CRISIL assigns valuation grade of 3/5 to Omaxe

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CRISIL assigns valuation grade of 3/5 to Omaxe

CRISIL Research has come out with its report on Omaxe. The research firm has maintained the fundamental grade of 2/5 to the company in its November 10, 2011 report.

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CRISIL Research has come out with its report on Omaxe . The research firm has maintained the fundamental grade of 2/5 to the company in its November 10, 2011 report.

Omaxe Ltd's Q2FY12 consolidated revenues were broadly in line but PAT was below CRISIL Research's expectations. We believe that rising interest cost has adversely affected margins and led to an overall fall in profitability. We may revisit our estimates post interaction with the management. We maintain the fundamental grade of 2/5.

Q2FY12 result analysis:

• Consolidated revenues grew by 28.1% y-o-y and 38.0% q-o-q to Rs 4.5 bn, driven probably by faster execution or higher bookings in the ongoing projects. We will get more clarity post our discussion with the management.
• EBITDA margin contracted sharply by 867 bps y-o-y and 356 bps q-o-q to 13.8% due to higher carrying cost.
• PAT fell by 25.7% y-o-y (up 36.3% q-o-q) to Rs 273 mn driven by fall in EBITDA margin and higher interest cost. However, lower provisioning of taxes has offset the impact of sharp fall in EBITDA margin on the overall profitability. EPS fell to Rs 1.6 in Q2FY12 from Rs 2.1 in the corresponding quarter of last year.

Valuations: Current market price is aligned: We continue to use the sum-of-the parts method (net asset value method for the real estate business and price-to-earnings multiple for the construction business) to value Omaxe and maintain the fair value of Rs 146 per share. We may revisit our estimates post interaction with the management. Based on the current market price, the valuation grade is 3/5.

Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.

© CRISIL Limited . All Rights Reserved. Published under permission from CRISIL"

To read the full report click on the attachment