CRISIL revises fair value to Rs 125 for Omaxe

7196 Investors following Omaxe. Share this News with them.

0

Like this story, share it with millions of investors on M3

CRISIL revises fair value to Rs 125 for Omaxe

CRISIL Research has come out with its report on Omaxe Ltd. The research firm has maintained the fundamental grade of 2/5 to the company in its November 29, 2011 report.

Post your opinion here

 

0

Tweet

Share on Tumblr

CRISIL Research has come out with its report on Omaxe Ltd . The research firm has maintained the fundamental grade of 2/5 to the company in its November 29, 2011 report.

Omaxe Ltd's Q2FY12 consolidated revenues were broadly in line but PAT was below CRISIL Research's expectations. Rising input costs and higher interest burden impacted profitability. Although Omaxe has a strong project pipeline and brand recall in the North Indian market, after considering the high interest rate environment, subdued demand outlook and Omaxe's high debt repayment obligations, 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 by faster execution of the ongoing projects. Omaxe Grand Woods, Noida, Omaxe City, Bhiwadi and Omaxe Connaught Place, Greater Noida were some of the major projects which have contributed to this quarter's revenue.

• EBITDA margin contracted by 867 bps y-o-y and 356 bps q-o-q to 13.8% due to rising input costs and lower realisation in incremental bookings. Omaxe sold 2.25 mn sq.ft. of new space in Q2FY12 at an average realisation of Rs 2,016 per sq.ft. registering a mere ~1% q-o-q growth.

• PAT fell by 25.7% y-o-y (up 36.3% q-o-q) to Rs 273 mn driven by the decline in EBITDA margin and higher interest cost. However, lower provisioning of taxes offset the impact of the sharp fall in EBITDA margin on overall profitability.

Earnings estimates revised downwards
We continue to maintain our revenue estimates given Omaxe's exposure to tier II and III cities where the demand for plots and independent floors remain healthy. However, as the rise in input costs and high interest rates continue to impact the margins of developers, we have reduced our earnings estimates by factoring in lower margins. Accordingly, we have reduced our EBITDA margin estimates by 500 bps for FY12 to 14.9% and by 470 bps for FY13 to 15.7%. Consequently, we have lowered our EPS estimate by 34.5% to Rs 6.1 for FY12 and 31.4% to Rs 9.6 for FY13.

Valuations: Current market price has downside
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. Due to downward revision in earnings, we have revised our fair value by ~14% to Rs 125 per share.

To read the full report click on the attachment

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"