*We believe that Unitechโs share price is currently not completely pricing in the positives in **terms of increase in volumes, estimated price increases in FY11 and FY12 and possible **reduction in cap rates. We raise our price target to INR113 from INR47 and upgrade the **stock to BUY from Reduce with 31% potential upside.*
* What has Unitech done right so far? * ๐ It has raised US$325mn from a QIP issue, diluting 20% of the equity post-money. Given that Unitech was facing a large cash shortfall, we believe investors may have lost confidence in the companyโs ability to survive. This QIP issue went a long way towards restoring confidence in the company and helped the stock rebound from almost bankruptcy value. ๐ Restructured short-term debt to ease pressure on cashflow. ๐ Closed a deal with Telenor in Feb โ09 for selling 67.25% in Unitech Wireless for INR61.2 bn, which also improved confidence in Unitech, in our view. ๐ Sold some assets, including a hotel and office complex in Gurgaon and Delhi, respectively in Marโ09 and Aprโ09, for about INR7.3bn, and this helped improve cashflow to fund construction and short-term payments. ๐ Launched several affordably priced projects in Gurgaon, Chennai, Kolkata and Mumbai in the period of Marโ09 to Mayโ09, totaling about 8mn sqft. Successfully sold 2.5mn sqft over a two-month period; this is an encouraging sign, in our view. ๐ Issued preferential warrants to promoters, convertible for a 10% stake at INR50.75/share totaling INR11.5bn. Of the money raised, 25% will be invested in June and the rest over the next 18 months. * What may Unitech do over next 12 months? * ๐ According to management, the company plans to launch another 20mn sqft of affordable, mainly residential space across 15 cities. Projects to be launched in the INR1-1.5mn range. ๐ De-leverage the balance sheet further by selling more assets, such as offices, hotel, residential, and school plots. The company will also look to infuse private equity at the project level. ๐ In our view, the company may undertake another QIP issue to de-leverage its balance sheet, fund construction and ease cashflow. * * ** * * ** ** --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en -~----------~----~----~----~------~----~------~--~---
