Time for investors to look at solid risk-free land plays that can guarantee decent returns.

My favorite is Mahindra Lifespace. It has a functional SEZ in Chennai which is showing accelerating profits for the past few quarters. Talk is that the company may be allotted more land in the surrounding areas to expand the SEZ. That would increase the CAGR to a decent level in the coming years.

ML is also setting up an SEZ in Rajasthan in collaboration with the state government. Unlike other land bank/realty companies ML seems to be working closely with state govt bodies to acquire land for the projects. Though it may reduce the upside in future, it offers considerable capital protection since the state government agency is an equal partner in the project.

The company is also available at an affordable P/E compared to other players like DLF, Unitech, Ansals, etc.

Knowing how land bank plays are being inflated by companies who do not hold title to the properties, a P/E of 1800 or so for DLF seems way over the top.

Even Reliance Industries which is developing the mother of all SEZs and with a reputation for great execution skills does not enjoy such high P/Es. That is why I am worried about investing in companies like DLF, Unitech and even HDIL.

HDIL comes one notch below ML mainly for the land bank it owns in Mumbai. But land in Mumbai with slums encroached is a double edged sword. I live in Mumbai, and from first-hand experience I know that sales of houses have slowed down considerably in the past year.

HDIL's properties are located in the more expensive areas of the city and the company has received in-principle SEZ in Vasai-Virar region. It is not clear if the company already owns the land or it has to buy from local people. In the latter case it will have to spend a bomb in doing so. Unlike Reliance, the company does not have a regular cash flow in the form of oil profits.

HDIL's project to resettle slum dwellers at Mumbai airport could be lucrative. But the cream of the profits would already be factored in by GVK Power which is the main promoter of Mumbai International Airport Ltd.

Originally posted by shivkumar Knowing how land bank plays are being inflated by companies who do not hold title to the properties, a P/E of 1800 or so for DLF seems way over the top. Even Reliance Industries which is developing the mother of all SEZs and with a reputation for great execution skills does not enjoy such high P/Es. That is why I am worried about investing in companies like DLF, Unitech and even HDIL.

Moneycontrol.com is the last place you should look when it comes to company financial information. DLF is trading at 80 times FY07 earnings and at about 25 times FY08 estimated earnings

Incorrect data again.