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Global Research
New data for April highlights continued home sales growth slowdown, confirming our weak sector outlook Inventory slowly rising, but not enough to trigger price correction Credit growth is slowing, which will impact execution scale-up during FY12. Expect weak Q1 earnings
We reiterate our bearish residential outlook. However, we like HDIL Overweight (V) for its volume growth pricing strategy. We are also positive on Unitech although we see no catalysts in the near to medium term due to overhang of 2G spectrum issue. Execution during FY12 will remain a challenge. Bank lending to the real estate sector, which had picked up during Q4 FY11 to 22%, in line with overall credit growth, has again slipped during April-May, to 20%. Recent media reports suggest that Indias Central bank has cautioned banks to slow their lending to real estate projects as a precautionary step to avoid loan defaults. This is in line with our expectation that execution during FY12 will face severe funding challenges. Q1 FY12 preview: Expect weak earnings and new sales. We anticipate earnings growth for our real estate coverage universe to fall c15% y-o-y, led by flat execution growth and rising interest cost expense. Although new sales volumes could remain high due to plot sales by large players such as DLF, we expect realizations (sales volumes) to continue to trend down. While we expect ORL to report healthy earnings growth (36% y-o-y), most of the growth is likely to be driven by investment income earned on excess funds.
India Property
Home sales still slowing; Q1 earnings set to disappoint
Figure 1: HSBC India property coverage Bloomberg Current Rating Target Potential NAV code price* price return (prem/ disc) DLF Unitech Oberoi Realty HDIL Indiabulls Real Estate Anant Raj Mahindra Holidays DLFU IN UT IN OBER IN HDIL IN IBREL IN ARCP IN MHRL IN 230 34 238 169 116 76 374 N(V) OW(V) UW(V) OW(V) N(V) UW(V) UW(V) 251 50 200 205 125 70 344 9% 47% -16% 21% 8% -8% -8% -30% -45% -16% -56% -47% -45%
Figure 2: Q1 FY12 earnings estimate summary Company Sales y-o-y EBITDA (INRm) margin 20,455 -5% 7,674 -7% 2,127 33% 3,750 -23% 3,635 112% 852 -18% 1,563 54% 55.4% 32.4% 60.0% 85.0% 31.4% 59.4% 34.5% y-o-y (bp) 398 (306) 549 (168) 679 437 1,188 Adj. PAT (INRm) 3,765 1,436 1,089 1,321 298 361 327 y-o-y
DLF Unitech Oberoi HDIL Indiabulls Real Estate Anant Raj Mahindra Holidays
14 July 2011
Ashutosh Narkar* Analyst HSBC Securities and Capital Markets India Private Limited +91 22 22681474 ashutoshnarkar@hsbc.co.in Chirag Gupta* Associate Bangalore
Figure 3: Residential and commercial real estate performance and expectations View HSBC Global Research at: http://www.research.hsbc.com *Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/qualified pursuant to FINRA regulations Issuer of report: HSBC Securities and Capital Markets (India) Private Limited Mumbai Bangalore Gurgaon Pune Hyderabad Chennai Kolkata April April Resi-view Commercial-view __volume__ __pricing___ HSBC FY12e ___HSBC FY12e__ M-o-M Y-o-Y M-o-M Y-o-Y Vols Pricing Demand Vacancy -7% 6% 4% -4% 0% 0% -3% -1% 6% 50% 4% 19% 106% 6% 1% 1% -2% 0% 1% 3% 1% 8% 8% 28% 10% 5% 10% 8%
Disclaimer & Disclosures This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it
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IBREL Sales EBITDA EBITDA margin PAT Anant Raj Industries Sales EBITDA EBITDA margin PAT
Real estate coverage Sales EBITDA EBITDA margin PAT Mahindra Holidays Sales EBITDA EBITDA margin PAT
