Hotel Leela + Puravankara Projects Result Overview

Hotel Leela reported 3QFY08 revenues of Rs1,430m and net profit of Rs550m. Results are not comparable on a YoY basis because of merger of Kovalam Hotels, a subsidiary, during the quarter. Net profit for the quarter was augmented by high other income which includes gains of Rs69m on forex debt.

The company recorded a healthy EBITDA margin of 51.7% for the quarter on the back of 8% YoY ARR growth, led by 27% growth in Mumbai ARR while Bangalore ARR declined 12%, and high occupancy of 76% which was boosted by higher business and tourist traffic.

Properties on the anvil include hotels at Gurgaon (management contract), Udaipur, Chennai, Delhi, Hyderabad and Pune to be operational over next 2-3 years.

Puravankara Projects:Revenues grew 78% yoy to Rs1,505m while net profit increased 122% yoy to Rs631m on account of a sharp increase in EBITDA margin by 830bps YoY to 39.4% and net interest income of Rs62m in 3Q FY08,
compared to interest expense of Rs3m in 3Q FY07.

~72.8 acres of land added – 30 acres in Hyderabad near Hitech City and 42.8 acres in Sriperumbudur near Chennai. These are still to be included in our NAV estimate. 2) Area under construction has increased to 18.8m sq ft with the launch of two large residential projects in Chennai and Kolkata (JV with Keppel Land) with a total area of ~6m sq ft.

Puravankara’s large exposure to Bangalore and Chennai is an advantage over North India-based developers, since we believe South India appears to have lower supply risks.