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All eyes on upcoming launches

OBER recorded its highest ever quarterly sales bookings in five years at Rs9.7bn driven by a broad-based uptick in all its key completed/nearing completion projects. With clarity on FSI norms emerging under the Unified DCR for Maharashtra (ex-Mumbai city/suburbs) and overall revival in market sentiment in Mumbai, OBER is targeting launches spread across 4-5msf in Q4FY21 (1msf in Thane and balance area in Goregaon and Borivali projects). We expect OBER to clock over Rs30bn of sales bookings each in FY22-23E owing to new launches and completed/near completion inventory in Worli/Mulund/Borivali projects. We retain our BUY rating with a revised target price of Rs645/share (earlier Rs457) assuming higher velocity of sales across projects and assign a 10% premium to NAV considering growth opportunities. Key risks to our call are a decline in demand for residential properties and higher costs owing to rising material prices.

* Quarterly sales surge to five year high: OBER recorded its highest ever quarterly sales bookings in five years at Rs9.7bn vs. Rs3.0bn in Q3FY20 and Rs3.3bn in Q2FY21 driven by a broad-based uptick in all its key completed/nearing completion projects. OBER sold 234 units during the quarter with the Esquire, Goregaon project clocking Rs2.3bn of sales bookings followed by the Borivali and Mulund projects clocking sales of Rs2.9bn and Rs2.3bn, respectively. Collections were also strong at Rs7.4bn with the Worli project clocking Rs2.4bn of collections. OBER also completed the acquisition of 50% stake from its partner in its Ritz Carlton, Worli hotel during the quarter for Rs2.5bn (accounting for JV adjustments). The hotel was valued at an EV of Rs10.4bn (Rs47mn/key). Retail consumption at OBER’s Goregaon mall has seen a strong QoQ uptick with few retailers crossing pre-Covid consumption levels.

* All eyes on upcoming launches from Q4FY21: With clarity on FSI norms emerging under the Unified DCR for Maharashtra (ex-Mumbai city/suburbs) and overall revival in market sentiment in Mumbai, OBER is targeting launches spread across 4-5msf in Q4FY21 (1msf in Thane and balance area in Goregaon and Borivali projects). While exact phasing and pricing of these projects are awaited, these upcoming launches along with completion of 360 West Worli project and near completion inventory in Mulund and Borivali is expected to drive the sales momentum over the next 12-18 months. We expect OBER to clock over Rs30bn of sales bookings each in FY22-23E.

* Potential platform deal for annuity assets yet to fructify: OBER’s management highlighted that company’s talks with a strategic investor to dilute stake in its office and mall annuity assets is yet to fructify owing to gap in valuation expectations. OBER currently has seven annuity assets which includes four office properties (three in Goregaon - two completed and one under construction) and upcoming Worli office and three malls (operational Oberoi Mall in Goregaon, under construction Borivali mall and upcoming Worli mall) along with two hotels in Worli and Goregaon.

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