TDR rates set to fall

“HDIL`s Mumbai International Airport (MIAL) project got a green signal as the issue with respect to `eligibility criteria` has been sorted and MMRDA has commenced the shifting of eligible slum dwellers from MIAL slums to Kurla Premier Compound. This decision of MMRDA is a positive move for HDIL as (1) it paves way for Phase-II of the project leading to ramp up in phase-I & II of the project. (2) The development work in phases is likely to help increase TDR generation. trade expect TDR generation to exceed 1 msf post two quarters; this is higher from company`s earlier guidance of 0.75-0.9 msf per quarter for FY12 given in their Q4FY11 conference call. (3) Tax rate going forward might be lower than earlier as MAT rate is applicable on TDR sale. We maintain `BUY` with our target price of Rs 225 a share with gross airport valuation at Rs 132 a share.“

MIAL phase-I shifting commences: “MMRDA has commenced shifting of all eligible slum dwellers from MIAL slums to Kurla Premier Compound and also have issued allotment letter for flats to eligible slum dwellers. The total slum dwellering families are ~28,000 families. We believe that almost 75% of the construction work has been completed and most of the buildings are in ready to shift stage. This shifting clears the cloud over the work on the MIAL project.“

TDR Generation to be higher: “The management, in Q4FY11 conference call, had given a guidance of 0.75-0.9 msf per quarter TDR recognition for FY12. Post the current development, trade expects that work on other phases of MIAL project to ramp up and see TDR generation exceed 1 msf post two quarters. This is likely to lead to higher cash generation and fall in TDR prices

Tax rate may fall very marginally: “Higher TDR generation is likely to make tax rate fall marginally as TDR is taxed at MAT.“

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