Oberoi Realty Ltd. share price target

Sales volume was at 5.1 lakh sq ft, strong growth of ~230% YoY. Sales value was up 220% YoY at | 970.8 crore (excluding subvention costs at | 1,016 crore). The key factors driving demand included a) mortgage rates at all-time low levels, b) buyers preferring better quality homes, especially after lockdown, c) local government interventions such as stamp duty cut and d) higher customer's preference towards readily available inventories/near completion projects. During Q4, ORL is likely to launch projects of ~4-5 mn sq ft (msf) at Borivali Phase II, Goregaon - Exquisite III and Thane. We bake...

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%.