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Pre-sales to pick up

Oberoi Realty Ltd (OBER) reported pre-sales de-growth of 36% YoY in Q1FY27. The company saw moderate growth in pre-sales with ~8% CAGR over FY22-26 to INR ~55bn. We foresee ~22% pre-sales CAGR over FY26-28E aided by successful new launches including 360 North, rapid inventory absorption from existing projects, and strong demand across the MMR market. Further, we expect annuity income to remain steady at INR13-14bn by FY28E, providing strong cash flow visibility. We retain our ‘Accumulate’ rating and DCF derived NAV with revised SOTP-based TP of INR2,100/share.

EBITDA beat with strong revenue growth and improved margins:

Operationally in Q1, OBER’s EBITDA increased 41% YoY to INR7.3bn; ~6% above our estimates, with EBITDA margin improving to 56.4%; up ~374bps YoY and 155 bps QoQ. Consolidated revenues improved by 32% YoY at INR13bn; in line with our estimates. PAT increased by 29% YoY to INR5.4bn.

Muted pre-sales due to absence of major launches:

OBER’s pre-sales declined by ~36% YoY and ~37% QoQ to INR10.5bn (Ple: INR 11bn) due to absence of major launches in Q1. The pre-sales were largely driven by Elysian and the newly launched redevelopment project (Oceanic), which contributed INR 2.6bn and INR 1.5bn respectively. Jardin, Sky City and 360 West contributed INR 1.4bn, INR 1.2bn and INR 1.1bn to the total pre-sales. Average price realization declined 1% YoY to INR 45,945psf in Q1. Collections declined by ~8% YoY and remained flat QoQ to INR 9.2bn. Leasing income increased by 20% YoY and ~4% QoQ to INR3.2bn during the quarter. Sky city achieved 82% occupancy in Q1 vs 72% in Q4. Hospitality revenues improved to INR469mn, up ~10% YoY. The company moved to a net cash deficit position of INR 9.4bn in Q1, compared to a net surplus cash of INR 29.9bn in Q4.

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