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S a l e s s l o w d o w n , m a r g i ns s u r p r i s e p o s i t i v e l y …
Oberoi Realty’s (ORL) results in Q3FY12 were marginally below our
estimates. The topline at | 187.3 crore was lower owing to lower
revenues booking from projects (| 122.2 crore vs. our estimate of | 163
crore). Margins, however, were surprisingly higher at 60.5% led by
superior residential EBITDA margins of ~62% in Q3FY12 vs. ~51% in
H1FY12. Consequently, PAT, at | 102.1 crore, was marginally below
estimates, despite a lower topline. The dampening factor was lower
presales volume of 1,24,023 sq ft vs. 1,51,421 sq ft in Q3FY11 and
1,86,036 sq ft in Q2FY12, with cooling down of Esquire sale (albeit at
higher realisation. Additionally, Esquire revenue recognition is expected
in H1FY13 vs. Q4FY12, as guided earlier, leading to shifting of earnings to
FY13. We believe timely launch of new projects would hold key for ORL’s
sales volume, going ahead.
ƒ Pre-sales volumes softens, Esquire cools down…
The pre-sales volume, at 1,24,023 sq ft vs. 1,51421 sq ft in Q3FY11 and
1,86,036 sq ft in Q2FY12, was lower as sales volume from Esquire
cooled down to ~68,000 sq ft vs. ~1,27,000 sq ft in Q2FY12. The
management, however, sounded confident of getting the sales volume
back in the Goregaon projects once it nears completion and on the
overall front with new launches slated in FY13.
ƒ Esquire to reach threshold in FY13; four launches in FY13E…
ORL has indicated that Oberoi Esquire would reach revenue recognition
threshold in H1FY13 vs. Q4FY12 indicated earlier. As a result, we now
defer Esquire FY12E revenue recognition to FY13E leading to a sharp
jump in FY13 earnings. Furthermore, ORL expects to launch four
projects in FY13 namely Worli (~1.5 mn sq ft), Mulund residential Phase
I (~1.6 mn sq ft), Exquisite phase III (~1.7 mn sq ft) and a small project
in Bandra. ORL has also bought property in a JV at Goregaon. The
development plans for the latter two projects are in a nascent stage.
V a l u a t i o n
At the CMP, the stock is trading at 9.9x FY13 EPS and 1.7x FY13 P/BV. We
have assigned a HOLD rating to the stock with a target price of | 246 (at
implied ~13% discount to its NAV). While ORL continues to be our
preferred pick in the sector, we would like to see progress on new
launches and momentum in sales volume in the coming quarters.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
S a l e s s l o w d o w n , m a r g i ns s u r p r i s e p o s i t i v e l y …
Oberoi Realty’s (ORL) results in Q3FY12 were marginally below our
estimates. The topline at | 187.3 crore was lower owing to lower
revenues booking from projects (| 122.2 crore vs. our estimate of | 163
crore). Margins, however, were surprisingly higher at 60.5% led by
superior residential EBITDA margins of ~62% in Q3FY12 vs. ~51% in
H1FY12. Consequently, PAT, at | 102.1 crore, was marginally below
estimates, despite a lower topline. The dampening factor was lower
presales volume of 1,24,023 sq ft vs. 1,51,421 sq ft in Q3FY11 and
1,86,036 sq ft in Q2FY12, with cooling down of Esquire sale (albeit at
higher realisation. Additionally, Esquire revenue recognition is expected
in H1FY13 vs. Q4FY12, as guided earlier, leading to shifting of earnings to
FY13. We believe timely launch of new projects would hold key for ORL’s
sales volume, going ahead.
ƒ Pre-sales volumes softens, Esquire cools down…
The pre-sales volume, at 1,24,023 sq ft vs. 1,51421 sq ft in Q3FY11 and
1,86,036 sq ft in Q2FY12, was lower as sales volume from Esquire
cooled down to ~68,000 sq ft vs. ~1,27,000 sq ft in Q2FY12. The
management, however, sounded confident of getting the sales volume
back in the Goregaon projects once it nears completion and on the
overall front with new launches slated in FY13.
ƒ Esquire to reach threshold in FY13; four launches in FY13E…
ORL has indicated that Oberoi Esquire would reach revenue recognition
threshold in H1FY13 vs. Q4FY12 indicated earlier. As a result, we now
defer Esquire FY12E revenue recognition to FY13E leading to a sharp
jump in FY13 earnings. Furthermore, ORL expects to launch four
projects in FY13 namely Worli (~1.5 mn sq ft), Mulund residential Phase
I (~1.6 mn sq ft), Exquisite phase III (~1.7 mn sq ft) and a small project
in Bandra. ORL has also bought property in a JV at Goregaon. The
development plans for the latter two projects are in a nascent stage.
V a l u a t i o n
At the CMP, the stock is trading at 9.9x FY13 EPS and 1.7x FY13 P/BV. We
have assigned a HOLD rating to the stock with a target price of | 246 (at
implied ~13% discount to its NAV). While ORL continues to be our
preferred pick in the sector, we would like to see progress on new
launches and momentum in sales volume in the coming quarters.
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