IGI Logo

About 200 units on offer of which 69 have been sold as of Jun’22

* About 200 units on offer of which 69 have been sold as of Jun’22

* The project consists of two towers: Tower A and Tower B.

* Tower A houses Hotel Ritz-Carlton upto 33 floors and 28 single-floor residential units over the hotel, having a per unit floor plate of 15,000 sqft.

* Tower B is residential with 170 units consisting of 4BHK/5BHK apartments sized at 5,600/7,500 sqft (carpet area) as well as penthouses on top floors.

* OBER has sold 69 units until now of which 68 units are in Tower B and one in Ritz Carlton tower. Hence, the total pending inventories were 129 units.

Targets sale of ~100 units in three years – optimistic or realistic?

*  OBER had strategically put a pause on new sales in the project as it filed for fresh approvals under the new Development Control and Promotion Regulation (DCPR) - 2034 plan, which ensured that all additional spaces were now considered as part of carpet area and in-turn improved the salability of the project.

* Post the approvals, OBER received the OC in Jun’22 and it will now restart the sales in the project. Exhibit 3 indicates comparable ready projects across South Mumbai with units priced ~INR400m being largely sold out.

* Thus, considering the latent demand and limited ready to move-in supply (RTMI) of luxury product in the market, the company is hopeful of improved traction for the project.

* It expects to fully monetize its balance ~100 units in Tower-B over the next three years, indicating 30-35 units per year. OBER registered sales of 22 units in FY17, which have been the highest annual sales until now.

* While we have built-in a pick-up in sales velocity in near term due to the pent-up demand, sustenance of high sales velocity will lead to faster-thanexpected cash flows and meaningful re-rating potential for the stock.

Pricing likely to pick-up given limited RTMI luxury supply

* According to the registrations data, the most recent transactions in 360- West have been closed at INR75,000-80,000/sqft on carpet area while an under-construction project in the vicinity, Raheja Artesia, has traded at INR85,000-95,000/sqft despite one and half years away from delivery.

* Resale transaction in another completed project, Raheja Legend, has garnered a carpet rate of INR110,000-140,000/sqft.

* Considering limited RTMI supply of luxury projects in the vicinity, the pricing for 360-West is also likely to pick-up to INR100,000-120,000/sqft as indicated by the management, resulting in a revenue potential of INR75b for the balance inventory in Tower B.

Valuation and view

* While the company has set ambitious sales targets for 360-West, we for now retain our FY23 pre-sales estimates at INR48b with contribution of INR7.5b coming from 360-West. We will closely monitor the pick-up in sales and pricing trajectory for the project from hereon and revise our estimates accordingly.

* Apart from sustenance of high sales velocity in 360-West, we see multiple rerating triggers in OBER including: a) the launch of Thane project and customer response to the same, b) new project additions in its core markets of Mumbai MMR and c) entry into newer markets of NCR as reported by media.

* We believe healthy cash generation will provide a lot of comfort to the company in seeking aggressive business development opportunities that will provide further growth visibility. We maintain our BUY rating on OBER with an SOTPbased TP of INR1,100 (unchanged), indicating 16% upside potential.

To Read Complete Report & Disclaimer Click Here

For More Motilal Oswal Securities Ltd Disclaimer http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html SEBI Registration number is INH000000412

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