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Elara Capital
Oberoi Realty (Buy)
CMP: ₹432.65
Target: ₹550
Oberoi Realty revenue grew 95 per cent y-o-y and was down 33 per cent q-o-q to ₹600 crore, below our estimates on lower revenue recognition from the Esquire project, Goregaon (₹110 crore in Q2 versus ₹400 crore in Q1FY19). Y-o-y growth was bolstered by Sky City at Borivali and Eternia & Engima projects at Mulund. Operationally, it was a strong quarter, with pre-sales up 61 per cent y-o-y and down 9 per cent q-o-q to ₹570 crore on strong sales at its Worli 360 West (five units sold) and Sky City (₹130 crore versus ₹89.1 crore in Q1).
Oberoi scores high on operational transparency and disclosures — key differentiators in the sector. The near-complete residential unsold inventory of +₹3,500 crore along with net cash balance will enable it to invest aggressively in growth. Regulatory headwinds such as RERA and liquidity issues at the NBFC level augur well for Oberoi with a strong brand, quality assets and timely execution track record.
We believe the company has multiple triggers over the next 12 months, such as the launch of Thane and subsequent phases at Borivali & Goregaon projects. Post the recent correction in the stock price, we revise our rating to Buy from Accumulate with a TP of ₹550 based on 1x one-year forward NAV.
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