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Thane launch on cards; NCR entry confirmed

Our view

Oberoi Realty (OBER) achieved presales of 0.36msf translating to sales value of Rs6.3bn wherein Sky City contributed 72% to the total sales while remaining was contributed by Eternia & Enigma and company collected 4.3bn in Q3FY23. Oberoi Mall achieved 95% operating margin over the revenue of Rs373mn. Office assets clocked revenue of Rs364mn flat q/q and declined by 8.3% y/y with an EBITDA margin of 92.4%. The Westin posted strong revenue of Rs419mn with the EBITDA margin of 38% (551bps q/q) with ARR of Rs12,344/night (29.3% q/q) and RevPAR of Rs9,961 (26.2% q/q). OBER is geared up to launch Kolshet, Thane in mid of Mar’23 and Pokhran in Q1FY24E.

In Q3FY23, OBER confirmed the entry in Gurgaon market and also acquired ~8acres land parcel from Blue Star, adjacent to the Pokhran 2 project. Additionally, Eternia & Enigma received part OC so sales velocity is expected to pick up in coming quarters. Borivali Mall’s superstructure is completed and should be operationalized by Sept-Oct’23E with optimal occupancy. As all the residential projects are cash flow positive and gearing of 0.21x, management is focusing on business development to strengthen the pipeline. We believe with sustenance of strong demand for larger houses, new launches to do well for OBER on the back of quality product & delivery track record. Land acquisition in the NCR market, reduces the OBER’s dependency on MMR. We continue to give a 20% premium to the current portfolio for being leader in the premium residential segment & arriv

Result Highlights:

? OBER reported Revenues/EBITDA/Adj.PAT of Rs16295mn/Rs9404mn/ Rs7003mn. Operating margin up by 1263bps q/q & 1786bps y/y to 57.7% guided by the higher revenue recognition from Elysian, Eternia & Enigma.

? OBER achieved pre-sales of 0.36msf translating to Rs6307mn (-45% q/q & -68% y/y) guided by superlative sales in new Tower-G in Sky City (69% contribution). And collected Rs4277mn (51.3% q/q & 56.4% y/y).

? Post receipt of part OC in Eternia & Enigma, Eternia has witnessed the increase of sales velocity with 31units booking while Enigma still to catch-up. In Q3FY23, Mulund projects contributed 28% to the total pre-sales.

? In Q3FY23, Oberoi Mall reported revenue/EBITDA of Rs373/Rs355 up 7.5%/6.9% q/q with a margin of 95% and occupancy of 97%. Rental rate per/sft/mnth was up by 7.1% q/q to Rs233.

? The Westin recorded strong uptick in ARR and RevPAR to Rs12,344 (29.3% q/q & 78.4% y/y)/ Rs9,961 (26.2% q/q & 99.2% y/y) resulted in revenue of Rs419mn (23.1% q/q & 68% y/y) with operating margin of 38% (551bps q/q & 1410bps y/y).

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