BUY on Oberoi Realty - Blockbuster quarter - HDFC Securities

Mr. Parikshit D Kandpal, Institutional Research Analyst, HDFC Securities

ORL surprised positively as revenue jumped to 1.5x/2.6x YoY/QoQ. Booking value also jumped to Rs 9.7bn during the quarter (vs 3.3bn in 3QFY20). We expect the momentum to continue for ORL, given the stamp duty cut, low- interest rate, strong brand recognition and market consolidation. Residential launches remain on track to hit market from 4QFY21 in Borivali, Goregaon and Thane. Platform deal for commercial assets is off-the table for the time being.

3QFY21 Financial Highlights: Revenue: Rs 8.3bn (+57% YoY, 162% QoQ, 60% beat); While real estate segment contributed Rs 8.2bn (+67% YoY, 164% QoQ), revenue from hospitality segment came in at Rs 113mn (-71%/+72% YoY/QoQ). EBITDA: Rs 3.8bn (+66% YoY, 105% QoQ, 69% beat). EBITDA margins: 46.2% (vs 43.6% YoY/ 59% QoQ). APAT: Rs 2.9bn (+93% YoY,+108% QoQ, 104% beat).

3QFY21 Operational Highlights: Pre-sales (including Three Sixty West): Volume 0.51msf (0.11msf in 2QFY21); Value Rs 9.7bn (Rs 3.3bn in 2QFY21). ORL achieved lifetime high pre-sales considering despite having no launches and sold 231 units in the quarter, compared to 42/5 units in 2Q/1Q FY21. Oberoi mall is seeing gradual recovery with consumption varying from 70-125% from tenant to tenant.

Rental assets: Platform deal for rental assets is off the table for time being as ORL is confident of its execution & fund raising capabilities without BS bloating to build out rental assets, and finds ~15% asking IRR by investors in current market unreasonable. Major assets like Commerz-3, Sky City Mall and Worli Mall are slated for completion by FY24, with FY24 exit rental guidance maintained at Rs ~14bn.

Balance sheet position comfortable: Consolidated gross debt stood at Rs 17.2bn (vs Rs 16.7bn on Sep-20 end) and net debt stood at Rs 15bn (vs Rs 13.6bn on Sep-20 end) with net D/E at 0.17x (vs 0.15x on 2QFY21 end), which is comfortable in our view. With the sequential improvement in collections to Rs 2.4bn (vs Rs 1.8/0.8bn in 2QFY21/1QFY21), ORL generated positive CFO of Rs 1.9bn.

Shares of OBEROI REALTY LTD. was last trading in BSE at Rs.517.3 as compared to the previous close of Rs. 536.45. The total number of shares traded during the day was 25677 in over 1277 trades.

The stock hit an intraday high of Rs. 546.4 and intraday low of 509.85. The net turnover during the day was Rs. 13519305.

Source : Equity Bulls

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