Poddar Developers Limited (Disclaimer: This report is prepared for the Valuepickr meet on January 22, 2017. This is not a recommendation to invest. This report is meant for discussion purposes only)

Poddar Developers Limited (PDL) Real Estate company focused only on affordable housing in and around Mumbai The company is promoted by Dipak Kumar Poddar Huge market for affordable housing in India – estimated shortage of 21 million units BUT Tough business model to crack – company needs an “affordable housing mindset” Lower margins, higher volumes AND velocity of sales Over 3000 homes delivered mainly in Badlapur. Company has a large land bank Has negligible debt plus sitting on funds from a Rs125 crore QIP to deploy for buying land

Financial Analysis PAT Margin 2011-12 2012-13 2013-14 2014-15 2015-16 9.20% 8.90% 19.82% 18.81%

Balance Sheet and Financials   2015-16 2014-15 2013-14 2012-13 2011-12 Equity + Reserves 225.22 209.56* 66.85 59.76 52.9 Debt 2.95 7.37 20.17 33.73 14.53 PAT 16.64 21.64 7.87 7.52 -0.83

MOAT? Product Moat  Good quality houses – fixtures from reputed names like Godrej, Cera etc. Fixtures come with a guarantee --- 3 brands Poddar Svakam (Rs60-90 lakhs), Poddar Anantah (Rs15-50 lakhs) and Poddar Spraha (Rs7.5-15 lakhs) Affordable housing mindset- unlikely to stray into more expensive housing when demand picks up Financial Moat Excellent unleveraged balance sheet with land bank in place. Possible that the company can keep buying land from its cash flows and may never need to take on significant debt (except for construction finance) Risks Inability to launch projects Slow demand Growing competition increase in raw material prices (mainly cement and steel)

Valuation Present Price Hovers around Rs1000 --- Rs630 crore market cap (illiquid stock) In valuing the company I would look at Prof Sanjay Bakshi’s formula, to value the business at 20 times expected earnings on the exit date (10 years) Expect the company to make Rs80-120 crore profit every year over the next five years – (Number could be higher as the government had announced lesser tax on profits for certain types of affordable housing companies --- for Poddar new rate is MAT)  Company could be valued at Rs1600-2400 crore five years from now