IPO Update: Parsvnath Developers Ltd.

Riding on Construction Boom



Parsvnath developers has entered the capital markets with a public offer of 3.32 crore equity shares at a price band of Rs. 250-300. Investment Guru recommends investors to subscribe to the issue. The issue is expected to garner moderate listing gains and could also be considered for a medium term hold.


Highlights of the issue
Parsvnath is one of the leading real estate development companies in India with operations in 41 cities and 14 states of India. The company directly owns or helds development rights for an estimated 108.64 million square feet of saleable area.

The company intends to develop 20 integrated townships, 27 commercial complexes including shopping malls, multiplexes, office space and a complete metro station and 25 residential projects. It also intend to construct 14 hotels and four information technology parks on commercial land acquired by us or in respect of which it has development rights.

Financials : Company's Revenue from operations stood at 643 crores for the FY06, an increase of 212% over previous year. Net profits have shown a increase of 163%. For the quarter ended June '06, the company has acheived a topline growth of 167 % over same quarter last year. Net profits increased by 226 % during the above period.

Positives :The company mentions its ability to identify emerging markets and assess the potential of a location, marketing network, diversified business model, timely and cost efficient completion of projects and transparent and efficient system of procuring materials as its qualitative strenghts.

Valuations :The weighted average EPS for last three years comes to Rs. 5.29. The EPS for the first quarter of this year comes to 2.46. If we take the etimated FY07 EPS of Rs. 9 for the company, the issue comes at a PE of 28 at the lower price band and at 33 times on the upper price band.

If we compare the offer price with the valuation of exitng listed players the valuations appear to be in the middle path and looks reasonable since the company is diversifying itself from a residential play to a commercial space player.

Return on Net worth is 53% which looks good as other competitors except DS Kulkarni are generating lower returns.

Risk Factors : The construction space as a whole commands a high PE in the stock markets given the huge potential and focus on housing and infrastructural development in the country. However, any negative developments or barriers on this front may lead to rerating of this sector. Apart from this Parsvnath is also battling the ownership of its brand name. The verdict if against the company may impact it adversely. Another concern is the negative cash flows in the last two financial year as well as the last quarter.

Issue Opens : November 06, 2006
Issue Closes :November 10, 2006
Registrar : Intime Spectrum

Additional references
Parsvnath developers Website

Company's Vision

Key Personnel

Prospectus

8 comments:

amit said...

Hi rajesh,

Here i will like you to thank for all the info that you share with us.

One stock specific querry i will like to have here.Sir i am tracking a stock "TATA INFOMEDIA".Recently there was a buyback offer at 245/- per share and now in the open market the stock is trading at 138/-.Sir i guess that the track record of the companies is good.What is your take on that particular stock with a time frame of six months in the mind.

Please sir your valuable analysis will be very helpful in taking decisions.Also if you can briefly throw some light on MTNL and SAIL on the current levels.

Best Regards,
Amit.

Suman said...

Dear Sir,
Please provide your valuable opinion on Lanco Infratech IPO? The issue is closing tomorrow. Shouls a small investor apply in this IPO?

Thank you
Suman

Market Analyst said...

good analysis. any idea what could be the land bank of the company and the worth of such landbank?

manoj said...

hi rajesh
please put your views on reliance industrial infrastructure on t5he blog. please advice if it is the right time to sell.

Anonymous said...

Good Afternoon Sir,
Would request you to share your views on Lupin labs and the target for the stock. I am willing to hold for 6 months.
warm regards
Saurabh

Anonymous said...

Hi rajesh


Nice reading your post.Plain english lot of gyan.Keep up good work pal.

Why dont u throw some light on F&O ?

Not much useful info available on net as of now.

Karthi

Anonymous said...

Hi,

I hold 20 shares of Anuh Pharma @ an average price of Rs. 780 per share.

I want to know the future prospects of the company.

Thanks,
Deepak Batreja
dbatreja@rediffmail.com

Anonymous said...

Hi raj,

any strategis for investors who get allotment in parsavanth.shd they accumualte more ?
Thanks!
George