-2% 0% 1% -15%
-28% 15% 20% 0% We estimate MHRL to book c4,600 new members during Q1 FY12 at average price of INR0.3m. Channel checks suggest the company has part opened the Tungi resort which will ease pressure on inventory. However with increased membership utilization from members, we expect resort income to remain flat y-o-y
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Key interest rates and liquidity indicators for real estate sector
Figure 5: Lending to real estate as share of total non food bank credit Figure 6: Lending growth across real estate and overall system
3.9% 3.7% 3.5% 3.2% 3.0% Mar-09 Jul-09 Mar-10 Jul-10 Mar-11 Nov-08 Nov-09 Nov-10 25% 23% 22% 20% 19% 17%
Y-o-Y grow th in credit to real estate Y-o-Y grow th in non food credit
Dec-10
Jan-11
Feb-11
Mar-11
Apr-11
J ul-09
Figure 7: Regulatory interest rate trends (HSBC economist expects another 75bp hike in repo rate during FY12)
C RR 10 8 Repo R ate R everse R epo
Figure 9: Residential supply trend across top 10 Indian cities (Good proxy for planned execution ramp up)
Figure 10: Outstanding system Liquidity VS BSE Realty (Realty index has mirrored liquidity position in the system)
Outstanding overnight liquidity with banks (LHS) BSE Realty (RHS) 15000 10000 5000 0 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11
May-11
Nov-10
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April volume growth was mixed Mumbai, Bangalore, Pune and Kolkata slowed down further, while Gurgaon and Chennai gained
Figure 11: Mumbai Metropolitan Region residential demand trend
Abso rptio n (LHS) Outstanding Inventory
Outstanding in v entory 30 24 18 12 6 Oct-09 Oc t-10 (Mon ths) (Mon ths) (Mon ths)
30 24 18 12 6 (Mon ths)
3 2 1
Apr-08
Apr-09
Apr-10
Oct-08
Note: Outstanding Inventory = inventory / three-month average absorption Source: PE Analytics, HSBC Research
Note: Outstanding Inventory = inventory / three-month average absorption Source: PE Analytics, HSBC Research
60 48 36 24 12 -
Note: Outstanding Inventory = inventory / three-month average absorption Source: PE Analytics, HSBC Research
Note: Outstanding Inventory = inventory / three-month average absorption Source: PE Analytics, HSBC Research
7.5 6.0 (M n sq ft) 4.5 3.0 1.5 Oct-09 Oc t-10 Apr-08 Oct-08 Apr-09 Apr-10 Apr-11
5 4 3 2 1
Note: Outstanding Inventory = inventory / three-month average absorption Source: PE Analytics, HSBC Research
Note: Outstanding Inventory = inventory / three-month average absorption Source: PE Analytics, HSBC Research
Apr-11
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2.5 2.0 1.5 1.0 0.5 Oct-09 Oc t-10 Apr-08 Oct-08 Apr-10 Apr-09 Apr-11
35 28 21 14 7 (Mon ths)
Note: Outstanding Inventory = inventory / three-month average absorption Source: PE Analytics, HSBC Research
Note: Outstanding Inventory = inventory / three-month average absorption Source: PE Analytics, HSBC Research
7.5 6.0 (M n sq ft) 4.5 3.0 1.5 Oct-09 Oc t-10 Apr-08 Apr-10 Oct-08 Apr-09 Apr-11
50 40 30 20 10 (Mon ths)
Note: Outstanding Inventory = inventory / three-month average absorption Source: PE Analytics, HSBC Research
Figure 20: Residential volume growth trend across major Indian cities
160% 140% 120% 100% 80% 60% 40% 20% 0% -20% M umbai Metropolitan R egion
Source: PE Analytics , HSBC Research
J an-11
Feb-11
Mar-11
Apr-11
Bangalore
Gurgaon
Pune
Hy derabad
C hennai
Kolk ata
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F Y10
F Y11
91 71 47 33 30 55 40 35 42 35 37 38 34 29 28 17 18 32 13 10 14
