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Anant Raj Industries (Mkt Cap USD0.7b, Buy)

Anant Raj's 3QFY11 results were better than our expectations. EBITDA was Rs.722m while EBITDA margin jumped to 62%. net profit declined 25% YoY.

The sharp increase in EBITDA margin is primarily attributable to higher realizations in its Manesar project. Revenue grew 50.5% YoY to Rs.1.2b.

While Anant Raj has not launched any new project in 3QFY11, phase-II of its Manesar project has witnessed strong response.

In 3QFY11, Anant Raj witnessed a sharp increase in debt (in line with the management guidance). Gross debt was Rs.9.3b as at Dec 2010, net debt at Rs.7.1b.

We are revising our FY11 PAT estimate upward to Rs.1.9b. We are downgrading our FY12 PAT estimate to Rs.2.3b to incorporate (a) delay in the launch of the Hauz Khas and Bhagwandas projects, and (b) higher interest expense on account of increase in net debt to Rs.7.1b (v/s Rs.3.6b in 2QFY11). The stock trades at 12.8x FY12E EPS of Rs.7.9 and 9.3x FY13E EPS of Rs.10.8, and at ~49.5% discount to its FY13E NAV of Rs.200/share.
Maintain Buy