Orbit’s FY11 revenue was disappointing due to construction being below guidance and delay in approvals in the past few months. Even with lower sales (given sluggish market conditions), Orbit has sold 79% of its launched projects, from which it has receivables of Rs12bn as of Mar ’11.
n Results review. Orbit’s FY11 revenue belied our expectations, given removal of a project (Villa Orb annex) from revenue recognition, as the threshold was not achieved. This indicates below guidance construction, although it does not impact cash flows. Adjusting for this, FY11 revenue and PAT were in line with our estimates, at ~Rs4bn and ~Rs0.8bn respectively.
n Operations. Sales slowed in 4Q, but Orbit closed FY11 with Rs5.3bn sales and Rs3.4bn cash collected. Although Mandhwa project is not in line with guidance (unlikely in FY12 too), Napean Sea Road remains Orbit’s forte, with ~50% sales contribution. Orbit’s projects saw 30% price appreciation in FY11.
n Focus on execution. Sales receivables stood at a healthy Rs12bn as of Mar ’11. Admitting slower execution in FY11, though citing approval delays, management has guided for 30% rise in the FY12 construction budget to ~Rs1.7bn and collections of ~Rs8bn.
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
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