*IndiaBulls Real Estate:
1- Indiabulls is merging with Embassy Group and the resultant company is going to be called 'Embassy Developments'.
*This is particularly an interesting event because the merged entity will end up becoming one of India's largest Real Estate companies. It will have 80 million sqft of area under planning - That is just massive.
2- The merger is also going to change the profile of the listed entity dramatically from what it currently is - for the better.
*The combined entity has the potential to have rental income of 4200 crore after a few years which is quite massive and hence will 'recurring cash flow' which we love.
*This is NOT a normal Real Estate 'also ran' anymore. This now becomes a top player.
3- In Q1FY22, I was amazed to see that their net debt was repaid by 50% compared to Q1FY21.
Debt has fallen nicely from 2025cr to 1088cr currently.
*This is very comforting. So now we have reducing debt and prospects of high 'recurring' rental income.
4- What is another a good thing is that the proposed merger is in advanced stages and this deal should be completed soon.
*Normally from announcement to actual deal, the time taken is a massive 2 years. This particular deal is in advanced stages.
5- Post the deal, the old promoters will be going out and the merged entity will be controlled by the Embassy group.
*This is important as the Embassy group is thought to be pretty good with corporate governance.
*This deal is beginning to tick all the boxes.
6- Post the deal, IndiaBulls Real Estate becomes India's number 1 'Land Bank' owner.
*Again, this means a lot of their future 'upfront costs' are already spent and cash flows will be good going forward.
*7- Note, with sudden leadership position, improving cash flows, reducing debt, 'better' promoter & corporate governance, it seems likely that the valuation multiple will keep expanding here going forward.
*This is the key to investing after all.
*A beautiful project.