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Q3FY22 sales: Blockbuster performance

The trend of realty companies clocking strong pre-sales continued with Oberoi Realty (OBER) notching up Q3FY22 pre-sales of ~INR19.7bn (up 102% YoY/137% QoQ). The company sold 371 units during the quarter (200 in Q2FY22 and 234 units in Q3FY21). Bookings were aided by the launch of a new tower in the Elysian project at Goregaon in Oct-21. 9mFY22 sales at INR29.6bn are up 124% YoY.

With its Thane project lined up for a launch and the housing cycle potentially turning, we expect the sales momentum to remain healthy. Besides, we expect OBER to focus on business development going ahead. Maintain ‘BUY’ with a TP of INR1,205/share.

Sales surge, aided by launch of new tower in Goregaon

OBER’s new sales during Q3FY22 grew 102% YoY/137% QoQ. The company sold 371 units during the quarter (versus 200 units in Q2FY22 and 234 in Q3FY21). By volume, it sold 1.04msf during the quarter (versus 0.44msf in Q2FY22 and 0.51msf in Q3FY21). With 9MFY22 sales up 124% YoY to ~INR29.6bn,, the company is well placed to build on the momentum in CY22.

Inventory liquidation brings cheer

OBER had earlier indicated that it had clocked bookings of ~INR7.9bn within four days of the launch of a new tower in the Elysian project in Goregaon in Oct-21. We believe inventory liquidation would have also contributed significantly to sales during the quarter. Considering that OBER had among the highest inventory levels among listed realty developers, this is a significantly positive development in our view and bodes well for its cash flows.

New launches in the offing

The company is looking to launch the Thane project soon. We believe this could boost its sales trajectory in the same way as the Elysian in Goregaon; the Goregaon projects had clocked ~INR27bn sales during Jan-Oct 2021.

Outlook and valuation: Healthy long-term prospects; maintain ‘BUY’

As highlighted in our comprehensive sector report Real Estate - The Charge of the Consolidating Brigade, RERA-driven consolidation is throwing up growth opportunities for organised players such as OBER.

Revival in housing demand, improving sales trajectory, inventory liquidation and a lean balance sheet underpin our bullish stance on the company. New project launches can be a potential stock catalyst. We factor in faster inventory liquidation, and expect management to focus on project addition (alluded to in Q2FY22 conference call) to take advantage of rising demand. Maintain ‘BUY/SN’ with a TP of INR1,205 (30% premium to Mar-23E NAV of INR927).

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