CMP: 6.31 January 25, 2016 Stock Details BSE code 533100 BSE ID PEIL Face value ( ) 10 No of shares (m) 41 52 week H/L 17.70/4.03 Market cap ( m) 261 30 days avg vol (No) 1,156 Free float ( m) 89 Stock performance (%) 1M 3M 12M Absolute 8.3% 46.1% -63.3% Rel. to Sensex 13.0% 53.4% 47.1% Shareholding Pattern* (%) Promoters FIIs DIIs Others 65.58% % % 34.42% *As of September 2015 Relative Chart 18 16 14 12 10 8 6 4 2 0 PREMIER ENERGY AND INFRASTRUCTURE LTD Sensex 30,000 29,000 28,000 27,000 26,000 25,000 24,000 23,000 22,000 Company Overview The company was incorporated as Premier Housing and Industrial Enterprises Limited on 25th March 1988. The company was established as one of the largest Housing Development companies in the country with accent on quality and cost reduction in construction cost. Industry Overview The Indian real estate sector has witnessed high growth in recent times with the rise in demand for office as well as residential spaces. According to the Planning Commission of India, it is estimated that by 2030, about 600 million people are expected to live in cities, which points to huge demand for affordable housing. Moreover, the government initiatives of focus on urbanization, smart city program and improvement in infrastructure will enhance the outlook for the sector. Financial Performance For the period ending 31 March, 2015, Premier reported revenues of 805 million, representing dip of44.9% when compared to the revenues in FY 14 The company has reported a net profit of 29.2 million in FY 15, representing a 54.0% dip in when compared to the profit of 63.4 million in FY 14. For the period ending Q2 16, Premier has reported revenues of 7.4 million and a negative bottom line of 12.6 million. Table1: Key Financials (Y/e March) 2Q FY15 2Q FY 16 Source: Bloomberg Sales ( m) 1,637.8 1,462.3 805.0 127.4 7.4 YoY Growth (%) 1.3% -10.7% -44.9% NM -94.2% EBITDA ( m) 157.9 331.4 154.5 18.2 18.4 EBITDA Margin 9.6% 22.7% 19.2% 14.3% 247.8% PAT ( m) 70.4 63.4 29.2 1 (12.6) EPS ( ) 1.7 1.5 0.7 0.2 (0.3) YoY Growth (%) -57.3% -9.9% -54.0% NM -229.2% Source: Company, Karvy Investment Advisory 1
Background and Business Description The company was incorporated as Premier Housing and Industrial Enterprises Limited on 25th March 1988. The company was established as one of the largest Housing Development companies in the country with accent on quality and cost reduction in construction cost. The company is also operating in various industries: Manufacturing Ancillary Construction Real Estate SEZ Software BPO Key Strengths State government initiatives to revive the real estate market could be a boost. Assignment of large funds by government to metro, infrastructure, security, flyovers, drinking water and road and buildings can have positive impact Risks & Concerns The performance of the company is subject to sales and rental realizations from its projects. Fluctuations in prices due to prevailing market conditions will hamper the company s operations. Inability to design projects that will meet customer preferences and to have timely approvals will impact sales volume through reduced bookings. Timely execution of projects require regular flow of finances, hence inadequate funding resources may lead to high interest rates which impacts company s operating performance. Board of Directors Table 2: Composition of Board Name Relation with Company S. Krishnan Managing Director R. Ramakrishnan Director Vikram Mankal K.N. Narayanan Source: Company Director Director 2
