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A financial comparison of Indian construction giants Unitech and DLF based on various financial ratios
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FINANCIAL ACCOUNTING
CONSTRUCTION INDUSTRY COMPANY COMPARISON
GROUP TWO
samedi 28 novembre 2009
CONSTRUCTION INDUSTRY COMPANY COMPARISON
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SINCE 1971. LAND BANK OF OVER 14,500 ACRES. PRIMARILY ACTIVE IN
NCR (NOIDA)
STARTED AS DELHI LAND AND FINANCE IN 1946.
LAND BANK IN 32 CITIES. MOST ACTIVE IN NCR
CONSTRUCTION INDUSTRY COMPANY COMPARISON
samedi 28 novembre 2009
SINCE 1971. LAND BANK OF OVER 14,500 ACRES. PRIMARILY ACTIVE IN
NCR (NOIDA)
STARTED AS DELHI LAND AND FINANCE IN 1946.
LAND BANK IN 32 CITIES. MOST ACTIVE IN NCR
CONSTRUCTION INDUSTRY COMPANY COMPARISON
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samedi 28 novembre 2009
INDIA’S LARGEST REAL ESTATE DEVELOPMENT COMPANY - 39,369 CRORE RUPEES TOTAL ASSETS (2009)
HEADED BY KUSHAL PAL SINGH DESCENDENT OF THE COMPANY’S FOUNDERS
COMPANY HAS USED ASSETS OBTAINED IN DELHI AND GURGAON TO EXPAND TO OTHER INDIAN MARKETS INCLUDING MUMBAI, TAMIL NADU AND BANGALORE
CREATING JOINT VENTURES WITH FIRMS SUCH AS LAING O’ROURKE (UK CONSTRUCTION COMPANY) FOR ALL LANDMARK PROJECTS, AND HILTON HOTELS FOR HOTEL VENTURES
FOCUSING ON STRENGTHENING ITS LATERAL AND VERTICAL BUSINESS DRIVERS
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CLAIMS TO BE INDIA’S SECOND LARGEST REAL-ESTATE INVESMENT COMPANY - 10,538 CRORE RUPEES TOTAL ASSETS (MARCH 2009)
FOUNDED IN 1971 BUT FOCUSED WHOLLY ON REAL-ESTATE SINCE 1986
DIVERSIFYING INTO TELECOMS IN COOPERATION WITH NORWAY’S TELENOR GROUP
ENVISION FOR 50% GROWTH PER YEAR SINCE 2008
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ECONOMIC ANALYSIS
In recent years the Indian economy has been, and expects to continue to grow at a rate of approx 8% until 2020.
Deregulation and positive demographic trends combined with attractive economic investment opportunities have meant that the Indian economy has been growing amongst the fastest in the world, has experienced positive FDI (recently crossing $100bn since 2000).
An increasing balance of payments gap, with current account deficit of $37.2 in 2008-9 (OECD figures) and a challenging macroeconomic environment (inflation of 13% at August 2008), 26% fall in value of Rupee, and major disruption to Real Estate sector.
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SECTOR ANALYSIS
The Real Estate sector was amongst the worst hit by the global slowdown started by Lehman Brothers’ collapse in 2008.
Uncertainty and job losses inhibited many people from purchasing new homes, while uncertain and unfavourable trading conditions pushed companies to delay capital intensive projects. Real Estate requires both high capital investment and economic security, thus fell victim to current crisis.
Economic indicators have improved (inflation back to 5% end 2008), while urbanisation and sector demand projection promise a rapid return to health in 2009.
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0
15
30
45
60
3638
47
36
55
40
DLF Ltd. UNITECH Ltd.
Net Profit Margin (PAT/Sales) (%)
200720082009
DLF Ltd. UNITECH Ltd.2009 54,75 39,752008 46,53 35,712007 35,95 38,42
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0 10 20 30 40 50 60
39,75
54,75
UNITECH Ltd.
DLF Ltd.
Net Profit Margin 2009 (%)
DLF Ltd. UNITECH Ltd.Net Profit Margin 2009 54,75 39,75
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0
20
40
60
80
78
6261 63
72
67
DLF Ltd.UNITECH Ltd.
Gross Profit Margin (%)
200720082009
DLF Ltd. UNITECH Ltd.
2009 72 66,8
2008 61 63,2
2007 77,8 62
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0
25
50
75
100
86,28
61,4464,45 62,72
92,63 91,38
DLF Ltd. UNITECH Ltd.
Opera8ng Ra8o (Total Opera8ng Expenses/Sales)
200720082009
DLF Ltd. UNITECH Ltd.2009 92,63 91,382008 64,45 62,722007 86,28 61,44
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0
16
33
49
65
63,6660,78
57,78
61,6264,85 64,47
DLF Ltd. UNITECH Ltd.
