Ansal Properties - Turbulent Times Ahead

In a recently released research report by Merill Lynch, the research house has cut NAV of Ansal properties and Infrastructure from Rs 425 / share to Rs 325 / share. [NAV is nothing but the Value of its Land Bank + Realty Assets which can transform into cash. The report said,

1) reduction in NAV (from Rs425/share to Rs325/share) to factor in delay in project launches and execution 2) reducing P/NAV 0.7x from 1x earlier to factor in the pricing pressure and lower sales volume [due to slowdown in the residential sector across different cities in India.] and regional valuation compression.

Merill lowered earnings estimates because of slower than expected sales of projects accentuated by the sales volume and the pricing decline in the real estate market in most of the cities including the Tier 2 and Tier 3 cities where APIL has most of the land bank.