Industry Overview Real estate sector is one of the most globally recognized sectors and it comprises of four sub sectors- housing, retail, hospitality and commercial. Real estate is the second largest employer in India and it is expected to grow at 30% over the next decade. Growth in the corporate environment and the demand for office space as well as urban and semiurban accommodations and infrastructure requirements points to the growth of this sector. For the period FY 08-20 the market size of this sector is expected to grow at a compounded annual growth rate (CAGR) of 11.2% to reach $180 billion by 2020. Sectors such as IT and ITeS, retail, consulting and e-commerce have registered high demand for office space in recent times. In 2014, investments in office space witnessed a four-fold rise to $2 billion compared to the previous year. Delhi-NCR is the biggest office market in India with 110 million sq ft, out of which 88 million sq ft is occupied. Delhi s Central Business District (CBD) of Connaught Place has been ranked as the sixth most expensive prime office market in the world with occupancy costs at $160 per sq ft per annum. According to the Department of Industrial Policy and Promotion (DIPP), the construction development sector in India has received foreign direct investments (FDI) that amounts to $24.1 billion for the period April 2000-June 2015. The Government of India has taken several initiatives to encourage the development in real estate sector. The Smart City Project, where there is a plan to build 100 smart cities, is a prime opportunity for the real estate companies. Competition analysis Company CMP ( ) Mcap ( m) Rev ( m) OPM (%) EPS ( ) PE (x) Premier Energy and Infrastructure Ltd 6.3 260.9 319.8 10.2% 1.1 6x Samruddhi Realty Ltd 35.0 394 498 19.4% 2.2 16x Steel Strips Infrastructures Ltd. 13.2 134.6 4 34.2% 0.5 26x Source: BSE 3
Financial Analysis For the period ending 31 March, 2015, Premier reported revenues of 805 million, representing dip of44.9% when compared to the revenues in FY 14. The company s EBITDA dropped to 154.5 million in FY 15 from 331.4 million in FY 14, primarily attributable to decreased revenues. Return on equity and return on capital employed were at 2% and 4.6% respectively in FY 15. Current ratio was at comfortable levels at 1.7x in FY 15 Year end March Income statement ( million) Revenue 1637.8 1462.3 805.0 % growth 1.3% -10.7% -44.9% EBITDA 157.9 331.4 154.5 % EBITDA margin 10% 23% 19% Depreciation and Amortisation 34.4 29.4 19.3 EBIT 123.6 302.0 135.2 Interest 142.1 145.5 136.0 PBT 115.9 97.6 (1) Tax (credit) expense 44.3 29.9 (17.8) Net profit 70.4 63.4 29.2 % growth net profit -57.3% -9.9% -54.0% Balance sheet ( million) Shareholder fund 1,912.7 1,976.2 1,780.4 Long term liabilities 623.3 727.6 1,171.4 Current liabilities 2,828.0 2,247.3 1,493.1 Fixed assets 2,055.9 1,991.0 1,871.6 Current assets 2,622.8 2,878.1 2,534.7 Cash & cash equivalents 685.3 82.0 38.5 Cash flow statement Cash flow operations 103.9-19.2-390.4 Cash flow from investing 0.4 (7.4) 1.3 Cash flow from financing (94.5) 70.6 345.3 Per share data EPS ( ) 1.70 1.5 0.7 CEPS ( ) 2.5 (0.5) (9.4) DPS ( ) NA NA NA BVPS ( ) 46.3 47.8 43.1 Financial Ratios % ROE 4% 3% 2% ROCE 4.9% 11.2% 4.6% Debt/Equity 0.3 0.4 0.7 Interest coverage ratio 0.9 2.1 1.0 Current ratio 0.9 1.3 1.7 Cash ratio 0.2 Source: Company, Karvy Investment Advisory 4
Financial Snapshot Revenue growth (%) EBITDA margin (%) 2,00 1% 40 25.0% 1,50 1,00 50 % -1% -2% -3% -4% -5% 30 20 10 2% 15.0% 1% 5.0% % Revenue ( m) % growth EBITDA ( m) % EBITDA margin Net Profit Margin (%) BVPS & EPS 8 6 4 2 Net Profit ( m) % net profit margin 4.5% 4.0% 3.5% 3.0% 5 48.0 46.0 44.0 42.0 4 Book value per share ( ) EPS diluted ( ) 2.0 1.5 1.0 0.5 Liquidity ratios Profitability ratios 2.00 1.50 0.30 0.25 0.20 12.0% 1% 8.0% 1.00 0.15 6.0% 0.50 0 0.10 5 0 4.0% 2.0% % Current ratio Cash ratio ROE ROCE Source: Karvy Investment Advisory 5
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