(M n sq ft)
Gurgaon
Bangalore
Pune
Hyderabad
Chennai
Kolkata
Figure 22: Major Indian cities residential market new project launches trend
125 98 100 75 53 50 25 M MR
Source: PE Analytics, HSBC Research
F Y09
F Y10
FY11
(Mn sq ft)
62 44 36 22 14 43 29 31 24 46 37 28 17 32 16 23 19 12 10 5 17 41
Gurgaon
Bangalore
Pune
Hy derabad
Chennai
Kolkata
Figure 23: City attractiveness mapping Mumbai Bangalore Gurgaon Noida/ Greater Noida Pune Hyderabad Chennai Kolkata
Risk to price growth Risk to demand Supply impediments Premium to secondary market Local brokers view on risk to demand HSBC view
Negative High
Neutral Medium
Neutral Low
Negative
Negative
Neutral
Neutral
Positive
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Figure 24: New launches in Q1 FY12 in major Indian cities Developer Name Mumbai Runwal Group Ajmera Lodha Group Kumar Builders Kalpataru Rustomjee Group Akshay Corporation Man Infra Construction RNA Builders (N G) HDIL Srishti Group Gurgaon Bestech Group DLF Ansal Housing Lahari Constructions Bangalore Sobha Developers LGCL Developers Mahaveer Structures Embassy Group Sobha Developers Century Group Mahaveer Structures Gopalan Enterprises H.M. Constructions Sobha Developers Mantri Developers Chennai Ozone Group Sri Satya Sai Const. Arun Excello Foundations Hiranandani Phoenix Group (Hyd) Vasanth Builders Marg Constructions Ramaniyam Builders Unitech Unitech VGN Homes Hyderabad Shanta Shriram Sri Sai Developers Shanta Shriram Pune Rohan Builders Kumar Properties Pride Purple Group Marvel Realtors Goel Ganga Devlopment Kolkata Eden Group Eden Group Eden Group Sobha Developers Tata Ganguly Group Mayfair Group Project Name Micro-market Launched (m sq ft) Launched Units Current BSP* (INR psf) % absorbed (till June-2011) Launch month Potential completion date
Runwal Elegante Phase-II Pristine Phase-II Lodha Aqua Phase-II Akul Tulip Crest Seasons Akshay Paradise Opus Phase-III RNA Viva Phase-II Whispering Towers Phase-II Tara Park View Ananda Phase-II DLF Garden City Ansal Heights Phase-II Rockwell Plaza Signature Stonescape Mahaveer Willow Annexe Embassy Pristine Ruby Platinum Phase-II Century Square Residential Project Admirality Court Tropical Tree Phase-II Sobha Elite Mantri Alpyne Metro Zone Phase-III Mayfair Apartments Temple Greens Phase-II Upscale Phase-II The Village-Apartments Residential Project Kalpa Vriksha Kattima Chaitanya North Town Ekanta North Town VGN Imperia Icon Hima Sai Heights Padmanabha Residency Rohan Leher Phase-III Penninsula Park Spring Arco Melrose Phase-II Eden Lavinder Eden Sapphire Eden Serenity Sobha Garnet La Montana Phase-III 4 Sight Florence Venus II
Andheri(W) Borivali(W) Dahisar(E) Ghatkopar(E) LBS Marg Bandra(E) Chembur Dahisar(E) Mira Road Mulund(W) Powai Sector 81 Sector 90 Sector 92 Bowenpally Haralur Road Hennur Road Kengeri Sarjapur Road Tumkur Road Hebbal Hosur Road Indiranagar R.T. Nagar Tumkur Road Uttarahalli Anna Nagar OMR Road OMR Road OMR Road OMR Road Mylapore OMR Road Pallavaram Perambur Perambur Vanagaram Banjara Hills Gandhi Nagar Secunderabad Baner Baner- Pashan Dhanorie Hadapsar Sopanbaug EM Bye Pass EM Bye Pass EM Bye Pass NIBM Road Talegaon Garia Narendrapur
0.38 0.12 0.04 0.05 0.27 0.39 0.08 0.08 0.63 0.94 0.13 0.16 1.44 0.24 0.07 0.24 0.08 0.07 1.66 0.33 0.70 0.14 0.07 0.08 0.28 0.23 1.47 0.08 0.25 0.31 0.17 0 0.08 0.16 0.64 0.33 0.28 0.07 0.23 0.11 0.14 0.08 0.43 0.31 0.07 0.01 0.01 0.03 0.10 0.19 0.18 0.02
