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Invest in Omaxe with medium to long term view: Experts

Published on Mon, Jul 16, 2007 at 12:44 | Source : Moneycontrol.com

Updated at Mon, Jul 16, 2007 at 18:39

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Omaxe, a real estate player, is entering the capital market with a public issue of 1.78 crore equity shares of Rs 10 each with an additional green shoe option of upto 17.50 lakh equity shares in the band of Rs 265 to Rs 310 per share on July 17. The issue will close for subscription on July 20, 2007.

Moneycontrol conducted a poll on market experts to check whether to apply for the public issue or not. Experts said apply.

Experts/Company	Poll Result	Experts view
R S Iyer (KR Choksey)	Apply	Omaxe is an excellent issue, in terms of valuations and well-known brand in the market. Ethics of this company's management is very good and it needs in this kind of industry. Real estate sector is also in a boom. Other players like DLF, Unitech, Parsvnath etc are doing well. There is no cause of concern. So investors should apply for long term as well as for listing gains.
Manish Bhatt (Prabhudas Lilladher)	Apply	Omaxe is a good issue. Investors should subscribe to the issue.
SP Tulsian (Investment Advisor)	Apply	The total land bank owned by the company is 3,255 acres including land of 571 acres acquired under joint development and 2,684 acres of its own for which the company has complete ownership or have entered into development agreement. Total developable area is about 183.83 million sq. ft. As at 31-03-07 the total saleable area under development is about 149.82 million sq. ft. Major presence of the company is mainly into tier II and tier III cities like Ajmer, Bhiwadi and Jaipur in Rajasthan while at Agra, Greater Noida, Lucknow, Mathura - Vrindavan and Noida in U.P. At Rs 310 per share, the market capitalization of the company works out at Rs 5,410 crore. The company can very well be compared with Parsvanath Developers and HDIL which are also mild size realty companies. Also, the company's presence in SEZ is also quite low when compared with Parsvanath, which has 24 SEZ with area of over 165 millions sq. ft. The company has received in principle permission from Board of Approvals, GoI for a multi-product SEZ in Rajasthan to be spread over 15,000 acres. The concern on execution capability of the company would always remain. However, in view of huge land bank at its command with expected market cap of Rs 5,500 crore, the investment appears safe and rewarding in the short to medium term.

Omaxe, which has a presence in 30 cities and nine states, intends to deploy proceeds worth Rs 500 crore for payments related to land, Rs 236 crore towards repayment of loan and Rs 699 crore for meeting development and construction costs of some of its projects.

The company has a land bank of over 3,255 acre and at present 47 projects are under development.

The issue would constitute 11.20 per cent of the fully diluted post-issue paid-up capital of the company, if the green shoe option is exercised and 10.30 per cent, if the option is not exercised.

Of the total equity float, up to 1.75 crore equity shares are for the public, while the balance 2.96 lakh shares are reserved for eligible employees of the company. Additionally, there would be a green shoe option of 17.5 lakh equity shares.

Omaxe has appointed DSP Merrill Lynch Ltd, Citigroup Global Markets India and UBS Securities India as global coordinators and joint book running lead managers for the issue. JM Morgan Stanley is the book running lead manager.

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