Buy Oberoi Realty Ltd For Target Rs.1,043 - Yes Securities
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Strong demand + higher APR = Accelerated CF
Our view
Oberoi Realty (OBER) achieved presales of 0.4msf translating to sales value of Rs7611mn for Q1FY23 guided by sustained demand for Elysian, Sky City and Eternia. OBER received OC for 360 West under DCR 2034 and is expected to witness good sales from FY23 onwards with higher average price realisations. Thane project is expected to launch in festive season (Q2/Q3 FY23) and Kolshet & Peddar road projects is in drawing stage. The Westin posted very strong numbers with ARR of Rs9116/night (27%q/q & 95%y/y) and is fully recovered from the covid-19 disruption while office and retail is on recovery path. After witnessing the steady demand for OBER’s all project, we have accelerated sales velocity and shorten project life cycle for some (Sky City & Elysian) of its projects which translates in faster cashflow but was partially negated by higher WACC of 11.5% adjusted to uptick in benchmark interest rates. We believe with strong demand and consolidation in sector, better player like OBER will always have upper edge on the back of quality product, delivery track record, D/E of 0.26x and supply side constraint. We continue to give 20% premium to current portfolio for being leader in premium residential segment & arrived at SoTP based NAV of Rs1043/share. We recommend ‘BUY’ rating with 22% upside.
Result Highlights
? For Q1FY23, OBER clocked bookings of 164 units and reported presales of 0.4msf (-23%q/q & 335%y/y) which translates in sales value of Rs7611mn (-18%q/q & 348%y/y) guided by the Elysian, The Sky City & Eternia while collected Rs5574mn (-41%q/q & -14%y/y).
? OBER reported revenue of Rs9131mn (11%q/q & 221%y/y) guided by the steady collection from Sky City Borivali & Elysian (contributed cumulatively 61% of total residential collection) and improved contribution from The Westin in Q1FY23.
? EBITDA came in at Rs4922mn (40%q/q and 294%y/y) and margins expanded by 1118bps q/q and 997bps y/y to 53.9% as higher margin projects came for recognition.
? PAT reported at Rs4031mn (74% q/q and 400% y/y) for Q1FY23 and reported margin of 44% (1592bps q/q & 1578bps y/y) aided by higher operating profit and higher contribution from 360 West.
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