Unitech has seen a slowdown in new launches, having launched only six projects in FY08.
The company appears to be holding back on new launches, the majority of which are new phases in existing projects. Resultantly, NAV estimates for Unitech are likely to undergo a material downward revision.
It has invested $400mn in a telecom license where it is yet to make progress. Although positive in the long term, it raises concern in the near term given the company is already tight liquidity position. It is yet to announce a tie-up with a strategic partner or incur any roll-out capex for this venture.
The company reported Q1FY09 revenue of Rs1,030 crore, significantly below expectations. Revenue in its real-estate business declined 8% q-o-q.
EBIT margin expanded on favourable product mix and lower contribution from the low-margin contractual business. PAT came in at Rs423 crore, which was also below our estimate. We recommend a SELL in this counter.