Crest Ventures Ltd
(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).