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Q u a l i t y p l a y o n M u m b a i r e a l t y…
We met the management of Oberoi Realty (ORL) to get an insight into the
company’s business model and its growth plans, going ahead. ORL is an
established brand name in the Mumbai real estate market with almost
entire land bank (~93%) of ~20 million sq ft in Mumbai, a key property
market. ORL also enjoys a debt-free balance sheet with cash balance of
~| 1400 crore. With the anticipated project launches of 5 million sq ft
over the next six to 12 months (1.97 million sq ft already launched), we
expect Oberoi’s sales momentum to remain strong, going ahead.
ƒ Quality land bank in Mumbai
ORL is an established brand name in the Mumbai real estate market.
The company currently has a land bank of ~20 million sq ft with ~93%
spread in Mumbai. In terms of verticals, residential accounts for 61%
followed by office space (20%) and others. The distinguishing factor for
ORL is its prudent strategy of acquiring quality land at reasonable rates.
For example, ORL had acquired 84 acres of land at Goregaon at a low
cost of~ | 107 crore.
ƒ Strong balance sheet
ORL has strong financials with a debt-free balance sheet. It is one of the
very few companies in the sector, which enjoys a positive operating
cash flow (~| 200 crore in FY11) and has a strong cash balance of ~|
1400 crore. The strength in balance sheet guards ORL from any kind of
delays in execution on account of financial stretch. Additionally, the
financial health would also enable it to acquire new land bank at better
valuation in case there is a slowdown in the sector.
ƒ New project launches to keep sales momentum strong
ORL has a strong pipeline of ongoing and planned projects, which are
launched/to be launched over the next six to 12 months in the
residential segment. This would keep it sales momentum healthy. ORL
has/is likely to launch ~5 million sq ft over the next six to 12 months.
This includes Esquire (1.97 million sq ft, already launched and sold 0.27
million sq ft in Q4FY11); Oasis Residential (1.54 million sq ft) and Oberoi
Exotica I (1.61 million sq ft). These project launches would keep its sales
momentum strong over the next six to 12 months.
View
At the CMP, ORL is available at 2.4x FY11 P/BV. Oberoi with a strong
launch pipeline, excellent corporate governance and a comfortable debtfree balance sheet position and strong return ratios is set to command a
premium over its peers
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Q u a l i t y p l a y o n M u m b a i r e a l t y…
We met the management of Oberoi Realty (ORL) to get an insight into the
company’s business model and its growth plans, going ahead. ORL is an
established brand name in the Mumbai real estate market with almost
entire land bank (~93%) of ~20 million sq ft in Mumbai, a key property
market. ORL also enjoys a debt-free balance sheet with cash balance of
~| 1400 crore. With the anticipated project launches of 5 million sq ft
over the next six to 12 months (1.97 million sq ft already launched), we
expect Oberoi’s sales momentum to remain strong, going ahead.
ƒ Quality land bank in Mumbai
ORL is an established brand name in the Mumbai real estate market.
The company currently has a land bank of ~20 million sq ft with ~93%
spread in Mumbai. In terms of verticals, residential accounts for 61%
followed by office space (20%) and others. The distinguishing factor for
ORL is its prudent strategy of acquiring quality land at reasonable rates.
For example, ORL had acquired 84 acres of land at Goregaon at a low
cost of~ | 107 crore.
ƒ Strong balance sheet
ORL has strong financials with a debt-free balance sheet. It is one of the
very few companies in the sector, which enjoys a positive operating
cash flow (~| 200 crore in FY11) and has a strong cash balance of ~|
1400 crore. The strength in balance sheet guards ORL from any kind of
delays in execution on account of financial stretch. Additionally, the
financial health would also enable it to acquire new land bank at better
valuation in case there is a slowdown in the sector.
ƒ New project launches to keep sales momentum strong
ORL has a strong pipeline of ongoing and planned projects, which are
launched/to be launched over the next six to 12 months in the
residential segment. This would keep it sales momentum healthy. ORL
has/is likely to launch ~5 million sq ft over the next six to 12 months.
This includes Esquire (1.97 million sq ft, already launched and sold 0.27
million sq ft in Q4FY11); Oasis Residential (1.54 million sq ft) and Oberoi
Exotica I (1.61 million sq ft). These project launches would keep its sales
momentum strong over the next six to 12 months.
View
At the CMP, ORL is available at 2.4x FY11 P/BV. Oberoi with a strong
launch pipeline, excellent corporate governance and a comfortable debtfree balance sheet position and strong return ratios is set to command a
premium over its peers
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