Focused forays

SPECIAL REPORT

Vipul, a real estate developer based out of northern capital region (NCR) has been making waves for quite a while now. A relatively unheard-of company, Vipul recently announced an investment plan of about Rs 13,000 crore over five years in its various commercial and residential projects across a number of cities in India, including Bhubaneshwar, Gurgaon, Hyderabad, Kolkata, Manesar and Nagpur.

Vipul has about 40 million sq ft of saleable area of residential space and over 17 million sq ft of commercial space under development "� all of this to be completed by FY13. About 75 per cent of the revenues for these projects would be accruing to Vipul after taking out the share of its partners in joint development for some projects.

"We do not aim to go pan-India, but limit ourselves to those cities which demonstrate good growth potential over the next five-ten years," says Punit Beriwala, managing director, Vipul.

Vipul plans to adopt a build-and-lease model for its commercial space, for all its new projects. The company has a 50:50 joint venture with British construction major Laing O'Rourke for a remote facilities management services company Vipul Laing O'Rourke, which will provide facilities management and automation services as well as consultancy to corporate clients from FY08. 
 

GAINING WEIGHT
Rs crore	FY07	FY08E
Revenues	198.7	300
Operating profit	67.9	90
OPM (%)	34.0	30
Net profit	41.5	63
NPM (%)	20.9	21

Both lease revenues from commercial properties as well as fees from facilities management contracts would be on an annuity basis, providing consistency to Vipul's numbers. Besides this, the promoter group owns a facilities maintenance venture, which provides its services to corporate clients in India. "We plan to merge Vipul Facilities Management with Vipul, the listed company, sometime next year, and we are in the process of deciding the valuations," says Beriwala.

Once its plans materialise, Vipul's business model is likely to become significantly different from the rest of the real estate pack, and a majority of them follow a build-and-sell model and do not have an annuity-based revenue stream.

The stock has been in the limelight ever since ICICI Securities' unrated note titled Deep Value published on August 31, 2007, found the stock trading at 50 per cent discount to its net present value (NPV). The stock has gone up 80 per cent since then to Rs 239 on November 29, and trades at just 15 per cent discount to that NPV.

While it may not be as cheap, there could still be some steam left considering that some of its expansion plans have happened recently.