free stock tips of the day June16

Edelweiss has put out a BUY call on Mahindra Lifespace.

“Mahindra Group has more than 100,000 employees and group revenues exceeding $7 billion. Currently, it is executing 2.18 m sq ft of projects across Mumbai, NCR, Chennai, and Pune, and 5.89 m sq ft of planned projects. Average realisation is estimated at Rs 3,900 per sq ft and the build-out cost at Rs 1,700 per sq ft. We estimate that the se projects will generate cumulative cash of Rs 1,040 crore till FY16E,” it said.

“Mahindra Life is developing another SEZ/ business park at Jaipur, spread over 3,000 acres. It has already signed 36 MoUs, of which 16 have been converted into agreements and two units are operational with 1,500 employees. It is planning similar projects in Chennai and Pune across 4,000 acres,” it said.

“We have valued Mahindra Life on a DCF basis for its high-visibility projects and valuation of its balance land bank. We estimate the high visibility projects of to generate Rs 1,040 crore, and value these at Rs 480 crore,” Edelweiss said.

“We value its industrial parks/ SEZs at Rs 1,100 crore, including the Thane land, other businesses and net cash. Mahindra Life is valued at Rs 2,100 crore (Rs 519 per share), indicating an upside of 24% from the current levels. Hence, we give a BUY recommendation and rate it ‘sector underperformer’ on a relative return basis,” it said.

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