Ansal Property - Dark Horse?

Hi Friends,

Lets start discussion on Ansal Properties. We feel it has lot of hidden value and may be quite undervalued at these prices. Pasting a blogpost done recently.

Ansal PropertiesaDark Horse?

BSE:500013| NSE:ANSALAPI|Market Cap. :~510 Crore

One asset class where huge wealth creation has happened over last few years is real estate, where the maximum appreciation has happened in Tier 2 & 3 cities over the last 3-5 years. Yet real estate stocks havenat performed well over last 3 years. The reason is the irrational exuberance the sector had witnessed during the 2007-08 boom.**Most of the stocks are down 80-90% from 2008 highs.**Lets rewind back to IT boom of 2000 and similar thing had happened but after the circle of extreme optimism and pessimism things came back to normal and genuine good companies were rewarded by the markets.**We feel that real estate sector is also going through extreme pessimism and there could be selected winners going forward.**One such stock idea might be a Ansal Property. They were one of the first to start the big township concept in these Tier 2 & 3 cities and going by the appreciation in land prices in these cities, they may be perfectly placed to reap the rewards going forward.

Ansal Property is one of the oldest and biggest builder of North India. Some of the landmark buildings constructed by the company are a Ansal Plaza, Ansal Bhawan, Statesman House etc. Following are the major projects being undertaken by the company:

  • Sushant Golf City, Lucknow a 3530 acres of theme based township.
  • Esencia, Gurgaon- Developable area of 220 Acres.
  • Megapolis Dadri, Greater Noida a 2504 acres of township.
  • Aquapolis a Ghaziabad (127 acres), Township in Mohali (309 acres), Sushant City a Meerut etc.

**Being based out of Lucknow, we are able to see the huge positive response to their biggest project a Sushant Golf City.**The selling prices have gone up dramatically by about 5-6 times over in this project over last 4-5 years and it has become a major success and investing option for people in Lucknow. When the project was launched 5-6 years back, it was on the outskirts of the city but now it is one of the most sought after project. If one goes through the companyas investor updates, one will notice that the company has been reporting robust sales and collection numbers over last one year.The numbers are not showing up in the reported profits as the delivery of flats, plots etc will happen over coming years and as per accounting standards, profits are recognized on percentage completion. Also, in the initial years, the company sells the inventory at marginal profits to make the project a success and the major profits/margins come in the later years.

At current price of Rs.32, the valuations seem very attractive andthere seems to be a good margin of safety:

  • Market Cap is only 510 Crwhile the companyas Lucknow project would be worth 10,000 Cr+ as of today. The company hastotal land reserves of 11,000 acres giving a total developable area of 288 mn. sq ft.
  • **The Book Value is 100.**The stock is trading at 1/3rd of its Book Value.
  • The debt position seems quite manageable with**debt to equity ratio at less than 0.90.**The gross debt is at about 1,350 Cr and has been reducing gradually. The company has been trying to reduce debt and has pledged shares.
  • During the year 2010, the company had done preferential placement to some good investors at Rs 82-85 /share.


  • As the real estate sector is not transparent, itas tough to get exact details and judge the real value. Many often the policies are not favorable to minority shareholders.
  • There was a news item a month back that environmental issues has been raised at companyas Greater Noida township. Itas a major project for the company a covering an area of 2400 acre, in case there is some trouble, it may be a major negative for the company.

We look at this company as a dark horse wherein if nothing major negative happens for the company then this stock has the potential to be a multi-bagger over next 3 years. One needs to have patience for things to take shape. One may allocate 2-3% of portfolio at CMP and then accumulate this stock slowly in SIP mode.

1 Like

Looks interesting. On the ground validation by you guys in Lucknow of the flagship project is added comfort.

Will have to investigate more.Available1/3rd Assets - are the assets generating serious cash? A quick look shows negative cash flows for past 5 years - but discernible big improvements every year - and there might lie the answer to the puzzle. 2012 should show positive cash flows for the first time?

Then there are perceptions. There were some questions about the books. Question on promoter group reputation vis-a-vis the Uphaar cinema tragedy. And the outlook on Real Estate companies - their high cost of borrowings, etc.

Will revert.

Would like to knowyour views if two similar companies i.e Ansal and Ashiana Housing are both competing for your capital.

I believe the debt free status of Ashiana Housing gives more comfort.

Ashiana is certainly better in many respects - Performance, Transparency, Investor communication, Corp Governance standards are very high which stands out in the industry. Its a clean steady compounder and a good bet for the long term portfolio.

Ansal, on the other hand can be a grossly mispriced story. While it may not match up in performance, or transparency…there are many things happening on the ground which are not apparent from the books. Perception change may also take lot of time…but if the company gets its act together on communicating well and makes real progress on cleaning up its books…as it seems to be…there is a big story, there…one or 2 years down the line.

All this is subject to investigation. All I am saying is there are enough grounds to take a deeper look…dont discard it only because you are happy with a Ashiana. Even if the same funds are competing for either Ashiana or Ansal…it deserves more scrutiny…the hidden value can be real!

A very interesting technical break-out seems to be taking place in the stock:

AnsalProperties thumb Ansal Properties and Infra â Interestingly placed for a move to 40/50. Buy

Credit goes to Nooresh, for bringing it to timely notice.


If nothing else, it could be a cigar-butt!At the current market cap of Rs. 592 Cr it is trading at > 33% discount to its “net-net” current assets (as per the 30th Sept 2012 Consolidated Balance Sheet). Provided of course you trust the numbers & the management…else it may not be worth even a beedi!

but sir, debt is the moot point of confratation