Buy Oberoi Realty; target of Rs 315: Emkay

Emkay Global Financial Services is bullish on Oberoi Realty and has recommended buy rating on the stock with a target of Rs 315 in its July 23, 2012 research report.

“OBRE sold 1.23 lsf in Q1FY13, lower than our estimates of 1.48 lsf and 1.76 lsf sold in Q4FY12. The lower sales bookings led to lower than estimated topline of Rs 1.99bn which was 10% below our estimate and 21.5% decline QoQ. EBITDA stood at Rs 1.14bn, 18% below our estimates and 21.5% decline QoQ. EBITDA margin at 57% was down by 748bps QoQ mainly due to higher Cost of Sales and Other Expenditure. PAT at Rs 1.01bn was 17% below estimates and 29.7% decline QoQ. Company generated Operating Cashflow of Rs 604mn in Q1FY13 against Rs 910mn generated in Q4FY12. Customer Advances stood at Rs 78.4bn against Rs 71.5bn at end of FY12.”

“OBRE hiked price across its on-going projects in Q1FY13E, a second such hike within period of 6 months. The price hike in the range of 8-12%, lowered down the sales booking in the quarter by 24% of the under construction projects viz. Spendor Grande, Exquisite and Esquire. Large new launches are expected in H2CY12E by Omkar Developers in Malad (E) and by Sunteck Realty in Goregaon (W) in the price range of Rs 10,000-10,500/sf. We believe there is no room for further price hikes for OBRE’s ongoing projects in FY13 if company wants to maintain its sales velocity in the above three projects.”

“OBRE Realty’s major concerns are high concentration of location which restricts scalability and investments in commercial assets which currently has lower traction. By lowering the realisations of planned residential projects vis-à-vis current market rate, increasing the timeline of commercial assets and estimating no price hike on on-going residential project, the conservative faire value comes to Rs 252,” says Emkay Global Financial Services research report.

Public holding more than 90% in Indian cos

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