orbit corporation construction & contracting Real Estate

Orbit Corp: Quick project execution to steal the show (updated - 11 May 2010)
Mumbai-based Orbit Corporation announced a 1:1 bonus for its shareholders along with its March 2010 results. For this purpose, the company intends to increase the authorised share capital as well. A good set of numbers and Rs 1.5 per share dividend took the stock up by almost 10% in Monday’s trade amidst high volumes. The company’s fourth quarter result mirrors the recovery witnessed by peers in the real estate sector.

Orbit Corporation reported an year-on-year (y-o-y) growth of 8% in sales aided by firming up of prices as well higher units beings sold in its South Mumbai projects. The average realisation for its Napean Sea Road project has increased 31% on a quarter-on-quarter basis, though projects in other locations reported a small 6% increase. Also, the company recorded new sales of Rs 327 crore, up 58% from the December 2009 quarter, thus reflecting the improved demand.

The company plans to increase its focus in high-price high-margin projects in Lower Parel and Lalbaug areas of Central Mumbai. For example, area sold in March 2010 was 37% lesser than that sold in December 2009 quarter, but it was around 50% higher in total value during the same period.

Orbit is also consciously increasing its execution capability. This increase has improved the company’s EBIDTA and PAT margins. At 32% profit after tax margin, Orbit has shown a marked improvement over the past four quarters.

The company’s cost of construction continues to be high due to an increase in construction costs for three of its ongoing projects in December 2009 quarter. As the company is in the process of completing under-construction projects and acquiring new land, its debt obligation increased by Rs 235 crore during the year. This has increased its finance cost. Also, had it not been for the tax MAT credit, its net profit margins would have been impacted.

Orbit has registered a 52% q-o-q increase in its order book in March 2010 quarter, which is represented by a significant increase in its debtors’ position. Going ahead, execution of projects would be the management’s focus.

With a strong project pipeline, Orbit is expected to continue to improve its good performance in the forthcoming quarters

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