Sharekhan on ORBIT CORPORATION

In the last conference call after the announcement of the company’s December 2009 quarter results, the management indicated the launch of five new projects and the first phase of the Mandwa project over the next 3-6 months. However, in the current quarter, Orbit Corporation has not launched any project so far and will not do so until the next quarter. One of the primary reasons for this was that people were waiting for the Budget 2010-11, and hence, any new launch prior to its announcement might not have evoked a very positive response. Besides, projects like Orbit Residency (Andheri) and Orbit Grand (Lower Parel) are expected to get delayed.

The brokerage is lowering its earnings estimates for 2009-10, 2010-11 and 2011-12 due to a delay in the new launches as well as the delay in revenue recognition from two of the projects. However, some positives are that Orbit operates in the key property market – Mumbai – and a project pipeline which provides strong revenue visibility. The stock is trading at 12.9 times 2010-11 earnings estimates. Sharekhan maintains a buy on the stock with a price target at Rs 340 (earlier Rs 393).