Realty share price target

Residential real estate is showing signs of stabilisation with improvement in volumes during 3QFY16. Our initial checks for 4QFY16E suggest further volume uptick in residential volumes. While new launches have shrunk, the uptick in volume absorption indicates higher sales from the unsold inventory. This is also reflected in months of inventory trending down. Prices remained muted with 10-15% discount offers during final negotiations.

Parliament passed the Real Estate Development and Regulation Bill, 2016, on 10 March 2016. The much-awaited reform will bring cheer to high-quality real estate developers/consumers and other stakeholders like financial institutions, private equity players, construction companies and shareholders.

Buy at CMP and add on dips to Rs.221 - Rs.233 range; Price Targets: Rs.274 and Rs.308 in 1-2 quarters

OBER delivered a stellar 3QFY16, with revenue coming 13.5% ahead of estimates. Net profit was subpar and came in 18.9% below expectations. The Esquire project area recognized was at FY11 realization, resulting in project contributing EBIDTA margins of 38% vs. 58% historically for other projects. Excluding Borivali, OBER achieved Rs 2bn of pre-sales vs. Rs 1.1bn during 2QFY16.

Real Estate: 3QFY16E Results Preview

Over the past month, Oberoi Realtys (OBER) share price has corrected over 9%. This, despite the successful launch of the Borivali project (~70%, 0.8mn sqft sold in a month), start of construction in Mulund, and the likely launch of Oasis Worli in 4QFY16E. OBER has defied investor concerns about a weak real estate market with the Borivali launch. We expect a positive surprise in the Worli pre-sales as well.

ORL delivered a muted 2QFY16 financial performance, with revenue coming 7.3% below our estimates. This was mainly because of marginal sales dip in the ready-to-move-in project, Exquisite. ORL expects to sell residual units in Exquisite by 1QFY17E.

Reforms can be accretive' and big bang' the market had perceived the amendments to the 2013 version of the land-acquisition law as big bang. However, the government was unable to muster numbers in the Rajya Sabha; judging the political cost of calling a joint...