Oberoi Realty’s (ORL) revenues grew 51.6% YoY to | 320.0 crore (our expectation: | 244.9 crore) mainly on account of better-thanexpected project execution. Revenue recognition from the Esquire project came in at | 160.9 crore (our expectation: | 109.9 crore). EBITDA margin contracted 881 bps YoY to 52.1% due to a change in the project mix with the topline mainly driven by the Esquire project. However, the EBITDA margin was above our expectation of 48.2%.
Outlook and Valuation: Though there was a pick-up in execution, sales momentum has remained at lower level despite launch of Worli project. While they like ORL given the quality of land bank, healthy balance sheet, management bandwidth to execute projects, the stock has run up ~41.1% in the past six months. Going forward, see limited upside in the stock and do not expect a significant up-tick in sales volume in near term. Hence, they downgrade the stock to HOLD recommendation and maintain target price of | 340. Key risk: Further delay in launches & lower than expected sales volume.