Oberoi Realty - Strong sustenance sales ahead of festive season - ICICI Securities

As per its maiden operations update, Oberoi Realty (OBER) has clocked Q2FY22 sales bookings of Rs8.3bn with no new launches and this performance is close to Q4FY21 sustenance sales which were at Rs9.7bn excluding Elysian Goregaon launch. OBER is targeting launches in H2FY22 across Thane and Borivali/Goregaon and other ongoing projects to coincide with the festive season. While exact timing and quantum of launches is awaited, we expect OBER to clock at least Rs35bn of sales bookings in FY22E and over Rs45bn each in FY23-24E owing to new launches and inventory in Worli/Mulund/Borivali projects. We revise our target price to Rs938/share (earlier Rs792) assuming faster pace of sales across projects and higher premium to NAV of 20% vs. 10% earlier considering growth opportunities. However, we downgrade our rating to HOLD from BUY considering the 43% appreciation in stock price over the last three months. Key upside risk is higher than expected price increase while key downside risk is a decline in demand for residential properties.

• Strong sustenance sales reflected in Q2FY22 operational performance: While OBER clocked Q1FY22 sales bookings of Rs1.7bn, it has seen a strong rebound in Q2FY22 with sales of 0.44msf worth Rs8.3bn across 200 units. Considering the weak base of Q2FY21 and Q1FY22, it is better to compare this performance to Q4FY21 where the company had clocked sales bookings of Rs19.6bn of which Rs9.9bn had come from Elysian while Rs9.7bn had come from sustenance sales. Hence, the Q2FY22 sales of RsRs8.3bn is impressive considering no new launches and the Occupation Certificate (OC) for 360 West, Worli project expected in Q3FY22.
• All eyes on new launches in H2FY22: OBER is targeting launches in H2FY22 across Thane (expected in Nov'21) and Borivali/Goregaon and other ongoing projects once lockdowns are eased. While exact timing and quantum of launches is awaited, we expect OBER to clock at least Rs35bn of sales bookings in FY22E and over Rs45bn each in FY23-24E owing to new launches and completed/near completion inventory in Worli/Mulund/Borivali projects. In the annuity business, while OBER remains on track to reach Rs10bn of exit rental income by Mar'24 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 intermittent mall shutdowns.
• Company to focus on society redevelopment projects going forward: As per OBER's management, the company is gearing up to enter the society redevelopment market in Mumbai and has already hired a few key personnel to drive this initiative forward. The company is looking at projects having a revenue potential of at least Rs5-7bn each and is in the process of finalising an agreement with Shivshahi society in Worli as the first such project under this vertical.

Shares of Oberoi Realty Limited was last trading in BSE at Rs. 918.20 as compared to the previous close of Rs. 936.65. The total number of shares traded during the day was 198252 in over 6574 trades.

The stock hit an intraday high of Rs. 985.00 and intraday low of 905.80. The net turnover during the day was Rs. 184463670.00.

Shares of Oberoi Realty Limited was last trading in NSE at Rs. 917.80 as compared to the previous close of Rs. 937.45. The total number of shares traded during the day was 4095012 in over 112859 trades.

The stock hit an intraday high of Rs. 980.00 and intraday low of 906.00. The total traded value during the day was Rs. 3814356107.00.

Source : Equity Bulls

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