Oberoi Realty Ltd. (ORL)|Q2FY15 Result Update | Above expectation performance; Maintain BUY with PT of Rs 308 :: IndiaNivesh

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-->  Oberoi Realty Ltd (ORL) reported Q2FY15 performance which was largely
in-line with our expectations on revenue fronts; EBITDA and PAT performance
was ahead of our estimates. Revenues de-grew by 0.9% y/y to Rs.1,839 mn
(v/s INSPL est: Rs.1,843 mn). The key reasons for the revenue de-growth
were as follows: (I) 4.6% y/y decline in project revenues, (II) no sales at
Priviera project, and (III) 13.9% y/y de-growth in rent segment revenue.
 EBITDA went up 29.9% y/y to Rs.1,118 mn (v/s INSPL est: Rs.1035 mn). As a
result, EBITDA margin expanded 14.7% point to 60.3% (v/s 45.5% in Q2FY14).
The key reason for significant expansion in EBITDA margin was 39.2% y/y
decline in operating expenses (27.9% v/s 45.5% in Q2FY14 – as % of revenue).
 During the quarter, other income went down 69.7% Q/Q to Rs.38.5 mn (v/s
Rs.127.1 mn in Q2FY14). On account of rise in debt the interest & finance
charges went up from Rs.0.9 mn in Q2FY14 to Rs.16.4 mn in Q2FY15.
 Tax rate during the quarter was 32.3% (v/s 30.2% in Q2FY14). On back of
higher EBITDA base, net profit grew by 10% y/y to Rs 705 mn (v/s INSPL est:
Rs.651 mn) with net margin expansion to 38.0% (v/s 33.9% in Q2FY14).
 At CMP of Rs 211, Oberoi Realty is trading at P/E multiple of 17.5x FY15E
and 14.5x FY16E earnings estimate. We maintain BUY on the stock with
SoTP based PT of Rs 308.
Q2FY15 Result Highlights
Muted Revenue Performance…
The company’s revenue de-grew by 0.9% y/y to Rs. 1,839 mn. The de-growth in
revenues was due to following: (I) no sales at Priviera project, (II) 4.6% y/y decline
in Oberoi Exquisite project revenues, and (III) 13.9% y/y decline in rent revenue of
Oberoi Mall and Commerz project. This was partially offset by 10.0%/86.3% y/y
increase in revenues from Hospitality (Westin) and project Management Fees,
respectively

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