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Unitech + Omaxe – Q3FY08 Realty Slowdown Ahead ?

February 2, 2008

Unitech:3QFY08 revenues increased 19% yoy to Rs11,421m. EBITDA margin at 64.3% was flat yoy, but a lower tax rate helped net profit grow 39% yoy to Rs5,258m. EBITDA margin increased to 64% in 3Q from 50% in the previous quarter because of higher proportion of commercial/retail asset sales.

Unitech has received LOI (Letter of Intent) for licenses in 22 circles and has paid ~Rs16.5bn as license fee – we await more details on spectrum allocation. UCP, the AIM fund, has widened its scope of investment to include retail/hotels assets – this could provide potential for Unitech to inject more assets into UCP.

Plans to transfer 40% stake in 3 IT Park/SEZ assets, which are partly owned by UCP, to a business trust to be listed in Singapore. UOT is expected to have an initial portfolio of ~10m sq ft.

Omaxe:3QFY08 revenues increased 18% YoY to Rs6,682m while net profit increased 50% YoY to Rs1,542 on the back of higher other income and 500bps YoY improvement in EBITDA margins to 31.2%.

The company has formed a consortium with GVK and Nagarjuna Construction to bid for infrastructure projects such as airports, roads, bridges, etc. The consortium has currently bid for redevelopment of Udaipur and Amritsar airports and development of Badarpur Highway.

Omaxe is planning to build hotels in Faridabad, Amritsar, Greater Noida and Patiala and is currently in talks with large hospitality chains to form a strategic alliance.

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