Oberoi Realty - Not Rated - Motilal Oswal

OBEROI REALTY 3QFY11: Steady sales momentum continues; Value-accretive land purchase could be key trigger

Oberoi Realty has reported 88.7% YoY growth in its 3QFY11 revenue to ~Rs4b.

EBIDTA is up 82% YoY to Rs2.5b, with EBITDA margin at ~62% (vs 64% in 3QFY10 and 59.2% in 2QFY11).

PAT is up 56.7% YoY to ~Rs2.1b. Apart from the strong operational growth, the sharp increase in net profit can also be attributed to jump in other income.

The 9MFY11 numbers are in-line with our FY11 estimates, with 9MFY11 revenue at Rs7.3b, EBITDA at Rs4.3b (Rs6b FY11E) and PAT at Rs3.8b.

Currently Oberoi Realty is trading at 15.5x FY11E EPS of Rs15.8/share. We expect the company to trade at premium valuations due to 1) value unlocking potential of huge idle cash, 2) strong monetization visibility, and 3) strong brand equity. The potential triggers of the stock are: 1) prudent use of surplus cash to augment its land bank, 2) broad-based recovery in commercial and retail markets, and 3) traction in pending issues (hotel properties in Juhu). Not rated.

Source : Equity Bulls

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