ICRA has assigned an 'A' rating to the Rs 2.35 billion proposed non-convertible debenture programme of Peninsula Land (PLL). The long term rating is assigned a stable outlook.
The rating favorably factors in PLL's status as the flagship company of the Ashok Piramal group; the long standing experience of the promoters and key personnel in the real estate industry and PLL's strong brand recall in Mumbai supported by the company's demonstrated track record of over 15 years in the industry having developed well-known projects across all major real estate segments in the city.
PLL's existing land-bank is entirely paid for and all projects to be developed on the existing land-bank are residential projects where milestone-linked customer advances could support cash flows during the project construction phase.
ICRA notes that the company has received healthy sales bookings for these projects. For instance, PLL has sold ~13% of the saleable area in its Sewree project within 2-3 months at higher realizations than prevailing market rates in the vicinity. The sales tie up, however, declined in Q3 FY14 on account of PLL's strategic decision to hold on to the sales. The project in Breach Candy has just ten saleable units and PLL has already sold six of these units despite the project being at nascent stages of execution. PLL also expects to launch its residential projects in J.P Nagar (Bangalore), Tathavade (Pune) and Carmichael Road (Mumbai) over the near term ie. within 6-12 months.
ICRA notes that the launch of projects like JP Nagar and Carmichael Road has been delayed on account of delays in receipt of last mile clearances. The company's ability to ensure healthy sales velocity supported by strong collection efficiency and timely execution of these projects along with timely sale of residual inventory in PBP are critical factors especially given the company's high debt repayments falling due in FY15 and FY16.
Shares of the company gained Rs 0.7, or 1.93%, to settle at Rs 37.05. The total volume of shares traded was 380,199 at the BSE (Monday).