195 88 30 48 192 150 100 200 540 706 150 100 400 150 55 32 35 88 416 192 216 76 45 38 160 208 700 76 266 131 120 8 70 100 605 510 288 24 160 80 94 44 375 192 22 9 9 24 43 185 130 20
16,000 6,500 6,800 8,100 7,650 18,500 8,000 5,650 5,500 7,551 3,500 4,250 4,222 2,555 2,200 8,800 4,500 2,150 5,115 2,550 6,500 4,000 7,500 5,800 3,163 2,790 7,300 2,999 2,550 4,750 4,000 8,500 4,750 5,500 5,750 5,000 3,499 7,000 3,500 3,900 4,100 5,200 2,800 5,000 6,500 2,450 2,300 2,350 4,300 3,300 3,500 1,950
11 13 10 2 10 15 30 25 9 22 4 40 88 20 7 9 6 10 3 13 1 0 7 26 13 48 6 33 5 8 13 50 100 34 48 39 10 0 9 25 15 41 13 5 23 33 33 21 9 86 12 5
11-Apr 11-Apr 11-Apr 11-Apr 11-Apr 11-May 11-Jun 11-May 11-May 11-May 11-Jun 11-Jun 11-Jun 11-Jun 11-Jun 11-Apr 11-Apr 11-Apr 11-Apr 11-Apr 11-Jun 11-Jun 11-Jun 11-May 11-Jun 11-May 11-Apr 11-Apr 11-Apr 11-Apr 11-Apr 11-Jun 11-Jun 11-Jun 11-Jun 11-Jun 11-Jun 11-Apr 11-Apr 11-Apr 11-Apr 11-Apr 11-Apr 11-Apr 11-Apr 11-Apr 11-Apr 11-Apr 11-Jun 11-Jun 11-Apr 11-Apr
14-Feb 11-Sep 13-Dec 13-May 14-Dec 14-Mar 13-Dec 13-Dec 13-Dec 15-Dec 12-Dec 13-Jul 13-Mar 13-Jul 13-Mar 14-May 13-Jul 12-Dec 14-Nov 14-May 12-Jun 13-Dec 13-Mar 12-Sep 14-Mar 14-Jun 14-Dec 12-Dec 12-Dec 13-Dec 13-Apr 11-Dec 13-Aug 12-Dec 14-Dec 14-Dec 13-Jun 13-Mar 13-May 13-Feb 12-Dec 12-Dec 13-May 14-Apr 13-May 12-Dec 12-Dec 12-Oct 13-Dec 13-Jul 14-Dec 12-Jul
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Figure 25: Price changes in a few selected projects across the major cities Project Gurgaon Palm Hills Express Greens Centrum Park Palm Terraces Select Uniworld Resorts Bangalore Garrison Westend Heights-New Town Welworth City Gateway Purva Venezia Golden Grand Mumbai Bellisimo Sky Suite Orchid Heights Majestic Towers Aqua Splendor Orchid Suburbia Orchid Woods Chennai Commanders Court Esplanade Ph 2 Indiabulls Greens Uni Homes Palm Villas Hyderabad New City Heights Central Park Orange County Kolkata Prakriti Vistas Harmony Gateway Uni Homes Pune Kalpataru Estate Emerald City Forest Trails
Source: PE Analytics, HSBC Research
Developer
___________________ Price trends ________________ __________Change______________ Apr-11 Mar-11 Jan-10 Apr-10 YoY QoQ MoM
0% 1% 9% 10% 9%
0% 0% 0% 0% 0%
0% 4% 1% 0% 6% 13%
0% 0% 0% 0% 0% 0%
14% 5% 8% 8% 9% 8% 9% 18%
0% -4% 1% 0% 5% 0% 4% 5%
0% 0% 0% 0% 0% 0% 0% 5%
14% 16% 1% 8% 5%
0% 13% 1% 0% 0%
0% 0% 0% 0% 0%
10% 25% 0%
0% 13% 0%
0% 7% 0%
3% 8% 5% 6% 0%
0% 0% -1% 0% 0%
17% 17% 5%
3% 17% 5%
3% -1% 0%
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Dem and
Demand
SBD
Gurgaon
N oida
C BD PBD (Whitefield)
New Supply
Dem and
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Dem and
Dem and
SBD
PBD
Dem and
10
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Dem and
Fig 41: Property price growth (yoy) and vacancy rate trend
R ental rate grow th (LHS) 40% 20% 0% Vacancy rate (R HS)
80 60 (Mn sq ft) 40 20 0
2007
2005
2008
2009
2010
Fig 42: India commercial space demand, supply and vacancy trends
50 40
43 33 29 29 23 22 32 33
42
41 31 20
(M n sq ft)
30 20 10 0
2005
2006 Supply
2008
2009
2010
2011e
2006
11
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DLF Unitech Oberoi Realty HDIL Indiabulls Real Estate Anant Raj
Neutral (V) Overweight (V) Underweight (V) Overweight (V) Neutral (V) Underweight (V)
135 115 95 75 55 35
Oct-10
Apr-10
J an-11
Apr-11
J ul-10
DLF Anant R aj
Source: Bloomberg
Oberoi R ealty
IBREL
Fig 45: India property companies share price trend Market cap (USDm) CMP 1 week 1 month 3 months 6 months 1 year YTD
