Reiterate 'buy' on Oberoi Realty – TP Rs.314 - Geojit BNP Paribas Financial Services

- Buy rating reiterated on Oberoi Realty with a target price of Rs.314 over one year.

- The company reported 1QFY13 revenue of Rs.230 crore, which is up 7.3% yoy and lower 19.2% qoq. Revenue was lower than market estimates.

- EBITDA margin declined to 63% from 68% in the earlier quarter, primarily due to product mix changes and one-time increase in construction costs.

- Tax rate increased by a marginal 300 bps yoy to 27% due to greater contribution from non-tax –exempt projects.

- Contracted sales volume came in at 0.12 million sq ft against 0.17 million sq ft in 4QFY12 and 0.21 million sq ft in 1QFY12.

- Realisations improved by 6% qoq and 35% yoy.

- It is expected that volume offtake from current projects would be muted in FY13.

- Launch of Worli and Muland projects is likely to provide an uptick to contracted sales.

- Execution remained consistent at 0.3 million sq ft.

- Cash & cash equivalents were stable at Rs.1300 crore.

- Revenue from hospitality business was at Rs.22 crore, an increase of 5.6% yoy.

- Revenue increase was primarily due to higher F&B (Food & Beverages) sales.

- Operating margin also improved to 9.4% from 5.7% in 1QFY12.

- Operating cash flow declined to 60.37 crore from 80.85 crore in 4QFY12. The decline was primarily a function of projects entering advanced stages wherein collection slows down.

- Operating cash flow will pick up once Worli project is launched.

- Key catalyst for the stock would be the launch of Worli / Muland residential projects.

Source : Equity Bulls

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