Oberoi Reality Reports Poor Q1FY14 Results

Oberoi Reality, a well-known real estate company in Mumbai announced its Q1FY14 results on July 15, 2013. The company has witnessed flat growth in revenues to Rs 210 crore. The net profit has also remained flat, meaning there is nothing to cheer about the stock. Shares of the company had risen over expectations of good numbers but the poor results have disappointed investors.

The company has 2 main business verticals - Real Estate and Hospitality. Real Estate generates the maximum revenues which have gone up marginally to Rs 192 crore for this quarter. The Hospitality segment, on the other hand, has shown revenue growth of 1.17% to Rs 25 crore.

Overall, the EBITDA margins during the quarter have improved to 61.57% against 57.59% in the June quarter of the last fiscal due to a decline in the input costs. The PBIT margins of the Real Estate segment stand at 64.14% and that for Hospitality stand at 17.72% against 59.68% and 9.36% in the corresponding quarter of the last fiscal.

The company has very low debt and hence there has been negligible interest outflow during the quarter. Its interest cover ratio remains very strong and we thus see no problem on this front.

The nature of the real estate sector is such that the profit or loss in a quarter does not reflect the annual performance of the company. The results have disappointed the street and the real estate sector is generally out of the investment cycle at the moment. The stock is therefore not worth recommending.