Indiabulls RealEstate Ltd

[CMP – 92] [Market Cap – 4980cr]

Industry Overview :
 The real estate industry did very well in 2022. The year can be easily termed as the
“turn-around year” for segments such as residential and retail, with all segments
recovering from COVID lows and recording strong year-on-year growth. While
growth in India has slowed for multinational corporations, domestic demand has
remained steady , India‟s real estate market is expected to exhibit a growth rate
(CAGR) of 9.2% during 2023-2028. Therefore, FY‟23-24 will see a strong foundation
as there will be more buyers, and home loan rates will be lower. Multiple rating
agencies have calculated that the Indian economy is estimated to grow by 8–9%,
which will ultimately drive the growth in the real estate market. This growth can be
attributed to increasing business activity, improved job markets, and higher income
levels, all of which will inevitably lead to a rise in real estate demand.

Indian housing market persists with a bullish trend, defying economic headwinds :

 The relative stability in sales was sustained across all markets with the YoY
percentage change in sales levels not exceeding single digits for any. Sales grew the
most in the Hyderabad market at 5% YoY while slipping in the larger markets of
Mumbai and Bengaluru at -8% and -2% YoY.
 While sales volumes have been stable in H1 2023, prices have grown in the range of
2% to 10% across all markets with Mumbai, Bengaluru and NCR growing by 6%, 5%
and 5% YoY respectively.
 Conversely, during the same reference period, the share of annual sales in the INR 5-
10 mn and >10 mn ticket-size categories grew from 36% to 38% and 21% to 30%
respectively.

MMR Market Overview :

 Mumbai continues to maintain its position as the largest market in terms of real estate
sales with sale of 40,798 units in the first half of 2023. While the growth in sales
remained steady compared to the second half of 2022, the city has witnessed an 8%
YoY decline in the total sales during the first half of 2023. In H1 2023, a substantial
supply of 50,546 units was added, marking the highest number since the first half of
2014. The unsold inventory has risen by 7% YoY in H1 2023 on account of the
massive supply added in the market. However, the Quarters- to-Sell has reduced from
12 quarters in 2021 to 8.4 quarters in H1 2023. This reduction indicates a faster pace
of property sales and suggests that the market is absorbing the available inventory
more efficiently.
Gurugram Market Overview :
 In line with past trends, Gurugram remains a key hub for primary residential sales in
NCR. Since H2 2019, Gurugram‟s share in NCR‟s total sales volume has only
expanded with each half-yearly period. From a 12% share in H2 2019, Gurugram‟s
share has grown to 52% in H1 2023.A high residential demand has also revitalized the
new launches activity in Gurugram. In H1 2023, new launches in Gurugram
comprised 82% of NCR‟s total launch pie. From a mere 19% share in H1 2021,
Gurugram‟s share has swelled to 82% in the current review period as many new
projects have been launched in the developing peripherals.

Opportunities :

 The Indian residential sector has been on a roll in the first half of 2023 with both housing sales and new
launches scaling new heights. Housing sales across the top 7 cities in H1 2023 have already reached
over 63% of the total sales in entire 2022 despite rise in both interest rates and housing prices.
 In fact, the unfettered demand for housing across the country has also enabled the top 8 listed
developers to reduce their debt from INR 405 Bn in FY20 to over INR 230 bn in FY23 – recording a
decline of 43 in the period. This decline in net debt is essentially because of the boosted sales and
revenues collected by these listed developers. These developers‟ sales volumes have surpassed pre-
pandemic levels and are headed for a new peak. With improved cash flows over the last few years,
their debt has thus reduced significantly.
 Other parameters including the stock market etc. also reflect positive trends which in a way are likely
to positively impact the residential market.

Challenges :

 Unanticipated delays in project approvals

 Increased cost of manpower
 Rising cost of construction lead by increase in commodity prices
 Growth in auxiliary infrastructure facilities

Company Overview :
 Indiabulls Real Estate Limited, one of the leading real estate developers in the
Mumbai Metropolitan Region (“MMR”) and the National Capital Region (“NCR”) of
India, was incorporated in 2006 with its focus on construction and development of
residential, commercial and SEZ projects across major Indian metros.
 The Group has successfully delivered 19 projects across India, spanning a
developable area of ~30 million sq. ft and has ~12 million sq.ft of unsold inventory
across 6 cities & 15 projects and holds a land bank of over 3,000+ acres near to major
metropolitans; one of the largest land banks among listed Indian real estate
developers.
 It has delivered iconic commercial developments of over 3.3 million sq. ft. in
Mumbai namely – One International Centre & One World Center and in the
 residential segment our flagship projects in Mumbai include Blu Estate & Club & Sky
Forest, apart from delivering projects in Gurugram, Chennai, Madurai, Ahmedabad
and Thane.

