Recommendation from Realty Sector

This section gives a recommendation of a stock having stock price below Rs 100 with sound fundamentals and expected to give handsome returns over a one-year time horizon.

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PURAVANKARA A COMPELLING BUY FOR REAL GROWTH

HERE IS WHY
Strong presence in South India
Attractive post-RERA opportunities
One of the largest pureplay residential retail brands

The Puravankara Group, headquartered in Bengaluru, was established in 1975 and has gained over 42 years of experience in property development, real estate and construction sector in India. Purvankara is among the largest group in South India that serves the needs of its clientele in housing, commercial and retail spaces. The group began operations in Mumbai and has established a considerable presence in the real estate industry in metropolitan cities of Bengaluru, Kochi, Chennai, Coimbatore, Hyderabad, Mysuru, Mangaluru, Kolkata and overseas in Colombo and Dubai with a focus on developing residential and commercial projects. 

KEY STRENGTHS
The company has a robust track record and has significant presence in southern India which is one of the fastest growing residential markets in India. Bengaluru city is considered to be one of the most stable real estate markets in India. Puravankara has some of its biggest residential projects being executed in Bengaluru. 

Beyond Bengaluru, Puravankara Projects has been extensively engaged in creating premium residential realty projects across South India, a zone accounting for 22-24% of India's GDP growth. Provident Housing Limited, a 100% subsidiary fo the company, is engaged in the development of premium affordable housing. Puravankara extended its real estate development business to western India (Mumbai and Pune) in 2015-16. This foray into new geographies augurs well for the company as the western markets such as Mumbai and Pune are amongst the fastest growing in India. 

Highlights: 1. Focus on high growth five cities (Bengaluru, Chennai, Hyderabad, Pune and Mumbai). 

2. Vision 2020 to increase anytime execution bandwidth 

3. Strengthening processes and construction technologies to lower costs, bring in construction consistency and quicker completion. 

FINANCIALS
On the financial front, the company's topline stood at Rs.186.84 crore, down by 4.49 per cent in Q4FY17 as against Rs.195.63 crore in Q4FY16, while the operating profit increased 62.39 per cent to Rs.99.06 crore in the last quarter of financial year 2016-17 as compared to Rs.61.00 crore of the same period last year. The company's profit after tax increased by a whopping 404.08 per cent to Rs.40.78 crore in Q4FY17 as compared to Rs.8.09 crore in Q4FY16. 

On an annual basis, Puravankara Limited's topline stood at Rs.894.11 crore, a decrease of 10.99 per cent in FY17, as compared to the previous year. However, the operating profit of the company grew 10.30 per cent to Rs.337.47 crore in FY2016-17, as against Rs.305.97 crore of FY2015-16. The company's PAT increased 16.72 per cent to Rs.100.51 crore in FY17, as compared to Rs.86.11 crore in the previous year. 

The changing fortunes of real estate sector in India and the obvious long term benefits linked with RERA and GST reforms make Purvankara a compelling BUY.