Marathon Nextgen Realty Ltd:-Buy/sell:multibagger

Scripscan:Marathon Nextgen Realty Ltd



Note of sp tulsyan:This a very interesting and a less discussed stock. The company is into real estate development; they are pioneers in developing textile mills. A decade back they acquired Piramal Mills from Dr Mohanlal Piramal.They have developed that property which is the commercial hub of Central Mumbai, located atLower Parel. They have developed both residential and commercial property.They have been awarded as best developer projects around 4-5 times in the last one decade. The best part is, they have developed a large chunk property inLower Parel(Piramal Mill) which is held by them and is let out. The lease rental or income from the rental is to the extent of Rs 40-50 crore.The value of that developed property in the books of the company is close to Rs 100 crore, while the net present value of those companies are Rs 500 crore.They have other projects coming up in Mulund, Panvel, extreme Eastern suburbs of Bombay. They have entered into a JV with 40% share to develop properties inSouth Mumbaias well as in Bangalore.Nearly Rs 100 crore comes from sale of properties and Rs 50 crroe comes from rental. That is why they have been getting an EPS of close to Rs 40 every year.For FY11 they had an EPS of close to Rs 45-46 and the promoter holding is very high at 89%. The close associates or HNI are holding about 6%. Only 5% float is there and maybe in view of guidelines where promoters are required to dilute their equity to 75% that can be good trigger.Their EPS of Rs 40 is likely to remain for many years because they will keep selling part of developed premises to put financials in place. That is the reason their net profit margins is quite high at 62-63%. The company has advanced Rs 300-350 crore for all projects under development including JVs (Bangalore, South Mumbai, Mulund and Panvel) this indicates that they have a strong pipeline of property development for next five years.The company is almost debt free, Rs 30-40 crore is lease rent discounting and cannot be called as debt. All this gives a lot of confidence when one wants to take a call on quality real estate stock.

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