Oberoi Realty - New launches drive record sales bookings - ICICI Securities

Oberoi Realty (OBER) recorded its highest ever quarterly sales bookings at Rs20.5bn driven by strong response to the new Goregaon tower launch (Elysian) and launch of 6th tower in Borivali project. While Q1FY22 is expected to be a muted quarter owing to second Covid wave impact, OBER is targeting launches in H2FY22 across Thane and other ongoing projects. While exact timing and quantum of launches is awaited, we expect OBER to clock at least Rs25bn of sales bookings in FY22E and Rs35bn in FY23E owing to new launches and completed/near completion inventory in Worli/Mulund/Borivali projects. We retain our BUY rating with a revised target price of Rs647/share (earlier Rs645) assigning a 10% premium to NAV considering growth opportunities. Key risks to our call are a decline in demand for residential properties and higher costs owing to rising material prices.

- Quarterly sales surge to record high: OBER recorded its highest ever quarterly sales bookings in Q4FY21 at Rs20.5bn vs. Rs9.7bn in Q3FY21 and Rs3.3bn in Q2FY21 driven by strong response to new tower launches in its Goregaon and Borivali projects. OBER sold 421 units during the quarter with the Elysian, Goregaon phase (new tower) clocking Rs9.9bn of sales bookings followed by the Borivali and Mulund projects clocking sales of Rs4.4bn and Rs2.3bn, respectively. Collections were also strong at Rs6.4bn with the Borivali project clocking Rs2.0bn of collections. For FY21, OBER has achieved its highest annual sales bookings of 1.7msf worth Rs34.3bn and has made up for slow bookings in H1FY21.

- Glaxo Worli project changed to residential from annuity/hotel earlier: OBER's management highlighted that the Glaxo Worli land parcel in Central Mumbai where OBER holds 50% stake is likely to be converted into a residential project with a bit of high-end retail vs. earlier plans of building a mall/office/hotel mixed-use project. As per OBER, the project may have revenue potential of ~Rs80bn against estimated construction spend of Rs20bn. We await further clarity on the project's saleable area and likely launch timelines before incorporating this project in our estimates.

- FY22 likely to be a repeat of FY21 performance: While Q1FY22 is expected to be a muted quarter owing to second Covid wave impact, OBER is targeting launches in H2FY22 across Thane and other ongoing projects once lockdowns are eased. While exact timing and quantum of launches is awaited, we expect OBER to clock at least Rs25bn of sales bookings in FY22E and Rs35bn in FY23E owing to new launches and completed/near completion inventory in Worli/Mulund/Borivali projects. In the annuity business, while OBER remains on track to cross Rs10bn of rental income by FY24E with Commerz III office and Borivali mall expected to commence operations, FY22 is likely to be a muted year for existing offices and malls owing to continued Work-from-Home impact and mall shutdowns likely to result in a fresh round of rental renegotiations with retailers.

Shares of OBEROI REALTY LTD. was last trading in BSE at Rs.551 as compared to the previous close of Rs. 526.5. The total number of shares traded during the day was 17765 in over 1079 trades.

The stock hit an intraday high of Rs. 555 and intraday low of 536.5. The net turnover during the day was Rs. 9650943.

Source : Equity Bulls

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