trading stock- bombay dyeing

Bombay Dyeing will consolidate between Rs.963 (stop Rs.955) and Rs.1,008 (stop Rs.1,022).

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Bombay Dyeing likely to spin off realty

Tanvi Shukla

Mumbai: Textile major Bombay Dyeing is considering demerging its real estate business into a separate company, according to sources familiar with the situation.

The hiveoff will be followed by an initial public offering, sources said.

Company officials refused to comment, saying Ness Wadia alone can speak on this. Wadia could not be contacted as he is in the thick of the IPL cricket extravaganza.

The Street, nevertheless, is betting on the move. On Friday last, the share ended up 18.21% at 973.15.

Shailesh Kanani of Angel Broking says the demerger and IPO plans are driving up the share price.

Analysts said a spin-off helps Bombay Dyeing get better valuations.

They expect concrete plans to be announced by August.

The development plans for the textile major’s Worli and Dadar properties are huge: about 10 million square feet for IT parks, retail hubs, commercial and residential projects, hotels and serviced apartments.

The capex involved will run into hundreds of crores. The company has already begun sales of residential projects valued at around Rs 500 crore.

Angel’s Kanani said more than 25% of residential properties have already been sold at prices between Rs 20,000 and Rs 25,000 per square feet.

“Their net margin will be over 60%-70%,” Kanani estimates. That should translate into a profit of around Rs10,000 per square feet, Kanani said.

The company does not have to invest in land, and the construction contract, worth Rs 1,800 crore, has already been given to Larsen & Toubro.

Sources said Bombay Dyeing plans to sell only 0.4 million sq ft, of its residential development at Dadar, and commercially lease the remaining 3.9 million sq ft including at Worli.

This, analysts said, would allow the company to capture capital appreciation on assets as well as enjoy healthy yields from leased properties. Bombay Dyeing’s development plans were first announced in fiscal 2005.

But analysts said the delays that the projects faced have been a blessing in disguise as real estate prices have skyrocketed since then.

Source : DNA