Prime Urban Development India Ltd
(BSE Code: 521149) (CMP: Rs.34.80) (FV: Rs.2)
We had recommended this stock at Rs.33.65 on 20 February
2017, where-after it zoomed to Rs.47.40 fetching 40.86% returns in a short span of time. Incorporated in 1936, Prime Urban Development India Ltd (PUDIL), formerly known as Prime Textiles Ltd, is engaged in real estate development. It develops villas and residential community with luxurious apartments; and commercial spaces such as malls and shopping and office complexes. It has been primarily involved in real estate development in Tamil
Nadu for the last 10 years. It also trades and exports cotton yarns.
PUDIL has an equity capital of just Rs.5.33 crore supported by reserves of Rs.22.42 crore. The promoters hold 71.03% of the equity capital, which leaves 28.97% stake with the investing public.
For FY17, the Company’s net profit declined to Rs.9.71 crore from Rs.14.49 crore in FY16 on lower sales of Rs.56.88 crore fetching an EPS of Rs.3.64. During Q4FY17, its net profit declined to Rs.3.28 crore from Rs.7.02 crore in Q4FY16 on lower sales of Rs.16.41 crore fetching an EPS of Rs.1.23. It declared 20% dividend for FY17 with book closure date as 5 August 2017. PUDIL at its Board Meeting held on 21 June 2017, agreed to acquire 58,02,925 equity shares of Rs.10 each at a premium of Rs.60.71/share constituting 100% of the paid-up equity share capital of New Line Buildtech Pvt. Ltd (NLBPL). NLBPL will become a wholly-owned subsidiary of PUDIL upon completion of the share acquisition/transfer process. On FY17 results, Vice Chairman of the Company said that “FY17 will be marked as an important year for real estate developers in India.
The Government of India’s proactive policy measures such as Demonetisation, Real Estate Regulation Act, (RERA), REIT legislation,
GST Act and announcement in the budget with respect to affordable housing have brought in a lot of credibility into the sector and most importantly customer confidence. These measures bode well for organized players like us and will lead to strengthening of our position in the market. According to him, customer demand which remained a challenge for the last few years may see an uptick with the recent government announcements on interest subsidy on home loans and reduction of the interest rates on home loans by the banking institutions.
“Going forward, our focus shall be on affordable housing. With the financial and operational resources, we are confident to grow our real estate footprint in the years to come. We believe that FY18 will be a good year on the back of various policy actions and a positive business environment,” he added. Currently, the stock trades at a P/E of just 9.47x. Investors can buy this stock with a stop loss of Rs.26. On the upper side, it could zoom to Rs.42 levels in the medium-term and further to Rs.50+ in the long-term.