Oberoi Realty - Q2FY13 Results: Beat estimates - PhillipCapital

Oberoi Realty's Q2FY13 results exceeded our expectations. The company reported QoQ growth of 29% in revenues, 31% in EBITDA and 23 % in PAT largely on the back higher revenue recognized from the Exquisite and Splendor Grande projects.

Highlights of Q2FY13 Results and Conference Call

- Residential sales were driven by increase in square footage sold (5% QoQ).
- Witnessed QoQ volume growth in in Esquire (32 Vs 25).
- Average size of the units sold during the quarter decreased by 7%.
- Oberoi Exquisite and Splendor witnessed QoQ increase in average realization to the tune of 1% and 9% respectively. Overall blended realization increased by 2% QoQ.
- The company has collected Rs156.3 bn (Rs226 bn in Q1FY13) from its various projects.
- MOEF clearance for Mulund project is awaiting approval. The case has been referred by Government of Maharashtra to Delhi for clearance.
- Company is evaluating newer markets/geographies such as Noida, Gurgaon and Bangalore. Delhi NCR would be most likely the first market to venture into outside Mumbai in another 2-4 quarters. Company doesn't have plans to go pan India.
- Garden city/ Exquisite is likely to be launch in Q4FY13.
- During the quarter, Rs 1bn has been spend on acquiring the TDR for residential project and Rs650 mn was paid as dividend, hence the operating cash flows were negative.

Valuation: We believe that ORL's strong presence in the Mumbai market with a good brand, well-diversified portfolio, and a premium quality product, assures delivery of sustainable cash flows in the medium to long term. We maintain Buy rating with PT of Rs 318 is based on FY14E NAV and equates 1.7x FY13E P/B and 10x FY14E P/E. However, ORL's valuations at a premium to the sector. In our view, the premium is here to sustain, given: (a) Visible and relatively short land bank, (2) No debt with strong net cash in the balance sheet, (c) better governance, and (d) proven execution. Risks to our estimates are delay in key projects - Esquire, Oasis and approval of Mulund Project (3 mn sq ft).

Source : Equity Bulls

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