CRISIL maintains valuation grade of 2/5 to Omaxe

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CRISIL maintains valuation grade of 2/5 to Omaxe

CRISIL Research has come out with its report on Omaxe. The research firm has maintained the fair value of Rs 125 per share and fundamental grade of 2/5 to the company, in its February 8, 2012 report.

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CRISIL Research has come out with its report on Omaxe . The research firm has maintained the fair value of Rs 125 per share and fundamental grade of 2/5 to the company, in its February 8, 2012 report.

Omaxe Ltd's Q3FY12 consolidated revenues were in line with CRISIL Research's expectations, but earnings were below due to lower margins. We believe that rising input costs and higher interest burden has impacted margins. We may revise our estimates downwards post interaction with the management. We maintain the fundamental grade of 2/5.

Q3FY12 result analysis
• Consolidated revenues grew 29.8% y-o-y (down 0.5% q-o-q) to Rs 4.5 bn, driven by plot sales and higher bookings in the ongoing projects. We will provide more details on bookings once we get more clarity post our discussion with the management. While revenues from the real estate business grew 43.4% y-o-y (up 0.3% q-o-q) to Rs 4.1 bn, revenues from the construction contracts declined 30% y-o-y (down 6.6% q-o-q) to Rs 1.3 bn.

• EBITDA margin contracted by 680 bps y-o-y and 240 bps q-o-q to 11.5% due to increase in raw material and higher carrying cost. Real estate business' EBIT margins declined 630 bps y-o-y (down 170 bps q-o-q) to 19% and the construction segment's EBIT margins witnessed a sharp decline of 1,170 bps y-o-y (down 340 bps q-o-q) to 1%.

• PAT declined by 14.4% y-o-y (down 29.2% q-o-q) to Rs 193 mn mainly due to decline in margins. However, increase in other income has partially offset the fall in EBITDA margin. EPS declined from Rs 1.3 in Q3FY11 to Rs 1.1 in Q3FY12.

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 and maintain the fair value of Rs 125 per share. Based on the current market price, the valuation grade is 2/5.

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.

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