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Oberoi Realty (OEBO.BO)
Buy Equity Research
In line with expectations: steady volumes and pricing; Buy
What surprised us
Oberoi Realty reported 2QFY12 PBT of Rs1.4 bn (41% yoy), in-line with our
estimate. Key takeaways from earnings release and conference call
include: (1) Residential area sold was 0.19 mn sqft with a total sale value of
Rs2.3bn; (2) Launch of ‘Oasis’ in the near term and of ‘Exotica’ in 1QFY13;
(3) Reduction in residential EBITDA margins was due to company reducing
interest charged to customers as this was transferred to society corpus,
additional cost booking at ‘Splendour’, and, higher costs following
enhanced specifications at ‘Exquisite’ and ‘Splendour Grande’, although
management expects to pass these on by increasing selling prices going
forward; (4) Increase in selling prices by Rs500-Rs1,000 per sqft, which
may affect volumes, in our opinion; (5) Management stated that the
acquisition of 50% stake in I-Ven Realty, Worli, was done at arms length
negotiations and that Oberoi Realty will not buy promoter’s stake in the
project in the future; (6) Lower volumes at ‘Splendour’ due to competition
from existing owners.
What to do with the stock
We believe the revenue potential from FY13E is increasingly stable as: (1)
Revenue booking from the ‘Esquire’ commences; (2) launches of ‘Oasis’,
‘Exotica’, ‘I-Ven’ and ‘Commerz 2’ are followed by revenue generation in FY13E
and FY14E; and (3) The ‘Prisma’ commercial property nears completion. We
have cut our FY12E-FY14E EPS by 3%-9% to account for delay in sale of
commercial property and lower other income. Consequently, we cut our FY12E
NAV and 12-m NAV based target price from Rs309 to Rs302. Maintain Buy. Key
risks: slower-than-expected construction, lower volumes due to increased prices
and changes in approval process.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Oberoi Realty (OEBO.BO)
Buy Equity Research
In line with expectations: steady volumes and pricing; Buy
What surprised us
Oberoi Realty reported 2QFY12 PBT of Rs1.4 bn (41% yoy), in-line with our
estimate. Key takeaways from earnings release and conference call
include: (1) Residential area sold was 0.19 mn sqft with a total sale value of
Rs2.3bn; (2) Launch of ‘Oasis’ in the near term and of ‘Exotica’ in 1QFY13;
(3) Reduction in residential EBITDA margins was due to company reducing
interest charged to customers as this was transferred to society corpus,
additional cost booking at ‘Splendour’, and, higher costs following
enhanced specifications at ‘Exquisite’ and ‘Splendour Grande’, although
management expects to pass these on by increasing selling prices going
forward; (4) Increase in selling prices by Rs500-Rs1,000 per sqft, which
may affect volumes, in our opinion; (5) Management stated that the
acquisition of 50% stake in I-Ven Realty, Worli, was done at arms length
negotiations and that Oberoi Realty will not buy promoter’s stake in the
project in the future; (6) Lower volumes at ‘Splendour’ due to competition
from existing owners.
What to do with the stock
We believe the revenue potential from FY13E is increasingly stable as: (1)
Revenue booking from the ‘Esquire’ commences; (2) launches of ‘Oasis’,
‘Exotica’, ‘I-Ven’ and ‘Commerz 2’ are followed by revenue generation in FY13E
and FY14E; and (3) The ‘Prisma’ commercial property nears completion. We
have cut our FY12E-FY14E EPS by 3%-9% to account for delay in sale of
commercial property and lower other income. Consequently, we cut our FY12E
NAV and 12-m NAV based target price from Rs309 to Rs302. Maintain Buy. Key
risks: slower-than-expected construction, lower volumes due to increased prices
and changes in approval process.
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