DLF Unitech Oberoi Realty HDIL Indiabulls Real Estate Anant Raj Godrej Properties Prestige Estates Sobha Phoenix Mills Sunteck Realty Ansal API Brigade
Source: Bloomberg
Rated Rated Rated Rated Rated Rated Unrated Unrated Unrated Unrated Unrated Unrated Unrated
8,307 1,939 1,731 1,504 1,011 526 1,264 597 688 898 411 152 185
-5.2 0.2 -3.6 -1.3 -3.3 15.0 9.1 -3.2 9.5 0.4 -1.4 -2.3 1.1
-5.2 -0.9 1.8 -7.4 -3.2 10.2 23.5 4.9 11.5 -11.5 -3.7 4.1 -7.1
-12.5 -26.0 -7.8 -11.2 -19.9 -12.8 21.6 -8.5 6.1 -10.7 -13.9 -4.5 -25.6
J ul-11
-16.9 -43.7 -3.9 -2.1 -10.3 -23.6 37.0 -9.1 -1.0 -14.9 -44.6 -20.1 -30.4
-27.7 -57.7 NA -37.0 -33.3 -33.4 25.8 -14.1 -3.4 NA -52.9 -46.1 -46.6
-25.0 -49.9 -7.7 -16.8 -19.4 -25.6 31.7 -16.2 -4.6 -28.8 -46.8 -28.8 -35.4
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-20% -40% -60% -80% Jul-10 Aug-09 Mar-09 Jan-11 Feb-10 Jul- 11 Sep-08 -10% -20% -30% Dec -10 M ar-11 Jan-11 Apr-11 Aug-10 Oct-10
13
Fig 52: India property coverage valuation summary (per share values) Company Rating Residential (A) Commercial/ retail (B) Hospitality (C) Other segments (D) Net debt (E) Land payments (F) Other businesses (G) Net asset value (A+B+C+D+E+F+G) Target price
Neutral (V) Overweight (V) Underweight (V) Overweight (V) Neutral (V) Underweight (V)
332 85 96 143 68 45
87 4 120 88 37 63
0 2 14 0 0 28
0 2 11 67 76 0
-123 -25 40 84 -6 2
-5 -7 0 0 0 2
35 1 0 0 41 0
Fig 53: India property coverage summary Company Bloomberg code Current Target price* (INR) price (INR) Rating Valuation methodology Investment risks
DLF
DLFU IN
230
251
N(V) DCF-based (COE of NAV of real estate projects. Real estate business valued at 30% discount to NAV along with terminal value of INR22. (cost of equity 15.0%, risk free rate 7.5%, market risk premium 5.5%, WACC 14.3%) OW(V) DCF-based NAV of real estate projects. Real estate business valued at 40% discount to NAV, telecom business at INR8 and terminal value of INR5. (cost of equity 15.7%, risk free rate 8.0%, market risk premium 5.5%, WACC 15.0%) UW(V) DCF-based NAV of real estate projects. Real estate business valued at 35% discount to NAV, terminal value INR17. (cost of equity 16.3%, risk free rate 8.0%, market risk premium 5.5%, WACC 16.3%) OW(V) DCF-based NAV of real estate projects. Real estate business valued at 55% discount to NAV, terminal value INR33. (cost of equity 15.5%, risk free rate 7.5%, market risk premium 5.5%, WACC 13.6%) N(V) DCF-based NAV of real estate projects. Real estate valued at INR181 (50% discount to NAV) and power business valued at INR63 (current market price less 20% holding company discount). (cost of equity 15.3%, risk free rate 7.5%, market risk premium 5.5%, WACC 15.3%) UW(V) DCF-based NAV of real estate projects. Target price set at 50% discount to NAV. (cost of equity 15.8%, risk free rate 7.5%, market risk premium 5.5%, WACC 15.8%) UW(V) DCF-based valuation. Implied exit PE of 21.6x FY12e earnings. (cost of equity 13.2%, risk free rate 7.7%, market risk premium 5.5%, WACC 13.2%)
Slower-than-expected improvement in commercial and retail segment demand and the continued fall in residential demand are key downside risks. Greaterthan-estimated non core asset sales leading to a lower debt profile would be the key upside risks to our rating and estimates Alleged involvement in the 2G spectrum row could result in weaker-than-expected project execution and lower-than-expected volumes over FY11-13e at a lower pricing level Upside risks to our rating and estimates include earlier-than-estimated approvals for