Oberoi Realty LtdQ2 FY23Realty

Oberoi Realty Ltd

Q2 FY23 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

N/A

Order

N/A

Capex

Yes

1 of 3 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 3

→Oberoi Realty anticipates strong sales growth driven by upcoming launches, particularly in Thane (Pokhran Road first, followed by Kolshet Road) with about 1,800 apartments starting construction soon.
→Launches planned in the festive season around October 2023 with show apartments and experience centers ready.
→Borivali project has seen incremental price increases with strong demand despite ready inventory selling at premium in secondary market.
→Mulund expected to see a sharp rise in sales volumes within a quarter as the product is now ready and feedback implementation is underway.
→The company prefers steady pricing based on cost and replacement cost rather than opportunistic price hikes.
→Significant inventory worth INR4,000 crores remains to be sold in Mulund and Borivali.
→Robust business development and pipeline of redevelopment projects that could lead to further launches.
→Leasing revenue stable and mall development in Borivali progressing towards pre-Diwali launch.

Margin guidance

Category 3

→Oberoi Realty is optimistic about future demand for premium housing due to rising customer demand and upcoming festive periods, supporting continued growth.
→New launches planned in Thane (Pokhran Road first, then Kolshet) within this year aim to bulk up sales and revenue.
→The large addition of 6.4 acres in Thane expands development potential, possibly exceeding Goregaon.
→Residential business margins have reset to around 45%, seen as reasonable minimum margins supporting sustainable profitability.
→Inventory in projects like Mulund is expected to see a sharp sales revival in the next quarter, which will positively impact earnings.
→The company maintains a disciplined pricing strategy, focusing on cost and replacement cost rather than opportunistic price hikes, supporting stable earnings growth.
→The ongoing leasing and mall developments (Borivali Mall, Goregaon Mall) are progressing, expected to enhance steady revenue streams.
→Overall, the management anticipates robust earnings growth driven by launches, improved sales velocity, and operational efficiencies.

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Fundraise plans

The transcript does not mention any current or planned fundraising through debt or equity. Highlights related to financials are: - No specific comments on new debt or equity fundraising during the call. - Focus is on ongoing business development, project launches, sales, and inventory management. - Emphasis on pricing strategy, project execution, and sales momentum. - No announcements about capital raising or funding plans at this stage. - The company is working on business development deals and new project launches but has not disclosed any fundraising activities. In summary, Oberoi Realty has not indicated any current or future fundraising through debt or equity as per this earnings call transcript.

Order book

→Vikas Oberoi mentioned ongoing business development activities are robust, with some deals in advanced stages but not yet announced.
→There is a deal in Gurgaon in closing mode and one redevelopment project with LOI signed, awaiting the development agreement.
→No specific cumulative value of advanced business development deals was disclosed; management expects pleasant surprises soon.
→For 360 West, there are ongoing sales despite challenges, with recent transactions completed and more expected this quarter.
→Upcoming project launches like Pokhran Road and Kolshet Road in Thane reflect future order book additions, with construction contracts awarded and work started.
→The Mulund project has roughly INR4,000 crores worth of inventory remaining to be sold, mostly fully built.
→Overall, the company has a healthy pipeline but prefers to announce new deals only when ready.

Capex plans

Yes

→Oberoi Realty has awarded contracts and started actual work at the Kolshet project in Thane with L&T as the principal contractor.
→They are in the process of awarding contracts for the Pokhran Road project in Thane, planning to launch in the festive season around October 2023.
→The company has acquired an additional 6.4-acre contiguous land parcel in Thane, completing the entire land package and preparing for large-scale development.
→At the Oberoi Mall in Borivali, civil work is complete; fit-outs are ongoing with a targeted launch before Diwali next year.
→They have completed rehabilitation work in Tardeo and plan to start giving possession late this year or early next year.
→In Worli, they've just regained part of their land previously used for Metro work, planning a residential project soon.
→Business development activities, including a deal in Gurgaon and multiple land parcels for redevelopment, are ongoing but kept confidential until ready.

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