Reduce Oberoi Realty Ltd For Target Rs. 1,323 - Elara Capital
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Entering uncharted territory
Forestville launch major contributor to Q3
sales Oberoi Realty (OBER IN) booked sales worth INR 7,910mn in Q3FY24, down 18% QoQ and up 24% YoY. It recorded a sales volume of 0.26mn sqft, up 18% QoQ and down 28% YoY. A total of 216 units were booked during the quarter. OBER entered the Thane market with the launch of Forestville on Kolshet Road. The initial phase, featuring three towers, was received. The project contributed pre-sales of INR 2bn with a volume of 0.11mn sqft (116 units) with an average realization of INR 19,250 per sqft. It is expected to contribute INR 5-8bn of pre-sales annually. For Q3FY24, OBER posted revenue from operations of INR 10.5bn, down 13% QoQ and 35% YoY.
Entry into NCR, exploring new opportunities.
OBER acquired a 14.8-acre land parcel from Ireo Residences at Gurugram for INR 5,970mn officially marking its entry in the NCR market. It is planning a luxury residential project there. In the NCR market, OBER’s focus will be on delivering quality products. The company is actively looking for large land parcel opportunities, and it plans to utilize surplus cashflow for land acquisition.
Annuity run-rate to reach INR 18bn
Commerz 3 is building good momentum and is anticipated to yield an annuity income of INR 7.0bn. After reaching a stable state, the combined impact of Commerz 3, the new Oberoi Mall at Borivali, and Ritz-Carlton Hotel should contribute ~INR 12.5bn to the annuity portfolio. This collective effort is poised to raise the total annuity run-rate to ~INR 18.0bn
Valuation: downgrade to Reduce with a higher TP of INR 1,323
OBER has built a healthy project pipeline and strong rental potential, which would ensure robust cashflow visibility in the near to medium term. The recent foray into the NCR market and a few prospective land parcels in the pipeline reflects beneficial business development activities. Due to ~20% run-up in the stock price in the past three months, we downgrade our rating to Reduce from Accumulate; we increase our TP to INR 1323 from INR 1,272 based on 1.3x one year forward NAV and introduce FY26 estimates. Premium of 30% has been applied to NAV due to its huge launch pipeline
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SEBI Registration number is INH000000933
