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Orbit Corporation can touch Rs 70: SP Tulsian

Orbit Corporation can touch Rs 70 in next 6 months, says SP Tulsian, sptulsian.com. They have total 12 ongoing projects in Central and South Mumbai with total area of close to about 18 lakh square feet.

November 22, 2012 / 10:00 IST
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Orbit Corporation can touch Rs 70 in next 6 months, says SP Tulsian, sptulsian.com.


Tulsian told CNBC-TV18, "My positive stance remains on the realty sector and especially more on the Mumbai real-estate stocks. These stocks having run up, Peninsula moved from Rs 40 to Rs 70-72 now. Same thing happened with HDIL, Indiabulls Real Estate and even stocks like Kolte Patil. All these companies who have good presence in Mumbai and Pune I have seen a good run up. In fact same thing has been happening with Bangalore and NCR real-estate companies also."


He further added, "If you purely go by the business model of Orbit Corporation, they have developed their mastery in redevelopment of the buildings in South Mumbai because you cannot expect any new land available up to the central part of Mumbai. So, all the developments has to happen in the form of redevelopment."


"This company has already developed 6-7 projects, completed the projects which have all been seen quite good and they have all given quality construction. So they are into small redevelopment projects. They have total 12 ongoing projects in Central and South Mumbai with total area of close to about 18 lakh square feet."


"The only problem with the company is that they have very heavy debts, on net worth of close to about Rs 1000-1100 crore they have a debt of Rs 1100 crore as well. So if you go by their H1 performance, the operating profit of about Rs 80 crore is largely eaten away by the interest payment of close to about Rs 72-73 crore in H1 which the company has paid."


"But considering the increase happening in South Mumbai, in fact in South Mumbai the real estate prices keep moving up in the multiple of Rs 5000 per sq ft. If you see in the central part of Mumbai the prices are as high as Rs 60000-75000 per sq ft. They have presence in Walkeshwar, Tardeo, Prabhadevi as I said that in central and South Mumbai where they are expected to fetch good realizations."


"If you go by their inventory held by the company in the financials having posted by them as on 30th September, they have inventory of close to about Rs 600-700 crore and I am expecting that that can really give them huge realizations, which will help the company to reduce the debts. So taking all this into consideration you really find very few companies having presence in Mumbai market. So taking that call mainly on the realty sector with presence in Mumbai I have chosen this stock and one can expect a price of about Rs 70 in next 6 months."

Disclosure: I have no personal holding in the above stock.

first published: Nov 22, 2012 09:58 am

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