Prime Property Development Corporation Ltd - 68.00 Rs
Incorporated in 1992, Prime Property Development Corporation Ltd (PPDCL) is small real estate developer based in Mumbai. It made a late entry and started its real estate activity only in the year 2002. PPDCL is led by Shri Padamshil L Soni who has a rich experience of nearly two decade in construction. Apart from his two sons company has eminent personalities on its board including Shri Y. C. Pawar, Shri K. Nalinakshan, Dr. B. Samal to name a few. Under their leadership the company has now positioned itself as a unique company catering to the niche segment of the property market. Within a short span of time, company boasts of constructing landmark residential and commercial buildings for high end customers in Mumbai. Prime Beach & Prime Centre in the Santracruz constructed by the company are among the most luxurious apartments and also well known for its modern and elegant architecture. On the other hand its Prime Plaza a 100% commercial project with ultra modern facilities in Santacruz was a huge success. Incidentally, Prime Avenue – a 100,000 sq ft residential cum commercial project in Vile Parle was the flagship project of the company consisting of residential flats and large commercial units like show rooms, shops and offices
Currently, PPDCL is developing two projects which are near completion. Out of that “Prime Down Town Mall” project is much bigger being a 270,000 sq ft luxurious composite Mall with multiplexes. The mall is at the prime location of Hughes Road, Mumbai and is being constructed in partnership with others. Once operational it will be among the largest malls in Mumbai with hi-tech elevation and international feel. “Prime Tech Park” the other projects is a 90,000 sq ft commercial building in Vile Parle mainly for IT /ITES companies. It is just next to Western Express highway and barely couple of kms away from domestic and international airport. Apart from these two projects, company has undertaken two more projects last fiscal. Incidentally, both are shopping mall – one in Mumbai and other one in Pune. The Mumbai mall namely “Prime Square” is a four storey 70,000 sq ft mall located on the S.V. Road, Goregaon – a flourishing suburb of Mumbai. Whereas the Pune mall called “Prime Pune Mall” will be a gigantic 430,000 sq ft state-of-the-art mall with anchor shop, multiplex, food court, entertainment area and a hotel. In short company is estimated to generate more than Rs 500 cr of revenue in next 2~3 years.
Moreover for future, PPDCL has finalized the location in Vile Parle (W) to construct a 60,000 sq ft shopping mall and has even created a blue print for the same. Secondly, it is also contemplating to develop a residential project in Pimpri Pune. The plan is still on paper and yet to be finalized. Financially, due to sale of units in Prime down Town Mall and Prime Tech Park, PPDCL has ended FY08 on quite a buoyant note. It recorded a topline of Rs 105 cr and bottomline of Rs 32.70 cr. Importantly it has made highest tax provisioning of Rs 17.50 cr which ensures the integrity of its real profit. This translates into an EPS of Rs 16 on equity of Rs 10 cr having face value as Rs 5/- per share. It is expected to declare Rs 2.50 as dividend which gives a yield of nearly 4%. To conclude, considering company’s current project in hand and that too at prime locations it may report total revenue of Rs 150 cr and net profit of Rs 40 cr for FY09 i.e. EPS of Rs 20 on current equity. So the scrip is available fairly cheap at a current P/E ratio of merely 4x times. At the same time adverse profiling of the sector, coupled with higher input prices, imposition of service tax on rentals of commercial property & hardening interest rates are bound to dampen sentiments & affect demand for certain categories of properties. But still, company is largely insulated from the downturn and hence investors can buy at current levels with a price target of Rs 100 in 9~12 months.
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