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Oberoi Realty
Overweight
OEBO.BO, OBER IN
4Q pre-sales surprise positively, earnings negatively
• PAT 11% below estimates: Oberoi reported 4Q PAT of Rs 1.37B
(-33% Q/Q, +30% Y/Y), around 11% below our estimate. A lower-thanexpected
EBITDA margin on account of mix (higher contribution from
Andheri project and past sales getting booked on delivery) was the key
reason for the deviation. EBITDA margin for the quarter stood at 54%
compared to the 9M FY11 level of 61%. Revenue of Rs2.7B (-33% Q/Q,
+58% Y/Y) was largely in line with our forecast. Cash on book was
Rs14.6B, down marginally Q/Q.
Key takeaways from the conference call
• Development business: New bookings at Rs3.3B increased during the
quarter (3Q Rs2B) primarily driven by the launch of Oberoi Esquire
(Exquisite II) in Goregaon project (0.3msf sold at Rs 11.7K psf). For full
year FY11, bookings at Rs9.2B were down 25% Y/Y and below our
estimate of Rs13B given the delay in new launches (Mulund/Worli). Of
the total Rs27B sales order-book, the company is yet to recognize
Rs11.2B as revenues and receive cash flows of Rs8B. The launch of
marquee Worli (luxury project) is expected soon (2Q FY12) and that
could materially change the company’s pre-sales numbers next year.
• Rental business is steady: Oberoi Mall and Commerz I are operating at
94% and 75% occupancy rates, respectively. The Westin hotel witnessed
an improvement over last quarter, with margins improving to 35% driven
by a higher occupancy rate (77% in 4Q, up from 62% in 3Q); while
ARRs remained largely flat Q/Q at Rs7,679. Further, work on Commerz
II (Gurgaon) and Prisma (JVLR) is progressing well; however visibility
on leasing/sales is expected to improve once the projects near completion
over FY12/13.
• We revise down our Mar-12 PT to Rs292 (from Rs320) based on 2x
FY13E P/BV (ROE of 18%), as we cut earnings by 30% for FY12E/13E.
Our PT equates to 12x FY13E EPS. Our presales assumptions are now
Rs13.4/20B for FY12/13, compared to the FY11 level of Rs9.2B. The
increase is primarily on account of the launch of luxury Worli project
(2Q FY12) and a for sale commercial project in Andheri.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Oberoi Realty
Overweight
OEBO.BO, OBER IN
4Q pre-sales surprise positively, earnings negatively
• PAT 11% below estimates: Oberoi reported 4Q PAT of Rs 1.37B
(-33% Q/Q, +30% Y/Y), around 11% below our estimate. A lower-thanexpected
EBITDA margin on account of mix (higher contribution from
Andheri project and past sales getting booked on delivery) was the key
reason for the deviation. EBITDA margin for the quarter stood at 54%
compared to the 9M FY11 level of 61%. Revenue of Rs2.7B (-33% Q/Q,
+58% Y/Y) was largely in line with our forecast. Cash on book was
Rs14.6B, down marginally Q/Q.
Key takeaways from the conference call
• Development business: New bookings at Rs3.3B increased during the
quarter (3Q Rs2B) primarily driven by the launch of Oberoi Esquire
(Exquisite II) in Goregaon project (0.3msf sold at Rs 11.7K psf). For full
year FY11, bookings at Rs9.2B were down 25% Y/Y and below our
estimate of Rs13B given the delay in new launches (Mulund/Worli). Of
the total Rs27B sales order-book, the company is yet to recognize
Rs11.2B as revenues and receive cash flows of Rs8B. The launch of
marquee Worli (luxury project) is expected soon (2Q FY12) and that
could materially change the company’s pre-sales numbers next year.
• Rental business is steady: Oberoi Mall and Commerz I are operating at
94% and 75% occupancy rates, respectively. The Westin hotel witnessed
an improvement over last quarter, with margins improving to 35% driven
by a higher occupancy rate (77% in 4Q, up from 62% in 3Q); while
ARRs remained largely flat Q/Q at Rs7,679. Further, work on Commerz
II (Gurgaon) and Prisma (JVLR) is progressing well; however visibility
on leasing/sales is expected to improve once the projects near completion
over FY12/13.
• We revise down our Mar-12 PT to Rs292 (from Rs320) based on 2x
FY13E P/BV (ROE of 18%), as we cut earnings by 30% for FY12E/13E.
Our PT equates to 12x FY13E EPS. Our presales assumptions are now
Rs13.4/20B for FY12/13, compared to the FY11 level of Rs9.2B. The
increase is primarily on account of the launch of luxury Worli project
(2Q FY12) and a for sale commercial project in Andheri.
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