Nuvama initiates coverage with a ‘BUY' rating on AGI Infra (AGIIL) with a target price of Rs 1448
Report link: https://agiinfra.tiiny.site
Key growth Drivers are highlighted below:
1. Pre-sales CAGR of 13% over FY26–30E on the back of a strong launch pipeline of ~INR5,120cr (9.8msf) and ongoing inventory of ~INR1,280 (4.98msf);
2. Strong demand for its product and further price realisation;
3. In-house construction using its team of experts, coupled with the use of Mivan technology, which gives it an edge in terms of faster execution, on-time delivery, and boosts margin;
4. Favourable dynamics in Punjab with lower inventory and limited supply by branded players;
5. Net cash surplus of INR2,060cr over FY26–32E (sans its land bank) led by pre-sales growth;
6. With a large land parcel spread across diverse locations, where demand is high, it is ready for the future. We expect a net cash surplus of INR1,506cr and a healthier Balance Sheet led by strong collections and internal accruals (net D/E ratio to improve to -0.1x in FY27E from 0.2x as of March).
It has ten/four ongoing/upcoming projects, with an inventory/saleable area of 4.98msf/9.8msf (GDV of ~INR1,280cr/~INR5,120cr). Well-diversified land reserves of ~12.2msf will be used for future development. We expect GDV of ~INR1,280/~INR5,400cr ongoing inventory/upcoming to be liquidated by FY30 and envisage a cash surplus of ~INR2,060cr from ongoing and upcoming projects. We see project additions once it launches most of its existing projects. We value AGIIL on its FY26E NAV considering its land reserves and ability to add projects aggressively in its existing micro-market given its brand value and improved Balance Sheet.
Organised real estate players gain an edge in underserved
Punjab micro-markets Its more than two decades of experience helps it stand out among Punjab's few organised players. Jalandhar and Ludhiana are among the fastest-growing realty markets in the region, with strong traction seen in recent years. We expect continued demand and price appreciation given: i) its luxury positioning, and ii) the presence of an affluent client base. Limited supply from organised players, better infrastructure, and rising aspirations are driving demand for branded residential projects.
Proven execution and strategic Tier II presence backed by a diversified portfolio
AGIIL's expertise lies in residential development, with a portfolio evenly balanced between luxury and affordable housing. This ensures access to a diversified client base and resilience across market cycles. It has delivered ~9msf across 10 successful projects in Jalandhar. It is expanding in key high-growth micro-markets in Tier II cities where demand is robust. Leveraging Mivan technology and in-house execution, it is ensuring faster project execution, greater durability, and reduced labour and overhead costs. With a sizeable land bank in Tier II cities and a proven execution track record, it is best placed to sustain margin and capitalise on rising demand for branded and quality housing across Punjab.
Ongoing and upcoming projects total ~14.8msf; launches seen till FY30
It has significantly scaled up given: i) the favourable market dynamics, ii) timely delivery of premium projects, and iii) strong demand for completed projects, leading to healthy collections and efficient capital recycling via internal accruals. It has 10 ongoing projects (eight residential and a commercial and plot each) with an inventory of ~4.8msf. Four upcoming projects (residential/commercial: three/ one), with a saleable area/GDV of 9.8msf/~INR5,120cr, will be launched by FY30. We expect the entire ongoing inventory to get liquidated by FY28-end.
Expect a cash surplus of ~INR2,060cr over FY26–32; Net debt to equity to decline -0.1x in FY27
We expect ongoing and upcoming residential projects to generate a gross/net cash flow of INR8,283cr/INR2,060cr over FY26–32. We foresee a net D/E ratio of -0.1x by FY27 from 0.5x as of FY25on healthy internal accruals.
Recommend buy with TP of Rs 1,448
We recommend Buy with a target price of Rs1,448 (upside of 36%). Our Buy recommendation is drive by 1. Well located land bank 2. Experienced management 3. Strong execution 4. Strong demand 5. Healthy cash flows 6. Comfortable balance sheet 7. Attractive valuations. Expect healthy cash flows aided by: i) the development of land parcels, ii) strong brand positioning, and iii) price premium in Punjab. We discount cash flows to FY26 to arrive at a NAV of INR3,539cr with a TP of INR1,448. Maintain BUY.