Cash Opera8ng Profit Ra8o
200720082009
DLF Ltd. UNITECH Ltd.2009 64,85 64,472008 57,78 61,622007 63,66 60,78
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DLF Ltd. UNITECH Ltd.2009 39,51 41,532008 44,65 42,192007 39,13 42,216
0
10
20
30
40
50
39,130
42,21644,65
42,1939,51
41,53
DLF Ltd. UNITECH Ltd.
Opera8ng Ra8o (%)(Total Opera8ng Profit/Sales)
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DLF Ltd. UNITECH Ltd.2009 0,125 0,25872008 0,2284 0,48072007 0,6258 0,8471
0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
0,8
0,9
0,6258
0,8471
0,2284
0,4807
0,1250
0,2587
DLF Ltd. UNITECH Ltd.
Return On Equity
200720082009
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0
0,1
0,1
0,2
0,2
0,3
0,3
DLF Ltd.UNITECH Ltd.
Return On Investment
200720082009
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DLF Ltd. UNITECH Ltd.2009 9,09 7,372008 15,48 10,23
0
4
8
12
16
DLF Ltd.
UNITECH Ltd.
Earnings Per Share
20082009
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DLF Ltd. UNITECH Ltd.2009 Rs. 2 Rs. 0,102008 2 0,25
0
0,5
1,0
1,5
2,0
DLF Ltd. UNITECH Ltd.
Dividend Per Share 200720082009
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DLF Ltd. UNITECH Ltd.2009 0,22 0,01362008 0,129 0,024
0
0,075
0,150
0,225
0,300
DLF Ltd. UNITECH Ltd.
Dividend Payout Ra8o
20082009
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DLF Ltd. UNITECH Ltd.2009 8,284 0,96652008 3,308 1,2632007 1,372 0,939
0
2,25
4,50
6,75
9,00
DLF Ltd.UNITECH Ltd.
Liquid Ra8o
200720082009
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DLF Ltd. UNITECH Ltd.2009 0,2461 0,01562008 0,2651 0,05832007 0,477 0,1876
0
0,125
0,250
0,375
0,500
DLF Ltd. UNITECH Ltd.
Super Quick Ra8o
200720082009
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DLF Ltd. UNITECH Ltd.2009 0,777 2,6852008 0,744 3,8782007 10,369 3,107
0
1,1
2,2
3,3
4,4
5,5
6,6
7,7
8,8
9,9
11,0
DLF Ltd. UNITECH Ltd.
Debt-‐Equity Ra8o
200720082009
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DLF Ltd. UNITECH Ltd.2009 3,374 2,3382008 8,0224 4,4932007 0,449 7,965
0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
9,0
DLF Ltd. UNITECH Ltd.
Interest Coverage Ra8o
200720082009
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DLF Ltd. UNITECH Ltd.2009 13,283 2,31662008 3,7811 3,7912007 6,544 25,668
0
5
10
15
20
25
30
DLF Ltd.
UNITECH Ltd.
Debtors / Turnover Ra8o (Sales/Sundry Debtors)
200720082009
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DLF Ltd. UNITECH Ltd.2009 0,18106 0,21782008 0,379 0,31982007 0,189 0,599
0,2
0,3
0,5
0,6
DLF Ltd. UNITECH Ltd.
Working Capital Turnover Ratio
2007 2008 2009
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0
10
20
30
40
DLF Ltd. UNITECH Ltd.
Fixed Assets Turnover Ra8o
200720082009
DLF Ltd. UNITECH Ltd.2009 1,558 17,0332008 3,752 29,1852007 3,45 35,961
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DLF Ltd. UNITECH Ltd.2009 27,479 157,55382008 96,533 96,282007 55,776 14,22
0
50
100
150
200
DLF Ltd. UNITECH Ltd.
Average Collec8on Period
200720082009
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DLF Ltd. UNITECH Ltd.2009 0,1286 0,17432008 0,28149 0,27322007 0,1527 0,525
0
0,2
0,3
0,5
0,6
DLF Ltd. UNITECH Ltd.
Total Assets Turnover Ra8o
200720082009
samedi 28 novembre 2009
DLF Ltd. UNITECH Ltd.2009 0,4267 0,21232008 0,933 0,39532007 0,2647 0,5641
0
0,1
0,3
0,4
0,6
0,7
0,9
1,0
DLF Ltd.
UNITECH Ltd.
Inventory Turnover Ra8o
200720082009
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DLF Ltd. UNITECH Ltd.2009 855,4 1719,2652008 391,211 923,3492007 1378,919 647,048
0
400
800
1200
1600
2000
DLF Ltd.UNITECH Ltd.
Inventory Holding Period
200720082009
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INVENTORY EVALUATION ANALYSIS
Unitech:
Materials etc are valued at lower of cost or market value
Scrap valued at Net realizable value
Work in Progress valued at estimated cost.
Shuttering and tools valued at amortized cost, spread over 3 years
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INVENTORY EVALUATION ANALYSIS
DLF:
Land and plots at the commencement of construction are valued at lower of cost/ estimated cost and net realizable value.
Constructed properties other than Special Economic Zone (SEZ) projects is valued at lower of cost/ estimated cost and net realizable value
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