Puravankara Projects – Buy at Declines

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Puravankara - Latest Results

(in Cr.)
Net Profit
Cash EPS

Puravankara - Share Price Movement

Weekly H/L
Monthly H/L
52 Weeks H/L
( 21 Oct 10 )
( 19 Aug 11 )
Delivery / Var+ELM %

Share Price Movement


Q1 results are good

Puravankara Projects has posted a good result for the quarter ended 30.06.11 as compared to the quarter ended 31.03.11. Revenue has increased from Rs.99.67 crore to Rs.138.60 crore. Revenue for the whole year 2010-11 was at Rs.414.14 crore. Net profit nearly doubled from Rs.9.26 crore to Rs.17.14 crore. Net profit for the whole year was at Rs.83.87 crore. Net profit margin increased from 9.29% to 12.37%. The company is operating in the real estate sector. The shares of Puravankara are traded in the Indian stock markets at Rs.73.50 now (Bombay Stock Exchange 18.11.11). The highest price recorded by the shares of the company in the last one year is Rs.135 (21.10.10) and the lowest price is at Rs.59.50 (19.08.11).

Luxury project in Bangalore

Puravankara is planning to launch a new luxury residential project in Bangalore. The project will be spread over an area of 1.08 million square feet and the company expects extra revenue of Rs.500 crore from this project. The company has applied for approvals for another six million square feet of projects in Bangalore and Chennai under the Puravankara brand name. Under the Provident brand name the company will be launching another six projects totalling an area of 12 million square feet in Mangalore, Bangalore and Coimbatore. Ravi Puravankara is the Chairman and Managing Director of the company. The company is well placed to capitalise on all opportunities and expand its projects at short notice.

In South India, real estate market has not been affected yet

Puravankara has decided to focus only on residential projects now. The company has put on hold its hospitality projects. The continuous rising of the home loan interest rate has deterred prospective buyers. Even upper middle class is scared away from availing home loans because of the RBI policy of raising interest rates periodically in the name of fighting inflation. Banks are also afraid of lending for home loans projects because of the fear that these loans may turn into non performing assets (NPAs) in their books of account. But in South India, the situation has not gone very serious yet. This is an advantage for Puravankara as it is a South-focussed company. Puravankara has a joint venture project in Colombo in Sri Lanka and also in Kolkata.

Venturing into cement manufacturing?

Puravankara is also scouting for opportunities to start cement manufacturing. It will be a backward integration for the real estate company. Puravankara raised Rs.150 crore from Kotak Mahindra Prime Land, a non-banking financial branch of Kotak Mahindra Bank through private placement of non-convertible debentures (NCDs). The debentures carry an interest rate of 16% repayable in 18 months time. Puravankara has the option to raise another Rs.75 crore through the debenture route. There were no NCD issues in India by the realty sector in 2009. But in 2010, 20 developers raised Rs.3000 crore through the NCD route.

Luxury project in Chennai

Puravankara launched a luxury project amounting to Rs.1700 crore in Pallikaranai, a suburb of Chennai city. It will have 2688 housing units on 55 acres of land and will be completed in four years. The first phase consisting of 728 units will be ready for occupation in 30 months. It will have 77% open space with amenities like swimming pools, two clubhouses, supermarkets, outdoor sports facilities and parlour. The price charged by the company is Rs.3299 per square feet. Puravankara is a 35 years old company. It has so far completed 36 commercial and residential projects across India. It is presently developing 16 more projects. Till date, the company has handed over 6500 houses. The company has a wholly owned subsidiary Provident Housing. It caters to the mid segment housing.

Good brand image

Puravankara has a good brand image. It has established its presence in the real estate markets of Kochi, Bangalore, Coimbatore, Chennai, Mysore, Hyderabad and in overseas markets like Colombo & Dubai. The company has also secured direct foreign investment in real estate industry through its joint venture with Singapore company Keppel Land. Keppel Land is the property arm of the government conglomerate Keppel Corporation. The joint venture is developing two new projects in Kolkata and Bangalore.

Invest at around Rs.50

The shares of Puravankara quoting at Rs.73.50 can be acquired at declines. One may acquire it at an ideal price of Rs.50 for medium and long term investment.

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