IGI Logo

INR120b of launches to drive pre-sales growth in FY24 We met Mr. Saumil Daru, CFO of Oberoi Realty (OBER), to understand the company’s launch plans in FY24, its growth prospects beyond FY24 via business development, its leasing strategy in the annuity segment, and demand sentiment in the Thane market.

Rubbing off a subdued year with strong launch pipeline

* OBER ended FY23 with a relatively moderate performance due to delays in the launch of key projects. It was the only company in our coverage universe that posted a decline in pre-sales in FY23.

* It now plans to rub off a subdued FY23 with the launch of multiple projects in FY24, including the first phase of its flagship project at Pokhran road in Thane with a development potential of 2.5msf and GDV of INR62b.

* Its smaller project at Kolshet road in Thane is also expected to be launched in FY24. The overall size of the project is 1.8msf across five towers. The company will initially launch three towers with expected GDV of INR22b.

* Finally, its ongoing project at Goregaon (Elysian) will also witness a new tower launch with 1msf development size and GDV of INR32b. Overall, OBER has a very strong launch pipeline with cumulative GDV of ~INR120b, which can help the company make up for its weak performance in FY23.

* Overall, given a strong project pipeline, we estimate OBER to clock bookings of INR56b in FY24 (up 73% YoY), with INR26b coming in from new projects

Pokhran Road II in Thane will be monetized over 15 years

* After the acquisition of adjacent land parcels, the company’s Pokhran road project in Thane has a development potential of 15msf (carpet area) and the company intends to develop group housing, a hotel and a school in the first phase with a cumulative development size of 3-4msf, (of which we estimate ~2.5msf will be carved out for residential).

* Given the multiple retail destinations in the micro-market, OBER intends to develop a small high-street retail to cater to the needs of captive audience.

* Although there are no plans to undertake office development, management is flexible to take it up in future if the market matures to become a preferred office destination given the evolving residential/retail catchment.

* Overall, the development potential in Thane is as large as its project in Goregaon, which is being monetized in over 20 years. Given that the Thane market is much more evolved (compared to what Goregaon was 20 years ago), the management expects a shorter monetization timeline.

Optimistic about land acquisition in FY24

* While the management has always reiterated its intent to acquire new projects, except for an ~15acre land acquired from Blue Star and NRB Bearings at its existing location in Pokhran Road,Thane, no major new land deal has materialized yet.

* Outside MMR: The management is also hopeful about the acquisition of ~50- acre land in Gurugram and expects to conclude the transaction soon. It is also evaluating opportunities in Bengaluru but will be more inclined to do office as a part of its strategy to exploring standalone commercial projects.

* MMR: It is in active discussion for the purchase of a large land parcel in Andheri, but it is still some time away from materializing, given that it falls under MHADA redevelopment.

* Few of the large ongoing residential projects, such as Sky City Phase 1, 360-West and Eternia-Enigma, are nearly complete and have the potential to cumulatively generate INR15b+ of surplus cash annually in the next 4-5 years.

* The above-mentioned factors, along with a gradual scale-up in rentals, will lead to significant cash accumulation, which can accelerate business development

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