Orbit Corporation Ltd.
We are optimistic about OCL South-Mumbai focused real estate business model. Despite reporting de-growth in the net profit we still believe company will outperform its peers in the near future. Company stands benefit from the new CRZ norms passed in Jan'11. Under this norm the no-development zone has been reduced to 100 meters from 200 meters. Further with three new projects to be launched in next 2-3 quarters including its two prime projects in the heart of the Island City at Napean Sea Road (0.3msf) and Lalbaug (0.075msf) and one in the Mumbai-suburb micro-market at Santacruz (0.3msf), together these projects provides enough revenue visibility in the near future. At CMP `54, the stock is trading at 6.3x and 4.1x FY12E and FY13E earnings while on P/BV basis the stock is available at 0.5x and 0.4x its FY12E and FY13E book value respectively. We maintain our “Buy” rating however we have revised our target price downward to Rs 70.

On technical perspective, stock market currently shows significant correction from the highs of Rs 91 however we believe it's a temporary one and we might see some buying opportunities in the near term. Nevertheless its technical indicators i.e. RSI and MACD also revealed some technical pull back in near term.

Voltas has transformed itself from a traditional HVAC (Heating, Ventilation & Air Conditioners) player to a complete MEP (Mechanical, Electrical & Plumbing) player. Being a complete MEP contractor expands the scope of work in total project cost from 15% for HVAC to 35% for MEP by offering services like power systems, fire detection and protection, process refrigeration, public health engineering, indoor air quality and integrated building management in addition to the core HVAC solutions. The EMPS segment has grown at a CAGR of 29.5% over FY05-10 to Rs. 3113.4 Crs and contributes ~60% to the company's total revenues. The segment's current order book stands at Rs. 4697 Crs (31st December 2010). The company expects Rohini Industrial Electrical to turn around by next fiscal which would positively add to the company's margins. With the visible growth prospects in the UCP and EPS division, led by rising infrastructure investments coupled with strong order book and good track record, we believe Voltas has strong revenue visibility. At the CMP of Rs.178, the stock is trading at 15.6x and 13.7x its FY11E and FY12E EPS respectively. We recommend BUY on the stock with a target price of Rs. 210, providing an upside of more than 15% from the current levels. On technical viewpoint, stock has shown some consolidation around Rs 155. In close proximity we believe stock is well poised to move in upward direction. Moreover it's RSI and other technical indicators stands in the oversold territory where possibility of turnaround couldn't be rule out. Hence stock investors are advised to BUY this stock for a price target of Rs 200-210 in one month.

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