Strong presence in Mumbai…
Oberoi Realty is an established player in the Mumbai real estate
market. The company currently has a land bank of 20.25 million sq ft
(ongoing development of 10.1 million sq ft and planned development of
10.1 million sq ft). The majority of the land bank is spread in Mumbai
and its suburbs. The company also has strong financials with a debt
free balance sheet and net worth of Rs 1942 crore (as on June 30, 2010).
Crisil has assigned it a rating of 4 indicating that its fundamentals are
strong.
Land bank of 20.25 million sq ft
Oberoi Realty is an established player in the Mumbai real estate
market. The company currently has a land bank of 20.25 million sq ft
(ongoing development of 10.1 million sq ft and planned development
of 10.1 million sq ft). Out of the total land bank of 20.5 million sq ft,
~93% is spread in Mumbai and its suburbs. In terms of verticals,
residential accounts for 60.9% followed by office space (19.9%) and
others.
Strong financial strength
The company also has strong financials with a debt-free balance sheet
and net worth of Rs 1942 crore (as on June 30, 2010). Crisil has
assigned the IPO a grade of 4 on a scale of 1 to 5 indicating that
fundamentals of the issue are above average.
Concerns
Oberoi has primarily focused its real estate development only in
Mumbai. The company’s inability to expand into and compete
successfully in areas outside the Mumbai real estate market may
adversely affect its business prospects
Oberoi has contingent liabilities to the tune of Rs 570.1 crore.
Materialisation of these contingent liabilities could adversely affect its
performance.
Valuations
At the IPO price band of Rs 253-260, the stock is available at 2.8x Q1FY11
post issue P/BV at the lower price band and 2.9x P/BV Q1FY11 post issue
at the higher price band.
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