15 July 2020 Oberoi Realtys (OBER) portfolio is heavily concentrated in the Mumbai Metropolitan Region (MMR) one of the worst affected regions in India due to the COVID-19 pandemic. Thus, we have lowered our estimates for residential, retail and hospitality segments for FY21; however, we have broadly maintained estimates for the commercial office space. Despite the current challenges, OBERs balance sheet strength gives us comfort. Maintain Buy with a revised TP of INR444. Revenue was down 80.4% YoY to INR1,180m (v/s est. EBITDA declined 75.4% YoY to INR579m (v/s est. However, EBITDA margins expanded 1,010bp to 49.1% (v/s est.

Housing market to be impacted in near term Coverage sales volume to decline 1.9% YoY in Q4FY20E We anticipate Covid-19 led lockdown would impact some deal closures for real estate players leading to lower sales volumes in Q4FY20E. Bengalurubased players have shown some resilience in sales volumes. Hence, we anticipate relatively lower impact on operational performance of Brigade Enterprises. Overall, we expect sales volumes of our coverage universe to decline 1.9% YoY to 10.8 lakh sq ft (lsf) in Q4FY20E largely on account of 22.4% YoY decline in Oberoi Realty's sales volumes to 1.1 lsf due to the...

Real estate players (like all major sectors) have faced the brunt of Covid-19, which is apparent from the stocks having seen a sharp correction in the past month. Segment wise, mall developers would be the first casualty with closure of malls and invocation of Force Majeure by at least some tenants. Similarly, home buyers' demand as well as construction stoppage will impact the residential segment. On the other hand, office segment cash flows remain protected. We expect the ground level situation to remain operationally challenging for all companies in our coverage universe amid...

Owing to recent correction we upgrade ORL from ADD to BUY. We have cut FY21/22E EPS by 12.1/21.8%. Reduce our NAV based TP to Rs 543/sh. Risks (1) Prolonged COVID impact (2) Sharp correction in property prices. We interacted with the management of Oberoi Realty Ltd (ORL) to assess the impact of COVID. Some obvious concerns viz (1) Residential demand (2) Site labour availability (3) Capex on ongoing real estate assets (4) Impact of Mall closure & (5) Status of new launches are addressed in this note.

Sales volumes grew 5.3% YoY (11.3% QoQ growth) to 1.55 lsf on account of lower sales at Eternia, Enigma and Three Sixty West projects. Sky City project recorded strong sales momentum with 65,326 sq ft (42 units) sold with a total sales value of | 100.4 crore in Q3FY20. Overall, no new launches and weak demand dynamics in the sector have impacted the company's sales performance, which de-grew 20.5% YoY to 5.3 lsf in 9MFY20. Furthermore, with no new launches planned in Q4FY20, we lower ORL's...

With a muted residential pre-sales backdrop, ORL is utilizing surplus cash flows to build robust lease asset portfolio. Work has started on Oberoi Borivali/Worli mall and Worli Office/Commerz III. Whilst in initial stages of construction and leasing, the rental potential of the ORL portfolio is expected to increase from Rs 3.3bn to Rs 15-18bn over next 3yrs. This shall then become REIT able and unlock value for shareholders. Residential projects sales velocity has been muted except for Borivali project, which is seeing strong demand due to lack of large gated project in the micro market. Mulund is seeing strong over supply with stressed projects being taken over by credible real estate players like L&T/Prestige Estate. ORL is building out affordable luxury product in Thane which shall augur well for volumes recovery/pre-sales velocity. We maintain NEU. Key risks (1) Approvals delays; (2) Continuation of weak underlying demand and (3) Delays in pre-lease tie up of under construction lease portfolio. ORL reported Revenue miss of 5% while EBITDA/PAT beat came in at 3.7%/4.1%. Pre-sales remain sluggish despite new inventory being opened up. Lease assets are shaping up on ground, we incorporate Borivali mall in our valuation. We maintain NEU with SOTP-based TP of Rs 573/sh (vs. Rs 539/sh earlier). We have reduced our FY20/FY21E EPS estimates by 50.6%/18.6%.

11 February2020 Despite the lack of new launches, OBER exhibited good pre-sales momentum, led by sustained sales at existing projects across the micro markets in MMR. On the commercial side, strong leasing at Commerz II and construction progress of ongoing projects provide comfort. We cut our pre-sales estimate for FY20/21 to factor in the delay in Thane and Exquisite III project launches. However, we broadly maintain estimates for the leasing and hospitality segments. volumes were up 5% YoY (+11% QoQ) at 0.16msf in 3QFY20, largely driven by strong bookings in Exquisite, Prisma and Maxima. Booking value grew 26% YoY to INR3,033m. Notably, sales traction remained healthy in existing projects across the micro markets in MMR. Launch of Thane project and Exquisite III in 1HFY21 bode well from the volume perspective. Leasing revenue was largely driven by ramp-up in Commerz II, where occupancy increased YoY from 64% to 100%.

Oberoi Realty revenue decreased by 17% YoY/18 percent QoQ to Rs. 4.9 Bn. Residential segment experienced a significant slowdown in pre-sales volume to 1.4 lakh sft.

