Housing Development and Infrastructure Limited engages in the real estate construction, development, and other related activities in India. The company's residential projects include apartment complexes, towers, and townships; commercial projects comprise office spaces and multiplex cinemas; and retail projects consists of shopping malls. It also develops slum rehabilitation projects. The company was incorporated in 1996 and is based in Mumbai, India.

India

Housing Development and Infrastructure Limited

Real Estate

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

HDIL.NS reported revenue of INR 344mn in the last 12 months, up 2 074% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 60% from FY23 to INR -0.16.

Over the past six months, the stock has consistently fallen, resulting in a 24% total decrease. When measured against its worldwide peers from the same industry (as shown above), the stock has been weaker, underperforming by 19ppts. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is slightly unfavourable.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 1.4% in the last 12 months, up from -1099.5% in FY23. 

Historically, HDIL.NS has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -6.2%, a growth from -1197.1% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to -0.1% in the last 12 months, an increase from -0.5% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 0.1%, below the peers. 

Housing Development and Infrastructure Limited reported a return on equity (RoE) of 0.1% in the last 12 months, down from 0.8% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -1.1 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

HDIL.NS has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity is usually stable and becomes extremely unfavourable on the days with the lowest activity. However, under highly turbulent market conditions, the trading volume tends to improve significantly. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note resilient historical revenue growth and low margin volatility, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, bleak profitability, negligible return on capital, weak debt servicing capacity, inadequate interest coverage, poor cash flow generation, and an unfavourable capital structure.

In highly turbulent market conditions, HDIL.NS is moderately volatile. In other words, the stock will fall more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be moderate. 

In normal market circumstances, HDIL.NS is highly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change somewhat erratically. The stock's losses on its worst days (less than 1-5% of the time) will range from low to mild. 

Based on key historical and expected multiples, the stock is greatly overvalued relative to its peers. Specifically, the stock is overvalued on EV/EBITDA. 

Housing Development and Infrastructure Limited

₹ 3.2

1

Housing Development and Infrastructure Limited

₹ 3.2

1

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

₹ 3.2

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