Swan Mills - Multibagger

A realty company in Mumbai

Swan Mills is developing its property located at Sewree and at Kurla in joint venture with Peninsula Land. The company shall be paying 22% of the sale proceeds to Peninsula for carrying out development and marketing of project.

The projects have following area available for development.
1) Sewree Project – Ashok Gardens is a 12-Acre property with high-class luxurious two towers, with parking podium for 500 cars and project shall be completed by June 09. The total saleable area is about 10 lakh sq. ft. The present selling rate is about Rs 15,500 sq. ft. (including floor rise). The average selling price for the project would be about Rs 12,000 per sq. ft., including car parking. Project would realize Rs 1,200 crores. Deducting cost of construction and development of Rs 285 crores and Peninsula Margin of Rs265 crores, PBT would be close to Rs 650 crores.

2) Kurla Project – The 11 acre project is a commercial complex called Peninsula Technopark with a saleable area of 10 lakh sq. ft. The project shall be completed by FY 10. The project is located adjacent to Bandra Kurla complex where present selling rate is about Rs 30,000 per sq. ft. This project can fetch Rs 25,000 per sq. ft. and since the developers have sold one Tower at old rate, the average rate realization could be Rs 20,000 per sq. ft. Peninsula land would be entitled for 22% of selling receipts as Developers fee, which would be about Rs 440 crores. Construction cost would be about Rs 160 crores, resulting in a PBT of Rs 1,400 crores.

The total PBT from both the project would be about Rs 2,050 crores by FY 10, in the next three years.

The present equity of the company is at Rs 19 crores, being 9.50 crore equity shares of Rs 2 each. Promoters are holding 82%, while about 10% is held by few long-term investors. The share has very low floating stock. The share is presently ruling at Rs 128.60, which results in a market capitalization of Rs 1,220 crores.

The company has not yet sold its Kurla property and quite a large area is unsold at Sewree. With any further rise in realization, it would improve its profitability. The expected PBT from the projects are over Rs 2,000 crores.

Hence, share has potential to rise to Rs 150 to Rs 180 levels in the next 6 – 9 months.