(Disclaimer: The above press release comes to you under an arrangement with NRDPL and PTI takes no editorial responsibility for the same.). PTI
This is an auto-published feed from PTI with no editorial input from The Wire.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Economic Times
7 hours ago
- Economic Times
Trent Q1 earnings preview: Robust topline growth up to 36% YoY seen on store additions. Brokerages divided on PAT growth
Retail major Trent will announce its Q1 earnings on Wednesday, August 6 where the Tata Group company is expected to post strong revenue growth for Q1FY26, led by aggressive store expansion, particularly in the Zudio format. However, brokerages anticipate pressure on profitability due to rising operating costs and a higher share of lower-margin Zudio sales. ADVERTISEMENT While topline may rise up to 36% YoY, EBITDA margin is likely to contract due to soft same-store sales growth (SSSG), cost inflation, and competitive pressures. As a result, the company's net profit is likely to take a hit, say brokerages who are evenly divided on this metric. Out of the four estimates considered, two indicate a profit after tax (PAT) decline while others see a low single-digit growth. The estimates of PhillipCapital (PC), Nuvama Institutional Equities, Motilal Oswal Financial Services (MOFSL) and Kotak Institutional Equities have been what their estimates are on these 4 metrics: – PhillipCapital: Rs 351 crore, up 3% YoY and flat QoQ ADVERTISEMENT – Nuvama sees core PAT at Rs 288 crore, down 16% YoY and down 18% QoQ– MOFSL: Rs 356 crore, up 4.1% YoY ADVERTISEMENT – Kotak Equities: Rs 509 crore, up 48.7% YoY and up 45.4% QoQ– PhillipCapital: Rs 4,788 crore, up 20% YoY and up 17% QoQ ADVERTISEMENT – Nuvama: Rs 5,061 crore, up 20% YoY and 17% QoQ– MOFSL: Rs 4,790 crore, up 20% YoY– Kotak Equities: Rs 5,428 crore, up 36% YoY and up 32.2% QoQ ADVERTISEMENT Blended revenue per store and per square feet based on calculated net revenue will likely stand at Rs 4.72 crore, down 7% YoY and Rs 3,511, down 17% YoY, respectively, PhillipCapital Trent's revenue growth 'weak', PhillipCapital assumed LFL growth to be -4%. 'This would also be because of Trent's strategy of cannibalization from newly opened stores near high-performing locations, a broader demand slowdown, geopolitical headwinds and the natural impact of a high comparative base,' it said in a Kotak attributed the strong double-digit revenue growth to new store additions in Zudio (20 net store additions on a QoQ basis) and Westside (5 net store additions on a QoQ basis), partially offset by 5.7% YoY decline in revenue per square feet. We expect YoY area growth of 39%, driven by addition of larger sized revenue growth is expected to remain robust, led by aggressive store additions in Westside and Zudio. Also Read: Bajaj Auto Q1 Results Preview: Muted earnings seen amid flat volumes. 6 things to keep watch – PhillipCapital: Rs 724 crore, up 19% YoY and up 10% QoQ– Nuvama: Rs 560 crore, down 8% YoY and down 15% QOQ– MOFSL: Rs 718 crore versus Rs 611 crore in Q1FY25– Kotak Equities: Rs 935 crore, up 53.2% YoY and 42.5% QoQEBITDA performance is divided. While Kotak expects a sharp rise driven by strong revenue and scale benefits, Nuvama forecasts a decline, citing lower gross margins and competitive intensity. Most brokerages agree margins will remain under pressure due to Zudio's growing share. – PhillipCapital: 15.1%, down 17 bps YoY and down 86 bps QoQ – Nuvama: 11.7% (↓360 bps YoY from 15.3%)– MOFSL: 15% in Q1FY26 Vs 15.3% Q1FY25– Kotak Equities: 17.2, versus 193 bps YoY and 124 bps QoQ PC modelled 23 bps gross margin contraction YoY, 25% increase in employee expense YoY and 18% increase in other expenses (including rent expense) YoY. It also expects operating margins to contract by 17 bps YoY primarily due to gross margin contraction led by higher Zudio mix. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
Time of India
7 hours ago
- Time of India
Trent Q1 earnings preview: Robust topline growth up to 36% YoY seen on store additions. Brokerages divided on PAT growth
