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Blockbuster quarter

ORL surprised positively as revenue jumped to 1.5x/2.6x YoY/QoQ. Booking value also jumped to Rs 9.7bn during the quarter (vs 3.3bn in 3QFY20). We expect the momentum to continue for ORL, given the stamp duty cut, low- interest rate, strong brand recognition and market consolidation. Residential launches remain on track to hit market from 4QFY21 in Borivali, Goregaon and Thane. Platform deal for commercial assets is off-the table for the time being.

* 3QFY21 Financial Highlights: Revenue: Rs 8.3bn (+57% YoY, 162% QoQ, 60% beat); While real estate segment contributed Rs 8.2bn (+67% YoY, 164% QoQ), revenue from hospitality segment came in at Rs 113mn (-71%/+72% YoY/QoQ). EBITDA: Rs 3.8bn (+66% YoY, 105% QoQ, 69% beat). EBITDA margins: 46.2% (vs 43.6% YoY/ 59% QoQ). APAT: Rs 2.9bn (+93% YoY,+108% QoQ, 104% beat).

* 3QFY21 Operational Highlights: Pre-sales (including Three Sixty West): Volume 0.51msf (0.11msf in 2QFY21); Value Rs 9.7bn (Rs 3.3bn in 2QFY21). ORL achieved lifetime high pre-sales considering despite having no launches and sold 231 units in the quarter, compared to 42/5 units in 2Q/1Q FY21. Oberoi mall is seeing gradual recovery with consumption varying from 70-125% from tenant to tenant.

* Rental assets: Platform deal for rental assets is off the table for time being as ORL is confident of its execution & fund raising capabilities without BS bloating to build out rental assets, and finds ~15% asking IRR by investors in current market unreasonable. Major assets like Commerz-3, Sky City Mall and Worli Mall are slated for completion by FY24, with FY24 exit rental guidance maintained at Rs ~14bn.

* Balance sheet position comfortable: Consolidated gross debt stood at Rs 17.2bn (vs Rs 16.7bn on Sep-20 end) and net debt stood at Rs 15bn (vs Rs 13.6bn on Sep-20 end) with net D/E at 0.17x (vs 0.15x on 2QFY21 end), which is comfortable in our view. With the sequential improvement in collections to Rs 2.4bn (vs Rs 1.8/0.8bn in 2QFY21/1QFY21), ORL generated positive CFO of Rs 1.9bn.

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