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Oberoi Realty (OBER) booking values increased to INR 11.56bn in 2QFY23 (+39% YoY; +52% QoQ) led by traction at Three Sixty West as it sold 8 units (Booking value of INR 6.1bn; 53% of total booking values). In the absence of new launches, sustenance sales from Goregaon (Elysian), Borivali (Sky City) and Mulund (Enigma and Eternia) projects have held up well backed by overall buoyancy across Mumbai residential markets. There was no new business development during the quarter however given the strong balance sheet (0.18x net debt to equity) and unlocking of cash flows from Three Sixty West project, OBER continues to scout for land parcels (Oberoi Gurgaon link). While OBER continues to execute well across its existing projects it has multiple growth triggers including i) Thane project launches, ii) continued momentum in Three Sixty West and iii) more project acquisitions. We introduce FY25 estimates and roll forward to Sep’23 of INR 1,050 (implying 17% upside). Maintain ‘BUY’. Key risks: Slowdown in residential segment / delay in launches of key projects.

* Project completion round the corner; launches key: Area sold came in at 0.37msf (down 17% YoY and 8% QoQ) and sales were largely led by Three Sixty West - 53% of total booking values (Exhibit 3). Overall collections improved during the quarter to INR 8.8bn (+64% YoY; 58% QoQ) on account of healthy collections at Three Sixty West (INR 4.05bn) and is likely to remain at elevated levels. OBER will further opportunistically look to launch towers in Borivali and Goregaon based on the demand supply situation over the coming quarters. Mulund is also in advanced stages of completion Mulund (Eternia - 81% and Enigma – 78%) and sales / cash flow profile are likely to remain healthy.

* Three Sixty West - pickup visible and the main driver in 2QFY23: Three Sixty West (2.28msf; INR 110bn+ revenue potential) received its OC in the last week of Jun’22 and in 2QFY23 and registered sale of 8 units at an average realisation of INR 83,181 (INR 49,550psf average till now). Booking values came in at INR 6.10bn (53% of the total booking values, INR 11.56bn in 2QFY23) while collections stood at INR 4.05bn for the quarter. Moreover our channel checks indicate limited competing inventory (in terms of ticket size and offering) in the region which can help drive bookings. (Oberoi Realty: Vantage Point: Oberoi Three Sixty West).

* Thane (Pokhran Road and Kolshet Road) key near term triggers: Pokhran Road, Thane (12-14msf developmental potential) has been delayed over the past few years and is now expected to be launched in 2HFY23 (capturing festive demand).

* Reported financials: Reported Revenue came in at INR 6.9bn (down 9% YoY and 24% QoQ) while EBITDA margins came in at 45% (declined 435bps YoY and 860bps QoQ), EBITDA stood at INR 3.1bn (declined 17% YoY and 36% QoQ) mainly on account of lower revenue recognition from Elysian, Goregaon (higher margin). PAT decreased to INR 3.2bn (+20% YoY; down 36% QoQ).

* We maintain ‘BUY’; roll forward to Sep’23 TP of INR 1,050: We broadly maintain estimates and roll forward estimates to have a ‘BUY’ rating with a Sep’23 TP of INR 1,050 (implying 17% upside).

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