OBEROI REALTY
Reco price: Rs 225
Target price: Rs 330
Oberoi's Q2FY12 net profit was 31 per cent ahead of estimates on better-than-expected execution progress in ongoing projects. Margins, however, contracted 424 basis points QoQ due to cost readjustments of Rs 9 crore for residential projects. Cash from operations was strong at Rs 87 crore, aided by higher customer receipts, while net cash reduced by Rs 220 crore due to the I-ven stake acquisition. The sales run-rate was good at 0.18 msf (against 0.16 msf estimated) versus 0.21 msf in Q1. Net cash (Rs 1350 crore) and strong operational cash flows provide a good opportunity for Oberoi amidst tight liquidity conditions for other developers. Maintain buy.
—Religare Institutional Research
MAX INDIA
Reco price: Rs 178
Target price: Rs 234
Max India has entered into an agreement to sell 26 per cent stake in its subsidiary Max Healthcare to Life Healthcare of South Africa for Rs 516 crore. The proposed transaction values Max Healthcare at Rs 1,500 crore. The deal has been done at a 72 per cent premium to the recent purchase of stake in Max Healthcare from private equity fund Warburg Pincus. Earlier in June, Max India had purchased a 16.37 per cent stake in Max Healthcare for Rs 140 crore from Warburg Pincus, valuing Max Healthcare at Rs 850 crore. Post the deal, the stake of Max India would reduce to 70 per cent in Max Healthcare. This implies a value of Rs 1,330 crore for Max India's stake in Max Healthcare at post money valuation of Rs 1,900 crore. Maintain buy.
—Sharekhan
