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http://content.icicidirect.com/mailimages/ICICIdirect_OrbitCorporation_Q3FY12.pdf
M u t e d r e s u l t s ; p r e - s a l e s v o l u m e i m p r o v e s …
Orbit’s Q3FY12 performance was lower than our estimates as execution
remained muted. The higher interest cost (| 32.7 crore vs. our estimate of
| 28.5 crore) led to lower bottomline despite higher margin of ~54% vs.
our estimates of ~44%. However, pre-sales volume at 32,921 sq ft vs. last
three quarter’s average of ~10,000 sq ft was a positive. The management
seemed confident of robust pre-sales through fire sale at Orbit Residency
and Terraces. However, we maintain our HOLD rating and believe that an
improvement in collection and pre-sales volume would hold the key for
the stock performance, going ahead.
ƒ Execution remains muted…interest cost hurts bottomline
Orbit reported a topline of | 71.5 crore vs. our estimate of | 90.7 crore as
execution across projects remained muted. The EBITDA at ~54% was,
however, better than our estimate of ~44%. The PAT was lower at | 3.3
crore vs. our estimate of | 7.7 crore mainly on account of higher interest
expenses of | 32.7 vs. our estimates of | 28.5 crore.
ƒ Pre-sales improve after three poor quarters
Orbit’s pre-sales volume improved at 32,921 sq ft in Q3 FY12 vs. ~9,000
- ~11,000 sq ft seen in the prior three quarters. The improved pre-sales
despite no new launches during the quarter was a breather. In our view,
while Orbit would exceed its pre-sales target of 45,000 sq ft set for
H2FY12, we would further like to see a pick-up in the sales volume given
no new project launches and peak level prices in the region.
ƒ Net debt at | 855 crore; Orbit WTC collection holds key to pare it
Orbit’s net debt to equity remained high at 0.8x with net debt of | 855
crore. Debtors level also increased marginally at | 543 crore vs. | 531
crore in Q2FY12. It collected | 15 crore in Q3FY12 and further | 15 crore
in January 2012 from Orbit WTC. Remaining | 147 crore is expected to
be received in FY13E (| 50 crore to be received in H1FY13E with receipt
of OC). These collections would enable it to reduce its debt level.
V a l u a t i o n
At the CMP of | 53, the stock is trading at 0.6x FY13 P/BV. We maintain
our HOLD recommendation on the stock and value it at | 52 (0.8x its NAV
of | 65). While an improvement in pre-sales and peaked interest rate,
signalling rate-cut from here, are positive, we believe a further pick-up in
sales volume, improvement in sales collection and debt reduction holds
the key for the stock performance.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� �
http://content.icicidirect.com/mailimages/ICICIdirect_OrbitCorporation_Q3FY12.pdf
M u t e d r e s u l t s ; p r e - s a l e s v o l u m e i m p r o v e s …
Orbit’s Q3FY12 performance was lower than our estimates as execution
remained muted. The higher interest cost (| 32.7 crore vs. our estimate of
| 28.5 crore) led to lower bottomline despite higher margin of ~54% vs.
our estimates of ~44%. However, pre-sales volume at 32,921 sq ft vs. last
three quarter’s average of ~10,000 sq ft was a positive. The management
seemed confident of robust pre-sales through fire sale at Orbit Residency
and Terraces. However, we maintain our HOLD rating and believe that an
improvement in collection and pre-sales volume would hold the key for
the stock performance, going ahead.
ƒ Execution remains muted…interest cost hurts bottomline
Orbit reported a topline of | 71.5 crore vs. our estimate of | 90.7 crore as
execution across projects remained muted. The EBITDA at ~54% was,
however, better than our estimate of ~44%. The PAT was lower at | 3.3
crore vs. our estimate of | 7.7 crore mainly on account of higher interest
expenses of | 32.7 vs. our estimates of | 28.5 crore.
ƒ Pre-sales improve after three poor quarters
Orbit’s pre-sales volume improved at 32,921 sq ft in Q3 FY12 vs. ~9,000
- ~11,000 sq ft seen in the prior three quarters. The improved pre-sales
despite no new launches during the quarter was a breather. In our view,
while Orbit would exceed its pre-sales target of 45,000 sq ft set for
H2FY12, we would further like to see a pick-up in the sales volume given
no new project launches and peak level prices in the region.
ƒ Net debt at | 855 crore; Orbit WTC collection holds key to pare it
Orbit’s net debt to equity remained high at 0.8x with net debt of | 855
crore. Debtors level also increased marginally at | 543 crore vs. | 531
crore in Q2FY12. It collected | 15 crore in Q3FY12 and further | 15 crore
in January 2012 from Orbit WTC. Remaining | 147 crore is expected to
be received in FY13E (| 50 crore to be received in H1FY13E with receipt
of OC). These collections would enable it to reduce its debt level.
V a l u a t i o n
At the CMP of | 53, the stock is trading at 0.6x FY13 P/BV. We maintain
our HOLD recommendation on the stock and value it at | 52 (0.8x its NAV
of | 65). While an improvement in pre-sales and peaked interest rate,
signalling rate-cut from here, are positive, we believe a further pick-up in
sales volume, improvement in sales collection and debt reduction holds
the key for the stock performance.
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