Unitech Limited develops and leases real estate properties in India. The company develops commercial complexes, IT/ITes parks, SEZs, schools, hotels, malls, golf courses, and amusement parks. It also develops integrated residential projects, which include villas, apartments, offices, retail spaces, schools, clubs, floors, plots, and townships. In addition, the company leases IT/ITes and commercial office spaces; and hospitality projects. Unitech Limited was incorporated in 1971 and is headquartered in Gurugram, India.

India

Unitech 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. 

UNITECH.NS reported revenue of INR 3 217mn in the last 12 months, down 32% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 30% from FY24 to INR -9.91.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 11ppts and its growth accelerated by 29ppts in the past month. 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 favourable. This generally signifies that a stock is fairly valued or marginally undervalued abd is becoming more 'expensive', suggesting a short-term spike in confidence by the market at large.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -109.8% in the last 12 months, up from -399.8% in FY24. 

Historically, UNITECH.NS has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -806.2%, down from -781.9% in FY24. 

In the last 12 months, the return on capital employed (RoCE) declined to 34.3%, above the peers. 

Unitech Limited reported a return on equity (RoE) of 38.0% in the last 12 months, down from 67.7% in FY24. 

Another important profitability metric, return on assets (RoA), amounted to -9.8% in the last 12 months, an increase from -14.1% in FY24. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -8.6 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.

UNITECH.NS has poor trading liquidity. It will take at least a day or two for the average private investor to sell a common position under normal market conditions. Liquidity is relatively stable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a small 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 low margin volatility and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, bleak profitability, negligible return on capital, weak debt servicing capacity, inadequate interest coverage, and poor cash flow generation.

In highly turbulent market conditions, UNITECH.NS is not overly volatile. In other words, the stock will fall less 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 low. 

In normal market circumstances, UNITECH.NS is volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move much wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from low to mild. We would also like to highlight the mild intraday volatility of the instrument. 

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

Unitech Limited

₹ 8.54

2

Unitech Limited

₹ 8.54

2

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

₹ 8.54

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