Company Update : Oberoi Realty Ltd By Motilal Oswal Financial Services Ltd
Poor operational performance
Office leasing increased
Operational performance
* In 4QFY25, the company achieved pre-sales of INR8.5b, down 52% YoY and ~49% below our estimates due to no residential launches in the quarter.
* FY25 saw pre-sales of INR52.6b, up 31% YoY due to sales coming in from the 3QFY25 launch of Jardin in Thane.
* The company has been appointed as the developer for a redevelopment project at Bandra Reclamation, with a free sale potential of 0.32msf of RERA carpet area.
* Oberoi Realty recently commenced the soft launch of Sky City Mall, located in Borivali East. This marks a significant milestone in the company's retail expansion strategy, with the mall expected to cater to a large catchment area and enhance the overall lifestyle and shopping experience for residents in the region.
* I-Ven Realty Limited entered into an agreement for a private equity investment of ~INR12.5b in exchange for a 21.74% equity stake.
* The company entered into a joint development agreement for ~81.05 acres in Alibaug and successfully concluded the transaction through NCLT for the acquisition of Mulund Asset in 3QFY25.
* Leasing segment: Following the Commerz-3 augmentation in 1QFY25, occupancy inched up to 81% from 65%, resulting in revenue growth of 10% QoQ to INR1.2b. This brought the total office revenue to INR1.7b (+7% QoQ), leading to an EBITDA margin of 82%.
* Commerz-I and II occupancy were stable at 96%. However, in 4QFY25, Commerz-III occupancy increased to 81% from 77% in 3QFY25.
* Oberoi Mall continued to deliver healthy performance with a 13% YoY increase in revenue to INR524m. EBITDA from the annuity portfolio stood at INR1.9b, with a blended margin of 85% (reduced by 6% from 3QFY25).
* In 4QFY25, The Westin hotel witnessed a 10% YoY growth in revenue to INR533m, aided by a 19% increase in ARR of INR17,610. Occupancy remained stable at 79%. EBITDA came in at INR235m with a margin of 44%.
Cash flow performance
* Collections declined 29% YoY to INR7.6b (54% below estimates)
* Net debt during the year end was at 0.01x (flat vs. 3QFY25).
P&L highlights
* In 4QFY25, Revenue declined 13% YoY to INR11.5b (6% above estimates). Further, the company reported EBITDA of INR6.1b, down 22% YoY (9% above estimates), and the margin contracted by 6.2% YoY to 54%.
* Consequently, PAT declined 45% YoY to INR4.3b which was in line with our estimates.
* The company declared its 4 rd interim dividend for FY24-25 at the rate of INR2/share, i.e. 20% of the face value of equity shares of INR10/share.
* In FY25, Revenue was up 18% YoY to INR52.8b. Further, the company reported EBITDA of INR31.0b, up 29% YoY, and the margin increased by 5% YoY to 59%.
* Consequently, PAT was up 16% YoY to INR22.3b. Reported FY25 top line, operating profit and PAT were all in line with our estimates.
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