the Mulund project and a positive review from the government for using higher FSI for developing public parking space, as well as better-than-expected volume growth and realizations Delaya in execution of slum rehabilitation projects, lower-than-estimated TDR volumes and prices Lower-than-anticipated demand for residential and commercial projects and slower-than-expected execution of pre-sold projects leading to delayed cash flows are key downside risks. Key upside risks include a sharp improvement in the residential sector demand Early launch of residential projects, faster-than-expected improvement in commercial projects occupancy rate would act as key upside risks An increase in disposable income levels, higher-than-anticipated membership growth, better-than-estimated price realisation on vacation ownership (VO) products, fall in debtor days, and an increase in debtor securitisation are the key upside risks to our rating and estimates
Unitech
UT IN
34
50
Oberoi Realty
OBER IN
238
200
HDIL IN
169
205
IBREL IN
116
140
ARCP IN
76
70
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MHRL IN
374
344
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Notes
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Disclosure appendix
Analyst Certification
The following analyst(s), economist(s), and/or strategist(s) who is(are) primarily responsible for this report, certifies(y) that the opinion(s) on the subject security(ies) or issuer(s) and/or any other views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Ashutosh Narkar
Important disclosures
Stock ratings and basis for financial analysis
HSBC believes that investors utilise various disciplines and investment horizons when making investment decisions, which depend largely on individual circumstances such as the investors existing holdings, risk tolerance and other considerations. Given these differences, HSBC has two principal aims in its equity research: (1) to identify long-term investment opportunities based on particular themes or ideas that may affect the future earnings or cash flows of companies on a 12-month horizon; and (2) from time to time to identify short-term investment opportunities that are derived from fundamental, quantitative, technical or event-driven techniques on a 0- to 3-month horizon and which may differ from our long-term investment rating. HSBC has assigned ratings for its long-term investment opportunities as described below. This report addresses only the long-term investment opportunities of the companies referred to in the report. As and when HSBC publishes a short-term trading idea the stocks to which these relate are identified on the website at www.hsbcnet.com/research. Details of these short-term investment opportunities can be found under the Reports section of this website. HSBC believes an investors decision to buy or sell a stock should depend on individual circumstances such as the investors existing holdings and other considerations. Different securities firms use a variety of ratings terms as well as different rating systems to describe their recommendations. Investors should carefully read the definitions of the ratings used in each research report. In addition, because research reports contain more complete information concerning the analysts views, investors should carefully read the entire research report and should not infer its contents from the rating. In any case, ratings should not be used or relied on in isolation as investment advice.
