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Unitech Ltd (updated - 03 July 2009)
Even the first placement of shares at Rs 38.50 a share to institutional investors in mid-April, which fetched it $325 million allayed cash flow concerns at Unitech. The Street was less worried about the huge equity dilution of 26 per cent on the pre-issue capital because the net debtequity ratio will come off to a more reasonable 1.2 times by the end of 200910.

With the second round of placements bringing it approximately $550 million, the debt–equity ratio, analysts expect could come down to a much lower 0.4 times. That puts the property firm on much firmer ground than it was six months back, when the debt on its books was close to Rs 9,000 crore.

The company’s March 2009 quarter revenues were down 69 per cent year-on-year though the fall in the profit after tax was less steep at 22 per cent, thanks to Rs 360 crore of other income. Operating profit margins slipped to 35.7 per cent compared with 50 per cent in the December 2008 quarter though adjusting for the consultancy business, they would have been far better at just over 40 per cent.

Unitech reportedly plans to launch 30 million square feet of space in 2009-10 across 15 cities with the focus being on affordable property; analysts believe sales could be in the region of 13-14 million sq feet. Over the last three months the company has launched several projects covering approximately 14 million sq feet of space, selling over three million sq feet. Revenues for the current year are expected to come in at around Rs 3,000 crore while net profits are expected to be around Rs 750 crore. However, with some amount of debt expected to be repaid with the funds raised, the profit numbers could be better.
source - BS

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Unitech Ltd (updated - 21 April 2009)
With the Rs 1,600 crore that Unitech has managed to raise through aplacement to qualified institutions, the risk on its balance sheet will be reduced. The money will help it pay back some of its dues to mutual funds and in the process, the firm’s net debt-equity ratio, analysts estimate, will come down to 1.2 times in 2009-10 from 1.9 times at the end of March 2009.

But that doesn’t mean the company is out of the woods. For sure, it can pay off some of the interest on loans and will have some money left to fund some projects. But, the debt on its books — estimated at close to Rs 8,500 crore at the end of March — is not small given that cash flows will continue to be weak until the real estate market revives. There are few signs of that just yet and it’s possible that things could get worse.

So another round of restructuring — about Rs 2,300 crore has already been rescheduled — is on the cards. Unitech’s ‘affordable housing’ strategy isn’t working too well outside of the NCR, says an IIFL report, which points out that not a single project has been delivered yet in Kolkata, even though it has been present in the city for so many years.

However, the company apparently wants to launch 30 million sq ft of space in 2009-10. But, as IIFL points out, that’s more than the area it has sold in the last three years. Unitech cannot afford to fritter away scarce resources; it needs to rethink its strategy.
source - BS

Unitech Ltd (updated - 14 Aug 2009)
Unitech’s focus on midsegment housing seems to be paying off. Between April and July, the property firm sold bookings for close to 7 million square feet and a good part of this was at price points of between Rs 2,700 and Rs 3,000 per square feet. Should the momentum sustain, the company will meet its target of selling 20 million sq ft in the current year. In fact, the June 2009 quarter saw launches for around 16.5 million sq ft.

The Unitech stock has rallied sharply to levels of Rs 95 from the lows of Rs 25 that it hit in March this year. Despite raising Rs 600 crore through a qualified institutional placement (QIP), Unitech’s net debt levels didn’t come off too much.
Compared with Rs 8,400 at the end of March 2009, the net debt at the end of June stood at Rs 7,600 crore; analysts had hoped for a smaller number.

However, with the company having raised around Rs 2,800 crore from a second QIP, the net debt-to-equity ratio is down to 0.6 and is expected to fall to 0.4 by the end of the year.

Analysts are also disappointed with consolidated earnings for the June quarter; even though expenses on interest fell, earnings declined 63 per cent yearon-year to Rs 156 crore.
It’s possible the company didn’t recognise revenues as anticipated - net sales fell 48 per cent year-on-year to Rs 539 crore though they were up 34 per cent sequentially.
Nevertheless, Unitech now has a much cleaner balance sheet and a lower weighted average cost of capital. ICICI Securities has estimated a net asset value of Rs 91 per share for 2009-10.
source - BS

Unitech Ltd (updated - 06 Nov 2009)
Unitech’s results for the September 2009 quarter were disappointing, with both revenues and profits falling below expectations. Revenues dropped by 48 per cent year-on-year while earnings fell 50 per cent year-on-year.

On a sequential basis too, the numbers were slightly lower than what analysts had hoped for—the pre-exceptional net profit was up 9 per cent. The company is now back in action; analysts point out that the average number of workers at construction sites rose 85 per cent sequentially.

Having raised around Rs 4,400 crore through placements, the company’s balance sheet is in a better shape now and the debt at the end of September was down to Rs 6,600 crore. The company has pre-sold around 10 million sq ft of the 21 million sq ft of space that it had launched in the first half of the current year, of which around 5 million sq ft is believed to be for the Unihomes project.

It has managed to sell Rs 4,000 crore worth of property in six months to September and the benefits of this will flow through in subsequent quarters. Unitech is also considering some new projects in Mumbai and it’s possible there could be some launches in areas such as Parel and Chembur.

Analysts, however, feel execution could be faster though the management is targeting around 30 million sq ft over the next three years. The company’s joint venture in Mumbai has acquired land for a slum rehabilitation project. At the current price of Rs 85 the stock trades at close to the net asset value of Rs 88, as arrived at by Citigroup, which believes that valuations are not compelling.
source - BS