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Oberoi Realty (OBER) reported the pre-sales of 0.22msf translating to Rs9,560mn of which 62% was contributed by the Sky City and 360 West for Q2FY24. Post OC, Eternia also witnessed incremental demand and achieved booking of 40units in Q2FY24. Management is confident to monetize both Mulund projects in the next 2years. Augmentation of the Commerz-III and Borivali mall is on track and will be given to fit-outs by Mar-24. Preleasing of the Mall to happen post Diwali this year. For Q2FY24, Oberoi Mall/ Commerz/ Commerz-II reported revenue of Rs364mn/93mn/272mn with operating margin of 94%/90%/91% respectively with steady occupancy and rental rate. The Westin achieved Rs402mn revenue for Q2FY24 with the EBITDA margin of 35% and RevPAR of Rs9,830 backed by strong ARR of Rs11,686/night/room. OBER plans to launch the Kolshet project immediately after Diwali and Pokhran within FY24. Additionally, plans to launch another phase of Sky City and Elysian in H2FY24.

Commentary for Q2FY24 was very optimistic as management is confident for the upcoming launch timelines. Additionally, showed intent to prudently utilize cash generated from projects on business development. We have rationalized the average price realization for all the projects and added the Tardeo (0.5msf) project to estimates. As all the residential projects are CF positive and 0.18x gearing, we believe with sustenance of strong demand for larger houses, new launches to do well on the back of quality product and delivery track record. We increased premium to 25% from 20% on the current portfolio & arrived at SoTP based 1year forward NAV of Rs1422/share with ‘BUY’ rating.

Result Highlights:

* Residential: Oberoi Realty achieved pre-sales of 0.22msf which translates in presales value of Rs9.65bn guided by the strong sales in Sky City (73units) & 360 West (4units). Two projects contributed 61% to the pre-sales booking.

* Post receiving occupation certificate Eternia witnessed strong booking of 40 units which translates in Rs1.28bn. OBER maintained its strong collection momentum and achieved Rs11bn as the company has high RTM inventory in Mulund and Worli projects.

* Reported Revenue of Rs12.17bn (33.8% q/q & 76.8% y/y) backed by strong sales and collection from completed projects. 84% of revenue is contributed by residential real estate. 

* EBITDA came in at Rs6.38bn (34.7% q/q & 105.6% y/y) and EBTIDA margin was at 52.4% (36bps q/q & 734bps y/y) guided by the recognition of high value/margin projects with steady performance of commercial real estate.

* Reported PAT of Rs4.57bn (42% q/q & 43% y/y) with the profit margin of 37.5% (217bps q/q & -875bps y/y).

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