Live Events 1) PAT 2) Revenue 3) EBITDA 4) EBITDA margin (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Retail major Trent will announce its Q1 earnings on Wednesday, August 6 where the Tata Group company is expected to post strong revenue growth for Q1FY26, led by aggressive store expansion, particularly in the Zudio format. However, brokerages anticipate pressure on profitability due to rising operating costs and a higher share of lower-margin Zudio topline may rise up to 36% YoY, EBITDA margin is likely to contract due to soft same-store sales growth (SSSG), cost inflation, and competitive a result, the company's net profit is likely to take a hit, say brokerages who are evenly divided on this metric. Out of the four estimates considered, two indicate a profit after tax (PAT) decline while others see a low single-digit estimates of PhillipCapital (PC), Nuvama Institutional Equities, Motilal Oswal Financial Services (MOFSL) and Kotak Institutional Equities have been what their estimates are on these 4 metrics:– PhillipCapital: Rs 351 crore, up 3% YoY and flat QoQ– Nuvama sees core PAT at Rs 288 crore, down 16% YoY and down 18% QoQ– MOFSL: Rs 356 crore, up 4.1% YoY– Kotak Equities: Rs 509 crore, up 48.7% YoY and up 45.4% QoQ– PhillipCapital: Rs 4,788 crore, up 20% YoY and up 17% QoQ– Nuvama: Rs 5,061 crore, up 20% YoY and 17% QoQ– MOFSL: Rs 4,790 crore, up 20% YoY– Kotak Equities: Rs 5,428 crore, up 36% YoY and up 32.2% QoQBlended revenue per store and per square feet based on calculated net revenue will likely stand at Rs 4.72 crore, down 7% YoY and Rs 3,511, down 17% YoY, respectively, PhillipCapital Trent's revenue growth 'weak', PhillipCapital assumed LFL growth to be -4%. 'This would also be because of Trent's strategy of cannibalization from newly opened stores near high-performing locations, a broader demand slowdown, geopolitical headwinds and the natural impact of a high comparative base,' it said in a Kotak attributed the strong double-digit revenue growth to new store additions in Zudio (20 net store additions on a QoQ basis) and Westside (5 net store additions on a QoQ basis), partially offset by 5.7% YoY decline in revenue per square feet. We expect YoY area growth of 39%, driven by addition of larger sized revenue growth is expected to remain robust, led by aggressive store additions in Westside and Read: Bajaj Auto Q1 Results Preview: Muted earnings seen amid flat volumes. 6 things to keep watch – PhillipCapital: Rs 724 crore, up 19% YoY and up 10% QoQ– Nuvama: Rs 560 crore, down 8% YoY and down 15% QOQ– MOFSL: Rs 718 crore versus Rs 611 crore in Q1FY25– Kotak Equities: Rs 935 crore, up 53.2% YoY and 42.5% QoQEBITDA performance is divided. While Kotak expects a sharp rise driven by strong revenue and scale benefits, Nuvama forecasts a decline, citing lower gross margins and competitive intensity. Most brokerages agree margins will remain under pressure due to Zudio's growing share.– PhillipCapital: 15.1%, down 17 bps YoY and down 86 bps QoQ– Nuvama: 11.7% (↓360 bps YoY from 15.3%)– MOFSL: 15% in Q1FY26 Vs 15.3% Q1FY25– Kotak Equities: 17.2, versus 193 bps YoY and 124 bps QoQPC modelled 23 bps gross margin contraction YoY, 25% increase in employee expense YoY and 18% increase in other expenses (including rent expense) YoY. It also expects operating margins to contract by 17 bps YoY primarily due to gross margin contraction led by higher Zudio mix.
Mint
9 hours ago
- Mint
Indias appeal among emerging markets fading due to high valuation premium
New Delhi [India], August 5 (ANI): India's equity markets are showing signs of fatigue as stretched valuations collide with slowing profit growth, undermining the country's appeal among emerging markets (EMs), according to a report by Nuvama. The report noted that despite a strong rebound, Nifty and SMIDs (Small and Mid-cap Stocks) rising 12 per cent and 20 per cent respectively since April lows--underlying earnings momentum has weakened, calling the rally's sustainability into question. "We argue this is unsustainable and skews the buyer-seller incentive structure decisively in the latter's favour," the report added. The report added that the BSE500's median price-to-earnings (PE) ratio stands at an elevated 40x, while median trailing earnings growth has slipped to just 9 per cent. The growing gap between company's profits and high stock prices is making the market more attractive for sellers than buyers. The report mentions that the three key investor segments of insiders, domestic households, and foreign institutional investors (FIIs) are reflecting a cautious sentiment in the Indian markets. The report claims that in Q1FY26, insiders (including promoters, private equity, and corporates) offloaded or issued a record USD18 billion in equity, showing their desire to cash out at current valuations. Meanwhile, household investor flows via mutual funds and direct equity have slowed, with net inflows down 26 per cent year-on-year to USD 9.5 billion. Weaker income growth and subpar trailing returns, which now lag even debt instruments, could dampen future domestic inflows, the report added. On the global front, the report observes that a weaker dollar has attracted USD 4.5 billion in FII (Foreign Institutional Investment) inflows during the quarter. However, the report also highlights that India's performance is lagging other EMs as its earlier earnings edge has evaporated, making its high valuation premium harder to justify.
