Astute Buyer

After the resignation of its CFO in August this year, DB Realty's CEO put in his papers a few weeks ago and the talk now is that Jayvardhan Goenka, son of promoter Vinod Goenka, will take charge. It is not just the management, but also the stock which is changing hands. Recently Vinod Goenka HUF bought 340,000 shares from the market at an average price of Rs.45.3. This year since January, Vinod Goenka and Sunita Goenka have been accumulating the stock gradually and their individual stake in the company has moved from 0.97% in January to 2.68% currently.

DB Realty hit the limelight in October 2012 when ace investor Rakesh Jhunjhunwala bought 1,250,000 shares at Rs.90.21 apiece igniting hope about a possible turnaround. The stock price soared soon after to Rs.165 in January 2013 before collapsing again. Post that, it did rebound to Rs.100 in June 2014 before hitting an all-time low of Rs.36 in February this year.  

Its financial position is not yet on the mend despite its sparkling inventory. Since FY12, revenue has fallen from Rs.600 crore to Rs.218 crore in FY16 as most old projects are stuck and new ones are under commissioning stage. Not surprisingly, it made a loss of Rs.30 crore in FY16. That said, the realtor is sitting on inventory of close to Rs.3,000 crore with another Rs.574 crore of land parcels at historical value. Its FY16 annual report shows that it has close to 21 projects in Mumbai and its suburbs out of which 14 projects are located between Bandra and Nariman Point.

These are high value projects with great revenue potential. For instance, DB Crown in Prabhadevi, Mumbai currently quotes at around Rs.40,000-50,000 per square foot, and has 699 units with a sales value of Rs.1,270 crore, more or less the current market cap of the realtor. The project is supposed to be completed by 2019 and revenue for the same has not been recognised as yet. Similarly Orchid Heights, which will be completed in 2018, in Mahalaxmi is supposed to fetch Rs.1,100 crore in revenue. Right now, the stock continues to languish but Jhunjhunwala still has a 2% holding.