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V o l u m e o f f t a k e a t n a d i r …
Orbit Corporation (Orbit) had a disappointing operating performance in
Q1FY12 due to slower execution of projects and persistent poor volume
off takes. The topline declined by ~29% YoY to | 85 crore marred by
slow execution. The margin at 38.4% was lower on account of cost
overrun to the tune of ~| 8 crore in Orbit WTC. While, we anticipate that
cash flow from Orbit WTC & sale of Ocean Parque would be key triggers
for the stock price performance, we expect weak pre-sales volume and
pledging of shares (~55%) would remain overhang for the stock.
ƒ Pre-sales weakness persists
The pre-sales volume has come down further to 9,985 sq ft in Q1 FY12
v/s 11,249 sq ft in Q4 FY11 on account of no new launches during the
quarter and receding volume offtake in existing projects. The pre-sales
volume (lowest in last 10 quarter) clearly reflects weak buyer sentiments
and price moderation is inevitable for pickup in the volume
ƒ Launch pipeline key for cash flows going ahead
The company indicated that it is looking to launch 3 projects (Lalbaugh,
Santacruz and Napeansea Road) in FY12. We believe successful launch
of the same would be key for the cash flows which have not seen any
improvement from the last couple of quarters
ƒ Ocean Parque sales deal in discussion
Orbit informed that it is in discussion with Mahindra Lifespace for sale
of Ocean Parque project at Napeansea Road. Mahindra Lifespace has
signed the term sheet and Orbit has received advance of | 11 crore. The
deal is expected at ~| 235-250 crore. Ocean Parque sale receipt will be
a boost to crunch cash flow situation of the company
V a l u a t i o n
At the CMP, the stock is trading at 0.4x FY13 P/BV. Though we anticipate
that cash flow from Orbit WTC & sale of Ocean Parque would be key
triggers for the stock price performance, we recommend Hold on the
stock given the weak volume offtake in Mumbai and challenging funding
environment for the industry. Additionally, pledging of shares by
promoters (55%) would remain overhang for the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
V o l u m e o f f t a k e a t n a d i r …
Orbit Corporation (Orbit) had a disappointing operating performance in
Q1FY12 due to slower execution of projects and persistent poor volume
off takes. The topline declined by ~29% YoY to | 85 crore marred by
slow execution. The margin at 38.4% was lower on account of cost
overrun to the tune of ~| 8 crore in Orbit WTC. While, we anticipate that
cash flow from Orbit WTC & sale of Ocean Parque would be key triggers
for the stock price performance, we expect weak pre-sales volume and
pledging of shares (~55%) would remain overhang for the stock.
ƒ Pre-sales weakness persists
The pre-sales volume has come down further to 9,985 sq ft in Q1 FY12
v/s 11,249 sq ft in Q4 FY11 on account of no new launches during the
quarter and receding volume offtake in existing projects. The pre-sales
volume (lowest in last 10 quarter) clearly reflects weak buyer sentiments
and price moderation is inevitable for pickup in the volume
ƒ Launch pipeline key for cash flows going ahead
The company indicated that it is looking to launch 3 projects (Lalbaugh,
Santacruz and Napeansea Road) in FY12. We believe successful launch
of the same would be key for the cash flows which have not seen any
improvement from the last couple of quarters
ƒ Ocean Parque sales deal in discussion
Orbit informed that it is in discussion with Mahindra Lifespace for sale
of Ocean Parque project at Napeansea Road. Mahindra Lifespace has
signed the term sheet and Orbit has received advance of | 11 crore. The
deal is expected at ~| 235-250 crore. Ocean Parque sale receipt will be
a boost to crunch cash flow situation of the company
V a l u a t i o n
At the CMP, the stock is trading at 0.4x FY13 P/BV. Though we anticipate
that cash flow from Orbit WTC & sale of Ocean Parque would be key
triggers for the stock price performance, we recommend Hold on the
stock given the weak volume offtake in Mumbai and challenging funding
environment for the industry. Additionally, pledging of shares by
promoters (55%) would remain overhang for the stock.
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