HSBC assigns ratings to its stocks in this sector on the following basis: For each stock we set a required rate of return calculated from the cost of equity for that stocks domestic or, as appropriate, regional market established by our strategy team. The price target for a stock represents the value the analyst expects the stock to reach over our performance horizon. The performance horizon is 12 months. For a stock to be classified as Overweight, the implied return must exceed the required return by at least 5ppt over the next 12 months (or 10ppt for a stock classified as Volatile*). For a stock to be classified as Underweight, the stock must be expected to underperform its required return by at least 5ppt over the next 12 months (or 10ppt for a stock classified as Volatile*). Stocks between these bands are classified as Neutral. Our ratings are re-calibrated against these bands at the time of any material change (initiation of coverage, change of volatility status or change in price target). Notwithstanding this, and although ratings are subject to ongoing management review, expected returns will be permitted to move outside the bands as a result of normal share price fluctuations without necessarily triggering a rating change. *A stock will be classified as volatile if its historical volatility has exceeded 40%, if the stock has been listed for less than 12 months (unless it is in an industry or sector where volatility is low) or if the analyst expects significant volatility. However, stocks which we do not consider volatile may in fact also behave in such a way. Historical volatility is defined as the past months average of the daily 365-day moving average volatilities. In order to avoid misleadingly frequent changes in rating, however, volatility has to move 2.5ppt past the 40% benchmark in either direction for a stocks status to change.
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Information regarding company share price performance and history of HSBC ratings and price targets in respect of its longterm investment opportunities for the companies the subject of this report,is available from www.hsbcnet.com/research.
DLF LTD HOUSING DEVELOPMENT & INF INDIABULLS REAL ESTATE UNITECH LTD
Source: HSBC
4 4 4 4
1 2 3 4 5 6 7 8 9 10 11
HSBC* has managed or co-managed a public offering of securities for this company within the past 12 months. HSBC expects to receive or intends to seek compensation for investment banking services from this company in the next 3 months. At the time of publication of this report, HSBC Securities (USA) Inc. is a Market Maker in securities issued by this company. As of 30 June 2011 HSBC beneficially owned 1% or more of a class of common equity securities of this company. As of 31 May 2011, this company was a client of HSBC or had during the preceding 12 month period been a client of and/or paid compensation to HSBC in respect of investment banking services. As of 31 May 2011, this company was a client of HSBC or had during the preceding 12 month period been a client of and/or paid compensation to HSBC in respect of non-investment banking-securities related services. As of 31 May 2011, this company was a client of HSBC or had during the preceding 12 month period been a client of and/or paid compensation to HSBC in respect of non-securities services. A covering analyst/s has received compensation from this company in the past 12 months. A covering analyst/s or a member of his/her household has a financial interest in the securities of this company, as detailed below. A covering analyst/s or a member of his/her household is an officer, director or supervisory board member of this company, as detailed below. At the time of publication of this report, HSBC is a non-US Market Maker in securities issued by this company and/or in securities in respect of this company
Analysts, economists, and strategists are paid in part by reference to the profitability of HSBC which includes investment banking revenue. For disclosures in respect of any company mentioned in this report, please see the most recently published report on that company available at www.hsbcnet.com/research. *HSBC Legal Entities are listed in the Disclaimer below.
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Additional disclosures
1 2 3 This report is dated as at 14 July 2011. All market data included in this report are dated as at close 11 July 2011, unless otherwise indicated in the report. HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its Research business. HSBCs analysts and its other staff who are involved in the preparation and dissemination of Research operate and have a management reporting line independent of HSBCs Investment Banking business. Information Barrier procedures are in place between the Investment Banking and Research businesses to ensure that any confidential and/or price sensitive information is handled in an appropriate manner. As of 30 June 2011, HSBC and/or its affiliates (including the funds, portfolios and investment clubs in securities managed by such entities) either, directly or indirectly, own or are involved in the acquisition, sale or intermediation of, 1% or more of the total capital of the subject companies securities in the market for the following Company(ies) : DLF LTD , HOUSING DEVELOPMENT & INF , UNITECH LTD , INDIABULLS REAL ESTATE
