Buy Oberoi Realty Ltd for the Target Rs 2,100 by Prabhudas Liladhar Ltd
Strong quarter aided by 360 North
Oberoi Realty Ltd (OBER) reported sharp growth in pre-sales driven by a robust response to its newly launched Gurugram project. We foresee ~25% pre-sales CAGR over FY26-28E aided by successful new launches including last phase in 360 North, rapid inventory absorption from existing projects, and strong demand across the MMR market. Further, we expect annuity income to remain steady at INR13-14bn by FY28E, providing strong cash flow visibility. Given recent correction in stock price we upgrade stock to ‘BUY’ from ‘Accumulate’ with DCF based NAV SOTP of INR2,100/share.
EBITDA margins expanded despite revenue decline; PAT remains flat YoY:
Operationally in Q2, OBER’s EBITDA remained flat YoY to INR10.2bn; in line with our estimates, with EBITDA margin improving to 61%; up ~360bps YoY and ~460 bps QoQ. H1FY27 EBITDA increased by ~14% YoY to INR 17.5bn with the OPM at ~59%. Consolidated revenues decreased by ~6% YoY at INR6.7bn. H1FY27 revenue stood at INR 29.7bn; up ~7% YoY. PAT remained flat YoY but up ~40% QoQ to INR7.6bn. H1FY27 PAT stood at INR13.1bn, up ~10% YoY.
Robust pre-sales led by 360 North bookings:
OBER’s pre-sales improved significantly by ~604% YoY to INR91.5bn (Ple: INR90bn) led by strong response to the newly launched 360 North project in Gurugram. 360 North contributed INR 78.9bn to the total pre-sales, while Elysian, 360 West, Sky City and Jardin contributed INR 3.5bn, INR 2.8bn, INR 1.8bn and INR 1.2bn respectively. Average price realization increased by ~12% YoY to INR 57,801psf in Q2. Collections increased by ~40% YoY and ~106% QoQ to INR 19bn. Leasing income increased by 18% YoY and ~2% QoQ to INR3.2bn during the quarter. The commercial portfolio occupancy stood at 98% during the quarter. Sky city achieved 83% occupancy in Q2 vs 82% in Q1. Hospitality revenues improved to INR456mn, up ~2% YoY. The company reported a cash surplus of INR 9.1bn in Q2FY27; however, cash flow remained marginally negative at INR 338mn in H1FY27.
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SEBI Registration number is INH000000933
