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Research
Oberoi Realty - Project launches to drive sales volume... - ICICIDirect
Posted On : 2012-07-24 06:30:06( TIMEZONE : IST )
Oberoi Realty's (ORL) Q1FY13 results were marginally above our estimates largely due to superior execution and revenue recognition. The pre-sales volume at 1,23,871 sq feet (our estimate 1,48,000 sq feet) was lower as the Oberoi Esquire witnessed pre-sales volume of 58,065 sq feet in Q1FY13 vs. 74,715 sq ft in Q4FY12. Going ahead, we believe new project launches (Mulund and Worli expected to be launched in Q3FY13) would hold key for pre-sales traction and stock performance going ahead. Given the strength in balance sheet along with the quality of land bank, we assign a BUY recommendation.
Superior execution leads to better topline show
ORL Q1FY13 revenues grew 23.9% YoY to Rs. 197.6 crore, ahead of our expectation of Rs. 182.1 crore, on account of better than expected revenues recognition in the Oberoi Exquisite (Rs. 63.1 crore) & Oberoi Splendor Grande (Rs. 46.0 crore). Consequently, the PAT was higher at Rs. 100.8 crore vs. our estimate of Rs. 98.1 crore.
Esquire revenue booking pushed to H2FY13
The threshold for revenue booking for Esquire is now expected in Q3/Q4FY13 given the slower execution on the project on account of change in DCR regulation and new guidelines for revenue threshold.
Pre-sales volume lower, new project launches hold key…
The sales volume at 1,23,871 sq ft (our estimate 1,48,000 sq ft) was lower as the Oberoi Esquire witnessed pre-sales volume of 58,065 sq feet in Q1FY13 vs. 74,715 sq feet in Q4FY12. Going ahead, launch of Worli (the management now expect it to launch in Q3FY13 post signing the deal for hotel branding) and MoEF approval for the projects such as Mulund hold the key for sales volume growth in FY13 (the management now expect it to launch in Q3FY13).
At 1.8x FY13EP/BV & 0.9x its NAV, New launches hold key for stock price While, the revenue recognition for Esquire would rev up the topline and bottom line growth in H2FY13, launch of Worli and Mulund in Q3FY13 would act as catalyst for stock performance, going ahead. Given the strength in its balance sheet and quality of land bank, we maintain our BUY recommendation on the stock with price target of Rs.270/share (at implied ~8% discount to its NAV).