ORL witnessed a disappointing quarter with regards to presales with the Mulund projects continuing to be a pain point. However, the company expects the sales to improve in the Worli project during 2HFY20 with the company applying for an OC certificate which is expected to be received by 4QFY20/1QFY21. We believe ORL may have to offer discount schemes for its Mulund projects depending on the response in the coming quarters. Subvention scheme is here to stay as the banks continue to selectively provide this facility for projects with credible developers. ORL will continue to incur large capex over the next 2-3 years with simultaneous under-construction activity for its annuity portfolio with Worli mix development, Commerz-III, Worli and Borivali Malls all expected to become operational around FY21-23 which will put further pressure on the stock price and limit de-rating. We maintain NEU. ORL reported Rev/EBIDTA/APAT miss of 22/22/32%. We maintain NEU with a reduced SOTP-based TP of Rs 510/sh (vs Rs 525/sh earlier). We have not made any changes to our FY20/FY21E estimates.

Overall weak market dynamics dampen sales volumes Sales volumes de-grew 41.6% YoY (de-grew 41.9% QoQ) to 1.4 lakh sq ft (lsf), impacted by weak demand and overall slowdown in the economy. Only silver lining was higher sales at Three Sixty West project where ORL sold four units (36,127 sq ft) with sales value of | 150.2 crore. Overall, due to delay in new launches and weak demand in the sector, we lower ORL's sales...

22 October 2019 42%/43% YoY to 0.14msf/INR3.2b. Overall collections grew 23% YoY to INR6.9b. Revenue declined 17% YoY to INR4.9b (v/s est. EBITDA margins contracted 665bp to 43.3% (v/s est. Sales volume/value declined 28%/39% YoY to 0.38msf/INR7.

Subvention schemes continue across ORL's projects (NHB's directive does not affect banks) which, along with ORL's strong brand recall, will aid inventory monetization of 4.6mn sqft (~4x FY20E sales). Timely launches in Thane/ Goregaon and pre-sales momentum improvement post receipt of OC in Worli will certainly aid pre-sales growth in FY20E, outside Borivali. Off late, the industry has been plagued with an increasing credit crunch (both for buyers and developers) and the reduction of FSI charges (for a 2 year window) from 50% to 40% is a positive development in such a scenario. ORL will continue to incur large capex to complete its annuity portfolio which will put pressure on the stock price and limit further re-rating. We maintain NEU on ORL. We maintain NEU with a reduced SOTP of Rs 517/sh (vs Rs 525/sh earlier). We have cut FY20/21E EPS by 3.9/3.5% to account for increased interest expense. Real estate headwinds mar re-rating.

Oberoi Realty revenue decreased by 32% YoY and increased by 5.2% QoQ to Rs. 6.03 Bn. Residential segment experienced a sequential increase in pre-sales volume to 2.4 lakh sft.

Sales volumes grow 65.3% QoQ to 2.4 lsf in Q1FY20 ORL's sales volumes grew 65.3% QoQ (de-grew 16.3% YoY) to 2.4 lakh sq ft (lsf). While Sky City project clocked robust 1.24 lsf sales volumes, 30-40% of this was driven by subvention scheme. The subvention scheme has also aided sales at its Goregaon projects. However, the recent circular from NHB advising HFCs to desist from participating in subvention schemes could impact sales momentum for ORL in the interim although the company plans to offer bank-driven subvention schemes. Overall, we expect sales volume...

Change in mix, drags EBITDA margins: Volumes were down 16% YoY (+65% QoQ) to 2,39,968sf in 1QFY20, primarily due to nil sales at the 360 West project (v/s 35,324sf in the year-ago period). Note that 360 West is a superluxury project, and sales are usually lumpy on a quarterly basis in such bigticket items. Overall booking value, thus, declined by 36% YoY to INR4,011m. Excluding the 360 West project, the sales performance was steady, in our view. Leasing revenue grew at a robust 28% to INR933m driven by Commerz II Phase I (+80% YoY) in 1QFY20. Overall revenue declined 32% YoY to INR6,033m (our estimate: INR7,106m) in the quarter. EBITDA margin shrank 1,300bp YoY to 39% (our estimate:...

Oberoi Realty (ORL) came out with weak set of numbers which were below our estimates. Q1FY20 results also look weak due to high base of last year, though on QoQ basis numbers were mostly flat. Revenue for the quarter fell 32.1% YoY to Rs 6033 mn against our estimate of Rs 6833 mn, EBITDA fell 49.1% YoY to Rs 2352 mn, below our estimate of Rs 2870 mn, while PAT declined 50.9% YoY to Rs 1521 mn, below our estimate of Rs 2187 mn. EBITDA margin stood at 39% against our estimate of 42%, a decline of 1300bps YoY mainly due to subdued margin of residential segment as...

Oberoi Realty revenue grew by 66% YoY and 8.5% QoQ to Rs. 5.7 Bn. Residential sales volume increased 10% YoY to 147276 sft. For FY19, revenue increased by 104% YoY while the residential volumes increased 47% to 0.82 msft during same period.

ORL is using interest subvention schemes for monetizing unsold inventory of 4.9mn sqft (~6x FY19 sales). New launches in Thane and Goregaon during 3QFY20E shall drive pre-sales recovery. Rentco investment in Malls and Office business will start yielding rental income from FY22E. Despite a tough environment, ORL recorded 47.6% YoY growth in residential pre-sales. Large outlay on Rental business amidst weak residential recovery shall put pressure on the stock price and limit further re-rating. We maintain NEU on ORL. We maintain NEU with a SOTP-based TP of Rs 525/sh post a largely in-line quarter. We have not made any material changes to our FY20/21E estimates.