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Disclaimer
*Legal entities as at 4 March 2011 Issuer of report UAE HSBC Bank Middle East Limited, Dubai; HK The Hongkong and Shanghai Banking Corporation HSBC Securities and Capital Markets Limited, Hong Kong; TW HSBC Securities (Taiwan) Corporation Limited; CA HSBC Securities (Canada) (India) Private Limited Inc, Toronto; HSBC Bank, Paris Branch; HSBC France; DE HSBC Trinkaus & Burkhardt AG, Dsseldorf; Registered Office 000 HSBC Bank (RR), Moscow; IN HSBC Securities and Capital Markets (India) Private Limited, Mumbai; 52/60 Mahatma Gandhi Road JP HSBC Securities (Japan) Limited, Tokyo; EG HSBC Securities Egypt SAE, Cairo; CN HSBC Investment Bank Asia Limited, Beijing Representative Office; The Hongkong and Shanghai Banking Fort, Mumbai 400 001, India Corporation Limited, Singapore Branch; The Hongkong and Shanghai Banking Corporation Limited, Seoul Telephone: +91 22 2267 4921 Securities Branch; The Hongkong and Shanghai Banking Corporation Limited, Seoul Branch; HSBC Fax: +91 22 2263 1983 Securities (South Africa) (Pty) Ltd, Johannesburg; GR HSBC Securities SA, Athens; HSBC Bank plc, Website: www.research.hsbc.com London, Madrid, Milan, Stockholm, Tel Aviv; US HSBC Securities (USA) Inc, New York; HSBC Yatirim Menkul Degerler AS, Istanbul; HSBC Mxico, SA, Institucin de Banca Mltiple, Grupo Financiero HSBC; HSBC Bank Brasil SA Banco Mltiplo; HSBC Bank Australia Limited; HSBC Bank Argentina SA; HSBC Saudi Arabia Limited; The Hongkong and Shanghai Banking Corporation Limited, New Zealand Branch This document has been issued by HSBC Securities and Capital Markets (India) Private Limited (HSBC) for the information of its customers only. HSBC Securities and Capital Markets (India) Private Limited is regulated by the Securities and Exchange Board of India. If it is received by a customer of an affiliate of HSBC, its provision to the recipient is subject to the terms of business in place between the recipient and such affiliate. This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. HSBC has based this document on information obtained from sources it believes to be reliable but which it has not independently verified; HSBC makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of the Research Division of HSBC only and are subject to change without notice. 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In Korea, this publication is distributed by The Hongkong and Shanghai Banking Corporation Limited, Seoul Securities Branch (HBAP SLS) for the general information of professional investors specified in Article 9 of the Financial Investment Services and Capital Markets Act (FSCMA). This publication is not a prospectus as defined in the FSCMA. It may not be further distributed in whole or in part for any purpose. HBAP SLS is regulated by the Financial Services Commission and the Financial Supervisory Service of Korea. Copyright 2011, HSBC Securities and Capital Markets (India) Private Limited, ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Securities and Capital Markets (India) Private Limited. MICA (P) 208/04/2011 and MICA (P) 040/04/2011
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Regional
Conglomerate and Transport Mark Webb Regional Head of Conglomerate and Transport Research +852 2996 6574 markwebb@hsbc.com.hk
sachinsheth@hsbc.co.in
Global
tejasmehta@hsbc.co.in Strategy Garry Evans Global Head of Equity Strategy +852 2996 6916 garryevans@hsbc.com.hk
Consumer & Retail Rajesh Kumar Singla Analyst +91 80 3001 3771 rajeshsingla@hsbc.co.in Healthcare Girish Bakhru Analyst +91 22 2268 1638
girishbakhru@hsbc.co.in
Industrials, Utilities Suman Guliani Analyst +91 80 3001 3747 sumanguliani@hsbc.co.in Tarun Bhatnagar Analyst +65 6239 0607 Rahul Garg Analyst +91 22 2268 1245
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Infrastructure, Real Estate Ashutosh Narkar Analyst +91 22 2268 1474 ashutoshnarkar@hsbc.co.in IT Services Yogesh Aggarwal Analyst +91 22 2268 1246 Metals & Mining Jigar Mistry Analyst +91 22 2268 1079 Oil & Gas Kumar Manish Analyst +91 22 2268 1238 Puneet Gulati Analyst +91 22 2268 1235 Telecom Rajiv Sharma Analyst +91 22 2268 1239 Utilities Arun Kumar Singh Analyst +91 22 2268 1778 Equity Strategy Vivek Misra Strategist +91 80 3001 3699
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kmanish@hsbc.co.in
puneetgulati@hsbc.co.in
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