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Thane launch deferred to 1QFY23; sales momentum in ongoing projects intact

As per our channel checks, OBER’s Thane launch has been pushed out to 1QFY23 (likely in Apr’22) v/s our initial expectation of an early launch in Mar’22 as the company awaits approvals.

We had assumed INR6b of sales from the Thane project in 4QFY22, which will now spill over to FY23. While the delayed launch will impact our 4QFY22 presales/collections estimate, sales momentum in ongoing projects has largely remained intact.

As per registry data, both Feb’22 and Mar’22 (till date) have reported a 25-30% rise in Mumbai property sales MoM. Total registrations are likely to end 35- 50% higher in 4Q than the rest of the quarters in FY22.

Project wise registration data till the beginning of Mar’22 for OBER indicates sales of 15-20 units across all projects, except Sky City, Borivali, which reported sales of ~75 units. With a further pickup in momentum in Mar’22, we expect the quarterly run-rate across all projects to at least remain intact, if not increase further.

On the back of a delayed launch, we reduce our FY22 pre-sales estimate by 14%, but increase the same by 4%/7% for FY23/FY24 to account for the spillover. The Thane launch; restart of sales in Three Sixty West, Worli; and progress on new land acquisitions are key near term triggers for the stock. We maintain our Buy rating with a SoTP based TP of INR1,200.

Thane project to be launched in 1QFY23; competition revving up

As per our interactions with channel partners, OBER has not launched its Thane project. The same is likely to be launched in Apr’22, subject to approvals.

While we had expected the project to be launched in the beginning of Mar’22, the management, in its recent concall, had indicated its plan to launch the project by 4QFY22 and not later than 1QFY23.

Meanwhile, we have seen competition in the vicinity also gathering pace as Shapoorji Pallonji launched its next phase (Skyraa) of its Northern Lights project, offering 3BHK/4BHK starting at INR24.4m/INR30m. Apart from Skyraa, it will also compete with Raymond’s The Address by GS and Indiabulls’ One Indiabulls project offering a similar configuration.

As per our channel checks, OBER is likely to differentiate itself from the competition by offering larger 3BHK/4BHK units starting at INR30m.

Mumbai registrations data indicate continued momentum

After a strong performance in Feb’22, property registrations gathered pace in Mar’22 (touched over 16,200 units MTD), with stamp duty poised to rise by 1% from 1st Apr’22.

Project-wise registrations data for OBER available till the beginning of Mar’22 indicates sustained momentum, with registrations of 15-20 units across all projects, excluding Sky City, where registrations reached ~75 units.

With a further increase in momentum in the industry in Mar’22, we expect sales velocity across OBER’s projects to at least sustain the trend in 3Q and report pre-sales of INR8b in 4QFY22.

Valuation and view

Adjusting for the delayed launch, we reduce our FY22 pre-sales estimate by 14% to INR38b. The same will increase to INR47b/INR51b in FY23/FY24

We tweak our FY22 revenue/EBITDA/PAT estimate by 19%/17%/13% to incorporate slower than expected progress in construction in its Mulund projects till 9MFY22 and the Omicron COVID wave delaying a recovery in the Retail business.

With a robust (7msf) near-term launch pipeline across projects in Borivali, Goregaon, and Thane and INR100b of inventory nearing completion in Mulund and Worli, the sales run-rate is expected to remain strong over the next threeto-four years.

Strong cash generation will enable business development and further growth visibility leading to a re-rating. We maintain our Buy rating on OBER, with a SoTP based unchanged TP of INR1,200, indicating an upside potential of 28%

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