IGI Logo

All-time high sales volume driven by new launches!

Oberoi Realty’s (ORL) Q4FY21 sales volume at 1.06 million sq feet (msf), was an all-time high, up a staggering ~7.3x YoY on a depressed base of Q4FY20 and strong 103% QoQ growth, driven by new launches. On the financials front, reported revenues grew 28.4% YoY to | 790.1 crore. The reported growth was led by residential segment revenue recognition, which was at | 682 crore, up ~41% YoY, owing to healthy sale of complete/near complete projects like Esquire, Enigma and Sky City that translated to high revenue recognition.

EBITDA at | 373.5 crore was only up 0.8% YoY as the base quarter had lower cost recognition. Reported EBITDA margins, thus were down ~13 percentage points YoY (up 110 bps QoQ) to 47.3%. Reported PAT was at | 286.9 crore, (up 14.3% YoY), with growth being lower than topline owing to margins decline.

Strong sales volume driven by new launches

The company reported highest ever sales volume of 1.06 msf (up 7.3x YoY on a depressed base of Q4FY20 and strong 103% QoQ growth). The sales value was up 8.2x YoY, 2x QoQ at | 1957 crore (gross value | 2050 crore). The sales volume was largely driven by new launches – new Goregaon tower named Elysian, which clocked sales volume of 0.53 msf (~50% of overall sales volume of the quarter) and launch of sixth tower in Borivali project (Borivali contributed 0.26 msf (~25% of sales volume).

ORL is currently at the designing stage to launch newer projects for Thane and Worli locations (GSK Land has now been converted into residential). Additionally, the management is contemplating launching one more tower in Elysian project and subsequent phase of Borivali in FY22. On a healthy base of 1.7 msf sales volume in FY21, we bake in 1.9 msf, 2.3 msf volumes in FY22E, FY23E, respectively, with Borivali, Thane, Goregaon volumes traction driving the same. We have not baked in GSK estimates given the lack of details.

Hospitality/retail, commercial remain muted

ORL’s commercial, retail and hotel performance remained muted amid Covid. Westin Mumbai Garden City project revenue declined 58.8% YoY to | 12.2 crore, with 63.7% YoY decline in average room rate to | 2.28) and decline in occupancy level at 44.2%. Rental revenues (from mall and office assets) were at | 81.8 crore, down 8% YoY. We expect this segment to remain muted in FY22 impacted by second wave of Covid. Expected completion dates for under-construction rental projects are a) Commerz III – staggered delivery by the end of FY23, and b) Borivali Mall – Q3, 2023.

Valuation & Outlook

ORL’s strong sales volume continued to surprise, more so the new launches traction. While Q1FY22 will be a washout, we expect sales momentum in FY22 to be as robust as FY21, driven by new launches in Thane, GSK Project and subsequent phases of Borivali/Goregaon. Thus, we maintain BUY rating on the stock with a revised target price of | 640/share (earlier | 635).

To Read Complete Report & Disclaimer Click Here

https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

Above views are of the author and not of the website kindly read disclaimer