Mills resulting in lower land cost for the company. This has resulted in the company enjoying highest EBITDA margins among its peers.
In Dec’06, PLL raised Rs 1560 mn through QIP placement of 2.6 mn equity shares at Rs 600 per share. The amount raised would be utilized for acquisition of fresh land deals. The company further plans to float a Reality Fund which would be raising funds from domestic & international markets in order to be cash ready to buy any potential good land assets for future property development.
PLL has also forayed into SEZ’s – (a) has acquired 200 acres of land for 3 SEZ’s in Goa with 16 mn sq. ft of saleable area. (b) The company has recently bagged a 100 acre SEZ in Pune in IT SEZ.
Financials & Valuation
Our FY09E financials already includes revenue from Dawn Mills premises in Mumbai and its proposed foray into Techno Park, IT Park & SEZ and we remain confident on the long term prospects of the company.
At the current price of Rs 483 the stock trades at a multiple of 10.2x FY08E and 7.3x FY09E earnings. We reiterate a BUY on the stock and maintain our target price at Rs 600 based on NPV of the projects under hand. At the target price, the stock trades at a PE multiple of 9x FY09E.
Download Full report in PDF
The Event
Peninsula Land Ltd received the sanction of the Hon’ble High Court of Mumbai sanctioning the Scheme of Amalgamation of The Dawn Mills Company Ltd with the Company on 4th June’07
About the Dawn Mills Merger
PLL recently acquired the Dawn Mills situated in Lower Parel, Mumbai with a total area of 15 acres (built up area of 0.6 mn sq.ft).
The amalgamation between PLL & Dawn Mills is by way of offering PLL shares to Dawn shareholders. As per the terms of offer, every Dawn shareholder was offered 20 shares of PLL of Rs. 10 for every 1 equity share of Rs. 50 held by them.
This would increase PLL’s current equity placed at Rs 420 mn to Rs 472 mn after this merger.
Construction for 0.6 mn sq ft of Dawn Mills has already started in FY07 and the project is expected to complete by Dec’09.
Business Outlook
Peninsula Land is working on an area of 28.0 mn sq.ft spread in Mumbai, Pune and Goa. Peninsula land focuses on land development as its core activity. The company currently constructs projects on its own mill land or land acquired in joint venture with Swan Mills resulting in lower land cost for the company. This has resulted in the company enjoying highest EBITDA margins among its peers.
In Dec’06, PLL raised Rs 1560 mn through QIP placement of 2.6 mn equity shares at Rs 600 per share. The amount raised would be utilized for acquisition of fresh land deals. The company further plans to float a Reality Fund which would be raising funds from domestic & international markets in order to be cash ready to buy any potential good land assets for future property development.
PLL has also forayed into SEZ’s – (a) has acquired 200 acres of land for 3 SEZ’s in Goa with 16 mn sq. ft of saleable area. (b) The company has recently bagged a 100 acre SEZ in Pune in IT SEZ.
Financials & Valuation
Our FY09E financials already includes revenue from Dawn Mills premises in Mumbai and its proposed foray into Techno Park, IT Park & SEZ and we remain confident on the long term prospects of the company.
At the current price of Rs 483 the stock trades at a multiple of 10.2x FY08E and 7.3x FY09E earnings. We reiterate a BUY on the stock and maintain our target price at Rs 600 based on NPV of the projects under hand. At the target price, the stock trades at a PE multiple of 9x FY09E.
Download Full report in PDF
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Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective.The information contained herein is based on analysis and up on sources that we consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it.& take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations given in this blog.
