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Pokhran launch deferred again; Annuity to grow 3x in next 2years

Our view

Oberoi Realty (OBER) reported the pre-sales of 0.26msf translating to Rs7,869mn of which 78% was contributed by the Forestville, Sky City and Enigma for Q3FY24. Management is confident to monetize 360 West projects in the next 2years. Pokhran, Thane project has been deferred to Sept-24. Augmentation of the Commerz-III and Borivali mall is on track and will be given to fit-outs by Mar-24. Leasing of the Commerz-III to happen at a good pace. Post stabilization of Commerz-III, Borivali Mall and Hotel the annuity income should surpass the annual run rate of Rs17bn. For Q3FY24, Oberoi Mall/ Commerz/ Commerz-II reported revenue of Rs434mn/114mn/275mn with operating margin of 95%/93%/92% respectively with steady occupancy and rental rate. The Westin achieved Rs492mn revenue for Q3FY24 with the EBITDA margin of 42% and RevPAR of Rs11,112 backed by strong ARR of Rs13,629/night/room. OBER launched the Tower C in Elysian and secured gross booking of Rs8.82bn on Jan-24 with 20% higher realization.

Management showed intent to prudently utilize cash generated from projects on business development and acquire projects of larger scale. As all the residential projects are CF positive and 0.15x 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 maintain a premium of 25% on the current portfolio& arrived at SoTP based 1year forward NAV of Rs1676/share with ‘BUY’ rating.

Result Highlights:

Residential: Oberoi Realty achieved pre-sales of 0.26msf which translates in presales value of Rs7.87bn guided by the sales in Forestville (116units), Enigma (23units) and Sky City (40units). These three projects contributed 78% to the presales booking area and 64% in value terms.

 In separate disclosure OBER declared launch of the new tower in Elysian and achieved gross ~Rs8.82bn presales totaling to 0.22msf in Q4FY24.

 OBER maintained its strong collection momentum and achieved Rs8.9bn as the company has high RTM inventory in Mulund and near completion inventory in Sky City project.

 Reported Revenue of Rs10.54bn (13.5% q/q & -35.3% y/y) due to slower sales from completed projects. 79% of revenue is contributed by residential real estate.

 EBITDA came in at Rs5.09bn (-20.2 q/q & -45.8% y/y) and EBTIDA margin was at 48.3% (-408bps q/q & -937bps y/y) due to the recognition of low margin project.

 Reported PAT of Rs3.6bn (21.2% q/q & -48.7% y/y) with the profit margin of 34.2% (-334bps q/q & -894bps y/y).

PRESENTATION & CONCALL HIGHLIGHTS

  Oberoi Mall: Clocked revenue of Rs443mn (21.7% q/q & 18.6% y/y) with an operating margin of 95% (100bps q/q & 0bps y/y) and occupancy steady at 97%.

 Office assets- Commerz & Commerz II cumulatively clocked revenue of Rs389mn (6.6% q/q & 6.9% y/y) with operating margin of 92.1% (115bps q/q & -31bps y/y). Occupancy was at 52% & 87% respectively.

 Hotel- The Westin continued its strong momentum and reported revenue of Rs492mn (22.5% q/q & 17.5% y/y) with an operating margin of 42% (700bps q/q & 400bps y/y). Occupancy was at 82% while RevPAR was at Rs11,112 (13% q/q & 11.6% y/y).

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