ICICI direct advises investors to book profits in Unitech

ICICI direct advises investors to book profits by selling shares of Unitech as at the current levels, it believe all the near term developments have already been priced in.

Hiving-off retail business
Unitech is looking at listing its retail business in a foreign exchange at a later stage. Last year, the company had hived off its office space business as Unitech Corporate Parks and listed it on London`s Alternative Investments Market (AIM). The company has big plans for its retail business. It plans to develop 48 new malls in the next six years in various parts of the country. These properties will together cover an area of more than 60 million sq ft and will be developed at an investment of over Rs 200 billion. However, this move would take time to shape up, and have a definite impact on the company`s financial performance.

To foray into Mumbai
The company plans to foray into the complex Mumbai real estate market with a commercial project spread over 80 acres near the Bandra-Kurla Complex, an upcoming business district in the city. It would invest nearly Rs 40 billion over the next 3 years for the first phase of the project comprising 3 million sq ft. The first phase could yield Rs 12 billion as rentals annually, if one were to go by the prevailing market rate of Rs 350 per square feet a month near the project site.

Valuation
Unitech witnessed a surge in its stock prices moving above the target price of Rs 465. In the last report (Nov 5, 2007), the broking house has valued Unitech at Rs 404 a share using a NAV (net asset value) methodology. At the current market price of Rs 477, it is trading at premium of nearly 20% to its NAV.