Project pipeline to keep revenue trajectory strong for Oberoi Realty

Robust sales traction in Q3 helped bring down high levels of inventory

The stock of Mumbai-based realty major Oberoi Realty was up 3.8 per cent in trade on Monday after its December quarter (Q3FY22) operational performance came in much ahead of expectations. Sales for the country’s third largest listed developer was 137 per cent higher than September quarter and doubled as compared to the year ago quarter. While the company sold units worth at Rs 1,965 crore, estimates had pegged the same at Rs 1,300 crore. The total sales for FY22 so far have been at Rs 3,000 crore with volumes at 1.58 million square feet.

The sale of 371 units in Q3 was aided by the launch of  Elysian project at Goregaon, Mumbai with area booked coming in at just over 1 million square feet. The company had indicated earlier that it had sold Rs 790 crore within the first four days of launch of Elysian and the sales in the quarter is a reflection of traction on that front. Parvez Qazi of Edelweiss Research says that the developer had the highest inventory levels among listed realty developers. The inventory reduction is a significantly positive development and bodes well for its cash flows, he adds.

Analysts expect the sales momentum to continue going ahead with the launch at its Thane projects. Adhidev Chattopadhyay of ICICI Securities says that the Thane launch and receipt of occupation certificate at 360 West at Worli, Mumbai are the key factors which will drive sales.

While the timing of launch given the rising level of Covid infections is uncertain, ICICI Securities expects the company to end FY22 with bookings of Rs 4,000 crore. Further, they expect this number to move up by 25 per cent to Rs 5,000 crore each in FY23 and FY24. Sales are expected both on account of new Mumbai launches and inventory in Goregaon, Mulund and Borivali projects.

Incremental sales could come from the company’s plan to enter the society redevelopment projects in Mumbai and from outside Mumbai projects.

While the brokerage has a hold rating, more upsides could come from higher selling prices. The target prices for the stock range from Rs 900-Rs 1,200 a share and at the upper end offers an upside of 27 per cent from the current levels. Investors can consider the stock on any weakness to benefit from the rising sales and opportunity for growth going ahead.