Indiabulls Real Estate is the victim of being a realty and infrastructure play as the credit crunch and high costs of borrowings would definitely hamper its growth. The company has posted its results for September 08, which on, profit before interest and exceptional items looks good, as it is placed at Rs.50.13 crores against Rs.48.52 crores of the corresponding quarter in the previous year.
The company has been divesting its stake in various realty and power projects, due to which, net profit for the quarter, after minority interest, sharply fell to Rs.8 crores, against Rs.34.15 crores of the corresponding quarter in the previous year. Also, other income components of Rs.62.26 crores, booked by the company, during the quarter has also been reviewed by the market negatively.
The problem, nowadays with these companies are non-clarity of the company on various realty and power projects, failing which, it is difficult for an investor or `analyst to take a call on the stock. Discounted cash flow or Net Assets Value Methods of valuations no longer hold valid for these companies.
Share having corrected from a 52 week high of Rs.845 to two digits now still has a market capitalization of close to Rs.2,500 crores, which is not too comforting.
Hence, any results posted by such companies will not be able to give any indication on future prospects.
India, among the European investors, is believed to be a good investment despite political uncertainty, bureaucratic hassles, shortages of power and infrastructural deficiencies. India presents a vast potential for overseas investment and is actively encouraging the entrance of foreign players into the market.
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Adam
Internet Marketing