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Oberoi Realty
(OEBO.BO / OBER IN)
RESULTS
Strong set of results right away
■ Strong 3Q FY11 results, as expected: Oberoi Realty reported strong 3Q
FY11 results, as PAT at Rs2.1 bn went 115% QoQ and 57% YoY – 4%
ahead of our estimates – due to higher EBITDA margin. Revenues at Rs4
bn saw strong growth (up 135% QoQ and 89% YoY) on the commencement
of revenue recognition in Exquisite-I project, which contributed Rs2.1 bn to
revenues. Rental and hospitality income stood at Rs518 mn. EBITDA margin
at 61.9% went up 277 bp QoQ but declined 219 bp YoY. EPS for 3Q11 and
9M11 stood at Rs6.3 and Rs11.6, respectively.
■ Sold 0.15 mn sq ft, series of launches ahead: Oberoi sold 0.15 mn sq ft in
3Q11 at an average realisation of Rs13,480/sq ft. 0.09 mn sq ft was sold in
Splendor Grande, which was launched in 3Q11. 0.06 mn sq ft was sold in
Exquisite-I and the rest in Oberoi Splendor. The company has unsold area
of 1.03 mn sq ft in its under-execution projects and intends to launch
Exquisite-II in 4Q11, Exotica-I in Mulund in 1Q12 and Oasis in Worli in 2Q12.
■ Waiting for right pricing to buy land: Operating cash flow after interest
and taxes stood at negative Rs367 mn for 3Q11 and positive Rs291 mn for
9M11. The company is waiting for the right opportunity to expand its land
bank and expects to face little competition, as most other developers are
already cash strapped and have significant debt repayment commitments.
With government rethinking on granting extra FSI in lieu of public parking,
management indicated that suburbs (where FSI goes up from 2.0 to 2.5) are
likely to be exempted and Oberoi Realty is unlikely to be impacted materially.
■ Maintain OUTPERFORM: Management indicated that it would be flexible on
pricing in case the market witnesses any slowdown in volumes, which we
believe is the right strategy in the current environment. Revenue recognition
on Splendor Grande is expected to commence in 4Q FY11, which should
boost profitability. With 26% potential upside to our target price of Rs309, we
maintain our OUTPERFORM rating on the stock.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Oberoi Realty
(OEBO.BO / OBER IN)
RESULTS
Strong set of results right away
■ Strong 3Q FY11 results, as expected: Oberoi Realty reported strong 3Q
FY11 results, as PAT at Rs2.1 bn went 115% QoQ and 57% YoY – 4%
ahead of our estimates – due to higher EBITDA margin. Revenues at Rs4
bn saw strong growth (up 135% QoQ and 89% YoY) on the commencement
of revenue recognition in Exquisite-I project, which contributed Rs2.1 bn to
revenues. Rental and hospitality income stood at Rs518 mn. EBITDA margin
at 61.9% went up 277 bp QoQ but declined 219 bp YoY. EPS for 3Q11 and
9M11 stood at Rs6.3 and Rs11.6, respectively.
■ Sold 0.15 mn sq ft, series of launches ahead: Oberoi sold 0.15 mn sq ft in
3Q11 at an average realisation of Rs13,480/sq ft. 0.09 mn sq ft was sold in
Splendor Grande, which was launched in 3Q11. 0.06 mn sq ft was sold in
Exquisite-I and the rest in Oberoi Splendor. The company has unsold area
of 1.03 mn sq ft in its under-execution projects and intends to launch
Exquisite-II in 4Q11, Exotica-I in Mulund in 1Q12 and Oasis in Worli in 2Q12.
■ Waiting for right pricing to buy land: Operating cash flow after interest
and taxes stood at negative Rs367 mn for 3Q11 and positive Rs291 mn for
9M11. The company is waiting for the right opportunity to expand its land
bank and expects to face little competition, as most other developers are
already cash strapped and have significant debt repayment commitments.
With government rethinking on granting extra FSI in lieu of public parking,
management indicated that suburbs (where FSI goes up from 2.0 to 2.5) are
likely to be exempted and Oberoi Realty is unlikely to be impacted materially.
■ Maintain OUTPERFORM: Management indicated that it would be flexible on
pricing in case the market witnesses any slowdown in volumes, which we
believe is the right strategy in the current environment. Revenue recognition
on Splendor Grande is expected to commence in 4Q FY11, which should
boost profitability. With 26% potential upside to our target price of Rs309, we
maintain our OUTPERFORM rating on the stock.
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