Mahindra Lifespace Qualitative Coverage - Strong Buy

Developers Ltd Rating -

Sector: Real Estate CMP: ` 500.55 Nifty: 5452.10 Sensex: 18167.03 Date: August 13, 2010

Risk Return Matrix Overview

Mahindra Lifespace Developers Ltd (MLDL), formerly known
as Mahindra Gesco Developers Ltd, has two successful
Risk

synergistic core business areas under Mahindra Lifespaces

focusing on residential and commercial projects and
Mahindra World City (MWC) focusing on Integrated
Return Business Cities. The company has completed over 5.88 mn
sqf of real estate development. MLDL has forthcoming
Stock Data
projects and land bank of around 20 mn sqf. Also it has
Market Cap : ` 20,437.5 mn 4,600 acres under management through World Cities.

52 week range : ` 550 / ` 295 MLDL has a healthy balance sheet, presence in SEZ
Bloomberg : MLIFE IN development and has good revenue visibility. We
recommend a Strong Buy and award low risk-medium
Reuters : MGDL.BO
return rating to the company.
BSE : 532313
Investment Rationale
NSE : MAHLIFE
Strong Balance Sheet: MLDL has a debt-equity ratio
Avg Daily Vol. (1 month NSE) : 74,611 of
No. of Shares : 40.8 mn 0.43x which provides enough scope for further leveraging
which may be needed for current and proposed project
Shareholding Pattern (as on June 30,2010) financing.

Pioneer in developing SEZ in the private sector: MLDL

Others was the first to develop SEZs in the private sector. The
15.0%
company has 6 sector specific SEZs currently notified and 4
DII operational at the two World Cities. MWC Chennai was
11.9% India’s first integrated business city in PPP mode. It is spread
Promoter
51.1%
over 1550 acres and has 3 SEZs, a domestic tariff area and
325 acre integrated township area. MWC Jaipur is a 3000
FII acre integrated business city with a multi-product SEZ and a
21.9% domestic tariff area.

Upcoming projects: MLDL (excluding MWC) has ongoing

Relative Performance
projects of 2.31 mn sqf, forthcoming projects of 4.81 mn sqf
and a land bank of 15.29 mn sqf. The projects and land bank
is located across Chennai, Mumbai, Pune, NCR,
Nagpur, Hyderabad, Nasik and Bangalore. Around
71% of the ongoing projects have been sold and they are
progressing as
per schedule. Key Concerns
SEZ laws: MLDL has a presence in SEZ development. Any
adverse government policy with respect to SEZs
especially tax benefits could reduce the attractiveness of
Source: Capitaline SEZs for companies which would impact the revenue
generation of MLDL.
Financial Performance
Economic slowdown: A slowdown in the economy due
to any internal or external reasons could impact the
demand
(` Crs) and pricing of real estate.
FY10 FY09 FY08 FY07 Project execution risks: Any delay in execution projects will
Sales 417.87 341.78 231.08 216.35 significantly impact the valuation of the company.
EBITDA 134.76 101.95 98.93 38.48

Adj PAT 71.29 64.01 58.37 17.91

EPS 18.07 15.36 15.55 3.92

Analyst: Vishal Chopda vishal.chopda@ideasfirst.in

Mahindra Lifespace Developers Ltd
Forthcoming Projects & Land Bank Summary of Projects

Location Project DFP (mn sq.ft) Location Ongoing Forthcoming Land bank

Forthcoming projects Chennai 0.37 1.95 11.00

Ghatkopar Project 0.20 Mumbai 0.95 0.60 0.59

Mumbai Eminente Phase 3 0.15 Pune 0.33 - 2.10

GE Garden* (R&C) 0.25 NCR 0.66 0.93 -

Aura subsequent Nagpur - 1.33 -

NCR phases 0.93
Hyderabad - - 1.00
Aqualily subsequent
Nasik - - 0.60
phases 1.15
Chennai
Iris Court 0.80 Bangalore - - -

Total 2.31 4.81 15.29

Nagpur MIHAN Project 1.33
Total 4.81 Recommendation
Land bank With a healthy balance sheet, presence in SEZ development
and good revenue visibility, MLDL is a good investment
Nasik Satpur 0.60
for long term. The company scores a 4 (out of 5) on our
Pimpri Project 0.30 star matrix and has been assigned the low risk-medium
return rating.
Pune Pimpri Residential 1.80
We recommend a Strong Buy on the stock.
Hyderabad* Kukatapally 1.00

Chennai MWC Chennai 11.00

Mumbai Thane 0.59

Total 15.29

*Joint development
Status of Ongoing Projects

Total Expected
Launch Last Selling Completion
Location Project Name date Price (/sqf) % sold Date
mn sqf units (area)

Splendour Phase 1 Q4 FY08 7,300 0.416 264 99% Jun-11

Mumbai Splendour Phase 2 Q4 FY10 7,300 0.385 246 43% Jun-12

Eminente Phase 2 Q1 FY10 9,000 0.148 68 89% Mar-12

Chloris Q1 FY09 4,200 0.391 160 54% Dec-10

NCR
Aura Phase 1 Q3 FY10 2,450 0.269 231 100% Mar-12

Royale Phase 3 Q1 FY09 2,900 0.111 84 92% Nov-10

Pune
Royale Phase 4 Q2 FY10 3,000 0.22 168 99% Mar-11

Aqualily Villas Phase 1, 2 Q4 FY10 3,950 0.225 74 52% Sep-11

Chennai
Aqualily Apts Phase 1 Q1FY11 2,950 0.144 80 2% Sep-12

5000 (Wt.
Total, Avg Avg.) 2.309 1,375 71%
 Methodology

Risk Reward Matrix: We use risk reward matrix to recommend companies that are currently a good buy. At times we may find a very good company but it
may be trading at very high price, reducing the ‘Reward’ from investing in it. And at other times we may find an average company available at
deep discount, substituting the little risk with higher Reward. We consider the companies risk, potential upside and stocks current market price among others
while placing a company in the risk reward matrix.

Star Rating: We use star matrix to highlight the inherent strength of the company. We consider the following areas when awarding Star Rating to a
company.

1. Investor Friendliness
2. Growth (profit, sales & margins)
3. Management Quality
4. Historical Performance
5. Group Financial Strength
6. Management Aggression and Ability
7. Management Vision
The scale if from 1 to 5 with 5 being the best.

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