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Indiabulls Real Estate Ltd.

BSE: 532832 Sector: Infrastructure
NSE: IBREALEST ISIN Code: INE069I01010
BSE LIVE 15:43 | 18 Aug 229.95 -6.95
(-2.93%)
OPEN

235.10

HIGH

236.35

LOW

226.50

NSE 15:59 | 18 Aug 229.55 -7.45
(-3.14%)
OPEN

235.50

HIGH

236.50

LOW

226.50

OPEN 235.10
PREVIOUS CLOSE 236.90
VOLUME 1059334
52-Week high 269.50
52-Week low 57.05
P/E
Mkt Cap.(Rs cr) 10,915
Buy Price 0.00
Buy Qty 0.00
Sell Price 227.20
Sell Qty 245.00
OPEN 235.10
CLOSE 236.90
VOLUME 1059334
52-Week high 269.50
52-Week low 57.05
P/E
Mkt Cap.(Rs cr) 10,915
Buy Price 0.00
Buy Qty 0.00
Sell Price 227.20
Sell Qty 245.00

Indiabulls Real Estate Ltd. (IBREALEST) - Chairman Speech

Company chairman speech

Dear Shareholders

The real estate industry contributes about 7.8% to India’s GDP and is thesecond-largest employment generator after the IT industry and is slated to grow at 30 percent over the next decade. The Indian real estate market is expected to touch US$ 180billion by 2020. The housing sector alone contributes 5-6 per cent to the country's GrossDomestic Product (GDP). Real Estate as a matter of fact has always been an attractiveinvestment option and with the additional support of the new rules and regulations by thegovernment it has resulted in significant growth in the residential and commercial RealEstate. The growth of this sector is well complemented by the growth of the corporateenvironment and the demand for office space as well as urban and semi-urbanaccommodations.

GST - A seminal development

Putting together my thoughts for this message has coincided with a very positivedevelopment - the goods and services tax (GST) has been recently cleared by the RajyaSabha. This is expected to benefit the real estate industry though the impact will dependon the final GST rate. I do feel the enactment of this law will single-handedly solve manyof the challenges faced by the real estate sector and help in pulling the sector out ofits long slumber. While it is still too early to definitively predict the bill’simpact on the real estate sector we can expect the sector to benefit in the long term onaccount of rationalisation in tax-related compliance and slated gains in related sectorssuch as cement steel IT and BFSI (banking financial services and insurance). Under GSTdevelopers would see lesser burden of tax on input items like cement and steel as taxcredits would be available for set off at various stages. This can lead to lowerconstruction costs for developers across all asset classes which could likely be passedon to property buyers.

Our optimism stems from our commitment and belief

Although real estate has been through a difficult time; and the market is soft yet itis a great time for players like us who have the holding power. Notwithstanding thecyclical hiccups that the sector is going through the way ahead for your company is onlyupwards. It’s testament to my commitment to your company’s long term future andmy strong conviction in its intrinsic strength and growth story that your company hasthrough its wholly owned step down subsidiary Grapene Ltd increased its stake inIndiabulls Properties Investment Trust Ltd (IPIT) from 47.51% to 54.95%. IPIT has bouquetof marquee commercial and residential properties underneath it viz One IndiabullsCentre Indiabulls Finance Centre and Sky range of residential projects at Mumbai.Accordingly IPIT has become a majority owned subsidiary of the Company and thefinancials of IPIT will be consolidated with financials of the Company from Q1 of thecurrent financial year.

Outlook

Keeping in mind the factors like rising income level of people people of all age groupinterested in Real Estate as an investment predicted growth in the manufacturing and theservice sectors affordable housing taking pace etc. we at Indiabulls believe that theyear of 2017 will revive the lost confidence and have a positive impact on the businessenvironment of Real Estate. With the lowering down of the rentals and the increasedforeign investments in India we are already witnessing a hike in interest in commercialspaces in 2016.

With the government taking initiatives to re-build the trust in the consumers mind andensuring that their investments are not misused the Real Estate (Regulation &Development) Bill will ensure that the developers avoid delays in the completion of theprojects and may focus on the completion of the on-going projects before launching newones.

We can also expect to see a shift in the Real Estate sector on the backdrop oftechnological advancement. Technology is pushing change in space use locations and demandlevels at an accelerated pace. But it is now the norm to anticipate strategize andrespond to new technologies before they are in mainstream. I am happy today that yourcompany is ahead of the curve in embracing in new technology.

Performance overview

Given the overall slowdown in the sector for the last couple of years your company toohas not remained totally insulated from the current sentiment in the real estate marketbut still braving the indifference surrounding the sector and unnerved by the slowdownwe are aiming high with a perfect blend of caution diligence and evaluation of all thepotential opportunities. We have maintained our focus on speedy execution maintaining amoderate level of debt and keeping costs under control.

