Crest Ven­tures Ltd

Money Times - - Stock Analysis - By Rahul Sharma

(BSE Code: 511413) (CMP: Rs.198.90) (FV: Rs.10)

Com­pany Back­ground: Through 6 sub­sidiaries, 5 as­so­ci­ates and 1 joint ven­ture, Crest Ven­tures Ltd (CVL) (for­merly Sharyans Re­sources Ltd) op­er­ates in three ver­ti­cals: Real Es­tate; Fi­nan­cial Ser­vices; and In­vest­ment and Credit. It de­vel­ops and man­ages real es­tate prop­er­ties in­clud­ing res­i­den­tial, com­mer­cial and town­ship projects. It of­fers fi­nan­cial ser­vices in­clud­ing in­ter­me­di­a­tion ser­vices in gov­ern­ment se­cu­ri­ties, non-gov­ern­ment se­cu­ri­ties, in­ter­est rate de­riv­a­tives, ru­pee op­tions, cur­rency for­wards and wealth man­age­ment ser­vices. It also pro­vides in­ter­me­di­a­tion ser­vices to ~200 banks, in­sti­tu­tions, mu­tual funds, pri­mary deal­ers, cor­po­rate, mu­tual fund dis­tri­bu­tion ser­vices and bro­ker­age

ser­vices in the de­riv­a­tives seg­ment as well as of­fers de­riv­a­tives desk deal­ing in in­ter­est rate swaps. It of­fers in­vest­ment man­age­ment ser­vices for fam­ily of­fices and HNIs. In ad­di­tion, it also of­fers tours, meet­ings, in­cen­tives, con­fer­ences, ex­hi­bi­tions, events and on­line ser­vices.

Real Es­tate: CVL has suc­cess­fully de­vel­oped var­i­ous town­ships, large for­mat re­tail prop­er­ties, res­i­den­tial and com­mer­cial prop­er­ties. Some of its mar­quee projects in­clude Crest Greens (a res­i­den­tial town­ship project in Raipur); Crest Tow­ers and Crest (the res­i­den­tial com­po­nent of the Phoenix Mar­ket City com­plex in Chen­nai); Phoenix Mar­ket City in Chen­nai; Pal­la­dium Mall (a lux­ury mall in Chen­nai); One Crest (a pre­mium res­i­den­tial project in Chen­nai); Crest Mukta (a com­mer­cial prop­erty in Mum­bai), etc.

Dur­ing the year, it di­vested 5% stake in its Phoenix Mar­ket City project in Pune for Rs.47.5 crore thereby un­lock­ing in­vest­ment value.

Fi­nan­cial Ser­vices, Credit and In­vest­ments:

Crest Fin­serv Ltd: Dur­ing the year, the com­pany man­aged to main­tain its mar­ket share in Gov­ern­ment Bonds de­spite a ~20% de­cline in over­all mar­ket vol­umes.

Crest Wealth Man­age­ment Pvt Ltd: The com­pany’s AUM stands at Rs.172.14 crore as at FY18 v/s Rs.150 crore in FY17. With an ad­di­tional AUM of Rs.150 crore con­trib­uted by the ad­vi­sory arm, its to­tal AUM works out to Rs.322.14 crore. Ta­marind Global Ser­vices Pvt Ltd: The com­pany op­er­ates un­der four ver­ti­cals: Tours; MICE (Meet­ings, In­cen­tives, Con­fer­enc­ing and Ex­hi­bi­tions); Events; and On­line.

Per­for­mance Re­view: CVL’s EBITDA has grown at 64% CAGR while PAT has grown at 43% CAGR over the last three years. For FY18, it re­ported 147% higher PAT of Rs.94.01 crore on sales of Rs.94.46 crore and an EPS of Rs.36.08. Dur­ing Q1FY19, it re­ported PAT of Rs.9.36 crore on sales of Rs.10.35 crore and an EPS of Rs.3.35.

Out­look: Real Es­tate: CVL has around 4.5 lakh of FSI for de­vel­op­ment of a project in Chen­nai. In ad­di­tion, it plans to de­velop a 14 acre land avail­able un­der Phase II of its Raipur project. It has also iden­ti­fied prop­er­ties in Mum­bai and Kolkata and Tier II cities as po­ten­tial ar­eas for joint de­vel­op­ment.

Fi­nan­cial Ser­vices, In­vest­ments and Credit: In or­der to im­prove its share in this in­dus­try, CVL is build­ing its brand un­der a part­ner­ship based model. It in­tends to build its mar­ket share in the Debt Mar­ket seg­ment and is cur­rently fo­cused on de­vel­op­ing the re­quired pool of tal­ent and ex­pe­ri­ence along with tech­nol­ogy based plat­forms needed to pro­vide the ex­pected lev­els of ser­vice in this com­pet­i­tive seg­ment.

Con­clu­sion: At the CMP of Rs.198.90, the stock trades at a P/E of 6.15x on its EPS (TTM) of Rs.39.28. The stock is avail­able at a dis­count com­pared to the NBFC in­dus­try’s P/E of 41x and real es­tate in­dus­try P/E of 27x. We ex­pect CVL’s rev­enues to grow 10% and 15% in FY19E and FY20E re­spec­tively with ~20% growth in PAT. Based on all these fac­tors, we have a Buy on the stock with a price tar­get of Rs.317 (val­ued at 8x its FY19E EPS).

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