Wednesday, November 19, 2008


Leverage remains uncomfortably high
Unitech has one of the highest debt-equity ratio among Indian real
estate developers. Even adjusting telecom-related debt, gross debt of
property business is approximately INR80b. The company’s interest
coverage ratio (EBITDA/Gross interest) remains dangerously high at
2.2x declining to 1.9x by FY10. We believe that weak pricing and slow
execution are likely to stretch Unitech’s balance sheet. The company
has launched only about five new projects (6m sqft) this year. We are
still skeptical about the company’s ability to drive volumes in the
residential segment in FY09 due to weak market sentiment.

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