Monday, July 14, 2008

Stock Idea: Orbit Corporation

A realty company, infact it is the first in the sector to declare its first quarter performance for period ended 30th June 2008. And clearly the troubled times seem to be showing on the bottomlines of the company. If times were booming in the last quarter of FY08, it is very apparent that the going is getting tough.
On a standalone basis, when the sales of the company itself falls, on a QoQ, by a whopping 86% at Rs.25.19 crore as against Rs.183.19 crore in Q4FY08, can much be expected of the profit margins? The company has managed to reduce its operating expense but naturally, that has not helped. EBIDTA was down 88% at Rs.11.06 crore, PBT fell 93% at Rs.6.40 crore and PAT was down 94% at Rs.4.82 crore as against its life time best of Rs.88.83 crore for Q4FY08. OPM was down sharply from 52.25% to 43.89% and NPM was down from 48.45% to 19.14%.
The company had raised Rs.100.10 crore in the IPO, of which it has utilized Rs.91.28 crore. What is gratifying to note is that it had earmarked Rs.50 crore for acquiring land for the said developments and this it has managed to do. The company acquired 85% stake in Ahinsa Buildtech Pvt. Ltd. consequent to which it has become a subsidiary of the Company. Ahinsa Buildtech has entered into a Deed of Conveyance with the receiver of Debt Recovery Tribunal (DRT) for acquiring the property of Orkay Mills situated at Kurla Andheri Road, Saki Naka, Andheri East. This gives the company 275,000 sq.feet of saleable land, which it plans to develop into a 5 star Residential Serviced Apartment with office complex.
The company had issued shares at Rs.110 per share, which is still quiet realistic if one were to go by the many other IPOs that followed at unjustifiable prices. At that time, realty was the toast of the marketmen and hence any price was ok. But it is at times like these, when the markets are down that those and realty is the most butchered sector, that the real test comes. Those who have issued shares at more realistic levels would manage to keep its head above water.
Orbit had touched a high at Rs.1080 and it today ruling at levels of Rs.248, Stay invested as the bottom seems to have been tested.



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