Oberoi Realty can touch Rs 350: PN Vijay

Oberoi Realty can touch Rs 350, says PN Vijay, Portfolio Manager.

Vijay told CNBC-TV18, "This is the time to pick some beaten down stocks. I am not one of those fellows who are walking away from the market and just forgetting about it. If you looked at it the realty space all of us can agree that values were extremely fantastic compared to replacement cost of the asset. But one is looking for companies with zero debt because debt environment is going to be very bad for some more time."
He further added, "Oberoi Realty strikes me as remarkable because it is not only zero debt but is also sitting on Rs 1200 crore of cash which is something that one would love to see in a Jaiprakash Associates or Unitech or a DLF. The other thing is that everybody in real estate would tell you that the strongest and stablelest market in Indian is Mumbai because supply is very tough. So, Oberoi is pat in Mumbai and its not going anywhere else."
"It has been there for a long time of about two decades in its core business and also there is a decent mix of real estate. There is residential and commercial in the form of Oberoi Mall. Also, 51% FDI is a big trigger for that. They have got hotels; they own the Western property in Mumbai. This decent mix of all segments makes it interesting. They have done nothing stupid like HCC doing Lavasa."
"In terms of valuation, it is quoting around 12 price earnings, which is not cheap the way midcaps have fallen. But it is pretty good considering the EBITDA margins around 52-53% which is very strong and the return on equity is very strong too. So this is a risky bet, this is not for widows and students but I would recommend this at the current price with 50% capital appreciation of around Rs 350 within 12 months."