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Strong execution
Oberoi’s 2Q profit came ahead of expectations, as strong execution drove
revenues up 31% YoY. Sales declined 12% QoQ reflecting a slow Mumbai
property market. Oberoi is utilizing faster execution as a means of
compensating customers as explicit price cuts remain elusive. Strong
cash collections led Oberoi again reporting a net positive cash flow from
operations. Oberoi remains a preferred pick on a potential recovery in
Mumbai property market. Maintain O-PF.
Results ahead of expectations on stronger execution
Oberoi’s 1Q earnings grew 17% YoY/5% QoQ to Rs1.1bn, ahead of estimates
on stronger revenues. Revenues, at Rs2.2bn grew 31% YoY/38% QoQ, on
faster execution and completion of a large (Splendor) project. Ebitda grew a
lower 15% YoY/28% QoQ to Rs1.2bn, as margins declined 420bps QoQ to
51.9% on one-time cost readjustments related largely to project completion.
Sales continue QoQ decline; no explicit price cuts taken
2Q sales were down 12% QoQ to 186k sf, reflecting the continued slow sales
in Mumbai. Sales decline was on account of Esquire (127k sf vs. 167k sf)
where new launch enthusiasm (launched in 4QFY11) continued to wane. Sales
from the other three properties (Exquisite, Splendor and Grande) rose by
23% QoQ to 53k sf, though still at a slow rate of 5% of inventory. Average
sales price declined at all projects by 1-11% which management attributes to
a relatively poorer mix of sales (e.g. lower floors sold). Oberoi has not taken
any price cuts and is instead looking to pass on benefits to customers via
faster execution and increase in specifications (1-2% cost).
Strong cash collections, lease income strengthen balance sheet
Oberoi recorded Rs307m in lease income and Rs295m in Ebitda (26% of
total) from its mall and office properties. Net cash balance decreased by
Rs2.3bn QoQ to Rs13.3bn as Oberoi invested c.Rs2.8bn in a new project at
Worli. Operations though were still positive by Rs0.5bn as strong cash
collections from residential projects of Rs2.9bn (+78% QoQ) helped.
Remains preferred pick
Mumbai property slowdown notwithstanding; Oberoi continues to enjoy a
strong balance sheet (Rs102/share from cash and assets), steady execution
and higher corporate governance standards. Company has already spent
Rs1.2bn in its Worli project and construction work is progressing steadily here
as well. A launch in 4Q can create near term excitement in the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Strong execution
Oberoi’s 2Q profit came ahead of expectations, as strong execution drove
revenues up 31% YoY. Sales declined 12% QoQ reflecting a slow Mumbai
property market. Oberoi is utilizing faster execution as a means of
compensating customers as explicit price cuts remain elusive. Strong
cash collections led Oberoi again reporting a net positive cash flow from
operations. Oberoi remains a preferred pick on a potential recovery in
Mumbai property market. Maintain O-PF.
Results ahead of expectations on stronger execution
Oberoi’s 1Q earnings grew 17% YoY/5% QoQ to Rs1.1bn, ahead of estimates
on stronger revenues. Revenues, at Rs2.2bn grew 31% YoY/38% QoQ, on
faster execution and completion of a large (Splendor) project. Ebitda grew a
lower 15% YoY/28% QoQ to Rs1.2bn, as margins declined 420bps QoQ to
51.9% on one-time cost readjustments related largely to project completion.
Sales continue QoQ decline; no explicit price cuts taken
2Q sales were down 12% QoQ to 186k sf, reflecting the continued slow sales
in Mumbai. Sales decline was on account of Esquire (127k sf vs. 167k sf)
where new launch enthusiasm (launched in 4QFY11) continued to wane. Sales
from the other three properties (Exquisite, Splendor and Grande) rose by
23% QoQ to 53k sf, though still at a slow rate of 5% of inventory. Average
sales price declined at all projects by 1-11% which management attributes to
a relatively poorer mix of sales (e.g. lower floors sold). Oberoi has not taken
any price cuts and is instead looking to pass on benefits to customers via
faster execution and increase in specifications (1-2% cost).
Strong cash collections, lease income strengthen balance sheet
Oberoi recorded Rs307m in lease income and Rs295m in Ebitda (26% of
total) from its mall and office properties. Net cash balance decreased by
Rs2.3bn QoQ to Rs13.3bn as Oberoi invested c.Rs2.8bn in a new project at
Worli. Operations though were still positive by Rs0.5bn as strong cash
collections from residential projects of Rs2.9bn (+78% QoQ) helped.
Remains preferred pick
Mumbai property slowdown notwithstanding; Oberoi continues to enjoy a
strong balance sheet (Rs102/share from cash and assets), steady execution
and higher corporate governance standards. Company has already spent
Rs1.2bn in its Worli project and construction work is progressing steadily here
as well. A launch in 4Q can create near term excitement in the stock.
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