Real Estate ƒ : Q4FY12 Result Preview: ICICI Securities, PDF Link

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http://www.icicidirect.com/mailimages/ICICIdirect_ConsolidatedResultPreview_Q4FY12E.pdf

Real Estate
ƒ Mumbai volumes remain subdued; Bengaluru resilient so far…
Volume offtake in the Mumbai region has remained subdued on account
of rising unaffordability at the given price levels. However, the
Bengaluru market continues to be resilient led by end user demand.
Consequently, we expect Oberoi and Orbit Corp to report muted presales volume in Q4FY12. On the other hand, Sobha Developers, which is
a key Bengaluru based player, would continue to report strong pre-sales
volume during the quarter.
ƒ Regulatory changes to expedite clearance process …
In terms of regulations, we believe regulatory changes for fungible FSI
and changes in Maharashtra Ownership Flats (Amendment) Rules
(MOFA) and municipal commissioner initiative are a positive in the long
run for the Mumbai real estate market. Though this step should increase
project cost for developers in the short run, this would eventually result
in expedition of project clearance. We believe this should lead to higher
sales volume led by better supply albeit at corrected prices.
ƒ Coverage universe topline to grow at 6.5% YoY in Q4FY12E
We expect muted topline growth of 6.5% YoY for our real estate
coverage universe. While Orbit is expected to report YoY growth of
63.5% mainly on account of a lower base in Q4FY11, we expect topline
growth of 8.5% YoY for Sobha Developers. However, we expect Oberoi
to report a YoY decline of 10.2% in revenues mainly because Oberoi
Esquire is now expected to reach the revenue recognition threshold in
FY13.

: Company specific view (Real Estate coverage universe)
Company Remarks
Orbit Corporation We expect pre-sales volumes for Orbit to remain weak during Q4FY12.
However, on the topline front, Orbit is expected to report YoY growth of 63.5%
mainly on account of a lower base in Q4FY11 due to failure to recognise Orbit
Annexe during that period. Key monitorable: pre-sales volume, sales collection
& debt level, management commentary on Madhwa environmental issues
Oberoi Realty Oberoi is expected to report YoY decline of 10.2% in revenues mainly since
Oberoi Esquire is expected to reach the revenue recognition threshold in FY13.
In terms of pre-sales volume, we expect the same to remain muted on
account of weak volume offtake in Mumbai region. Key monitorable:
commentary on Mulund and Worli project launch
Sobha Developers We expect Sobha's sales volume to remain robust led by resilient offtake in
Bengaluru region. In terms of revenues, we expect topline growth of 8.5%
YoY. Key monitorable: debt paring status and management commentary on
demand scenario in southern India
Source: Company, ICICIdirect.com Research,