Key Projects :
 The Company has 12 residential projects and 4 commercial projects in MMR, NCR,
Jodhpur, Vadodara, Vizag in various stages of completion.

 Under-Development :
The Co has 5 projects under development. The total net surplus of these projects
amounted to ₹6226 cr.

Screenshot from Investors Presentation

 Completed & Near Completion Projects: [Net Surplus - 806cr ]

Screenshot from Investors Presentation

Projects Visuals :
 Significant Land Reserves :

 Total of 3,226 acres, near major metropolitans, the largest among all listed players.
 This allows us to develop projects to take advantage of potential opportunities,
without the need to spend time locating and acquiring the land first.
 Provides an option to monetize certain land banks in non-core areas with limited
potential and enhance our presence in strategic locations.

Sales & Collections :

 Operations :

Debt Profile :

Major Changes & Updates :

 Update on Merger with Embassy Group :

 The Board of Directors of the Company in its meeting held on August 18, 2020, have
approved the Scheme of Arrangement („Scheme‟) amongst the Company, NAM Estates
Private Limited (“NAM Estates”) and Embassy One Commercial Property Development
Private Limited (“NAM Opco”), both Embassy group entities.
 Upon effectiveness of the Scheme, the Company will issue its equity shares, in accordance
with the approved share swap ratios, pursuant to which Company is being valued at ` 92.50
per share. The Scheme had been granted approval by Competition Commission of India
(“CCI”) and SEBI/Stock exchanges. The Equity shareholders of the Company, at their
meeting held on February 12, 2022, has also approved the Scheme with 99.9987% majority.
Further, the NCLT Bengaluru Bench has also approved the Scheme on April 22, 2022.

Nashik SEZ :
 M/s Indiabulls Industrial Infrastructure Limited (“IIIL”) a subsidiary of the Company,
had in August 2007 entered into a Share Purchase Agreement (“SPA”) with Maharashtra
Industrial Development Corporation (“MIDC”) which allowed IIIL to enter into lease deeds
with MIDC on approximately 2,500 acres of land (“Land”) situated in Sinnar, Nashik district,
Maharashtra. The Land was to be developed as industrial plots within the Special Economic
Zone (“SEZ”) framework. IIIL has paid a premium of ₹67.7 Crores to MIDC for the Land.
 Development on the Land has been carried out with respect to a 1350 MW power plant, along
with basic infrastructure (such as roads, water, power, administrative blocks, etc), a 38 km
SEZ boundary wall, 8MLD freshwater pipeline, customs office inside SEZ, solar streetlights,
telecom and broadband connectivity. Further, to rehabilitate the Project Affected Persons
(“PAPs”) the Company has paid the plot fee towards the PAPs, along with basic infrastructure
(such as bitumen roads, RCC water tank, water pipeline, electric pole network, solar
streetlight, WBM road (14 km), culverts etc).

London Receivables :
 A resolution was purportedly passed by the Operations Committee of the Board (comprising
the erstwhile management) on February 07, 2023, authorizing execution of amendments of
the Share Purchase Agreement executed on November 01, 2019 (“SPA”) by the Company‟s
subsidiary Brenformexa Limited (“Brenformexa”) with Clivedale Overseas Limited
(“Clivedale”), an entity controlled by the erstwhile promoters of the Company. Under the
terms of this SPA, out of a total consideration of GBP 200 million, an amount equal to GBP
61.85 million (~₹629 Crores) remains due and payable from Clivedale to Brenformexa
(“Balance Amounts”).
 As a prudent measure, the Board, in consultation with the statutory auditors, has decided to
create a provision of ~₹629 Crores in its books of accounts for the quarter ended June 30,
2023, against the potential inability to recover the Balance Amounts.
 Financials :
Profit & Loss Statement

Balance Sheet
 Financial Comparisons:

Indiabulls
Particulars Industry
RealEstate Ltd
PBV 2.31 1.69
Stock EV/EBITDA -8.62
Stock Market Cap/Sales 9.68
10 years PE 13.7
Industry PE 32.5
ROCE -7.17%
ROE -11.4%
Debt/Equity 0.09
The following report is for educational purpose and the report has been made by a NISM certified research analyst. Do your own
research before investing.

Rhythm Gandhi
Research Analyst
Finportal Investments Private Limited