Key highlights: sustaining growth

The current economic environment is extremely challenging; competitive intensityremains high and is likely to increase. However we remain committed to drive the businesstowards delivering consistent competitive profitable and responsible growth. I am happyto share some of the key highlights as follows:

• Total Revenues of Rs 2786 Crores in FY-16 vs. Rs 2737 Crores in FY-15

• Profit after Tax (PAT) Rs 341 Crores in FY-16 vs. Rs 273 Crores in FY-15

• Earnings per share (EPS) increased to Rs 6.77 in FY-16 vs. EPS of Rs 5.84 in FY-15.

• Credit rating of AA- highest amongst its real estate developer peers

• Gross Development Value of ongoing and planned projects is Rs 40015 Crores atthe end of Q1 FY-17 (excluding IPIT’s Suites & Forest – 7711 cr).

With new project launches planned in the current year the outlook for the ensuing yearlooks much brighter.

Land Bank: key to future profitability

The Company has fully paid land bank of 1017 acres in key cities across India ofwhich more than 95% of the Land Bank is in high value super-metro cities – Mumbai(MMR) National Capital Region (NCR) and Chennai and which is sufficient for proposeddevelopment over the next 7 years. In addition to the said land bank of 1017 acres theCompany also possesses 2588 acres of SEZ land in Nashik Maharashtra.

Ongoing projects gained momentum

Undeterred by the current slowdown your company has been steadily expanding itspresence in Tier I and Tier II cities. Presently your company is developing bothresidential and commercial projects mainly concentrating in metros and Tier I cities.Company’s ongoing projects have 35.5 million square feet saleable area with a grossdevelopment value of approximately Rs 33919 Cr. Each project bears a stamp of thoughtfulsolutions highest quality and an optimum mix of different categories and is a testimonyof Company’s diversified portfolio across price segments.

During the year under review our various existing projects gained momentum while wedeferred any new launches given the tepid market conditions. Almost entire Phase 1 of ourintegrated housing project at Panvel called ‘Indiabulls Greens’ has been soldout with very little inventory left out of the existing stock. ‘Golf’ Savrolipositioned as a weekend second home for the life style oriented is also generatingenthusiastic response. With civil construction almost over for most buildings in phase 1work on golf course has started. ‘Blu’ the most sought after project in Mumbaiis creating new benchmark in the city. A very high-end sales lounge and a show flat havebeen built at the site which reflect the experience buyers will enjoy on possession. Theproject has been steadily appreciating in terms of price realization for all incrementalsales. ‘Chennai Greens’ our flagship project down south is an integratedtownship of over 50 acres. While Phase 1 of the project was delivered in May 2013 thelong awaited CMDA approval for 2.5 FSI was received last year. This would permit thecompany to construct the 19 storey towers in Phase 2 of the project. We hope to startdelivery of Phase 2 from mid 2017 and complete by late 2018.

Besides the above your company is also in the process of launching 22 Hanover SquareLondon a unique luxury & residential project with total saleable area of 0.11 millionsq ft with gross development value of approx. Rs 5720 Cr. While we have obtained theplanning permission for this project its formal launch is due next year.

Thrust on execution and expansion

I am glad to inform that your Company has completed its first residential project inthe high end luxury segment in Mumbai. We have received Occupation Certificate for our"Sky" project in Lower Parel Mumbai and handover process has started. Yourcompany has recently entered into a Joint venture (JV) with Oricon Properties Pvt Ltd fordevelopment of 1.93 acres land parcel next to our Indiabulls "BLU" project inWorli. With this Indiabulls "BLU" also gets direct access from Dr. E MosesRoad adjacent to Four Seasons Hotel which greatly enhances the aesthetic appeal of thisbe-spoke residential complex in the ultra-luxury segment. Further as per proposed DPRegulations 2034 released by Municipal Corporation of Greater Mumbai (MCGM) Base FSI forresidential projects gets enhanced from 1.33 to 2.00. This will result in incrementalvalue in projects such as BLU.

Our Credit rating – A reflection of sound financials

After the upgrade in its long term credit rating to AA- from A+ last year the Companyhas maintained its long term credit rating of AA- amongst the highest rated listedcompanies in the Indian real estate industry peer group. The Company has also retained A1+(A One Plus) rating for its short-term debt which is the highest rating that can beassigned for short-term debt. The ratings are the manifestation of the Company’sstrong fundamentals low gearing and execution track record and mirror its long termgrowth prospects. The company reduced its net debt by 16% during FY16 and is one of theleast levered companies amongst its real estate peers in the country with a net gearingof 0.58.

Before I conclude I wish to place on record the sincere dedication and hard work ofour employees which has enabled your company to hold its head high even in thesechallenging times. I am also grateful to our bankers business associates and shareholdersfor their support and cooperation.

Thank you!

Sameer Gehlaut

Founder & Chairman