MOSL: OBEROI REALTY (Buy)-Revenue and PAT treble; subvention schemes driving sales velocity
Oberoi Realty: Revenue and PAT treble; subvention schemes driving sales velocity
(OBER IN, Mkt Cap USD2.6b, CMP INR496, TP INR616, 24% Upside, Buy)
- Sharp rise in volumes; booking value jumps 117% YoY: OBER’s sales volumes surged 193% YoY to 2,86,689sf and sales value jumped 117% YoY to INR6.2b in 1QFY19 on account of increased traction across projects, primarily in Esquire and Eternia (run-rate in SkyCity project maintained). Overall collections jumped 458% YoY to INR5.7b. Revenue grew 241% YoY to INR8.8b (est. of INR11b) in 1QFY19. EBITDA margin was flat at 52% (est. of 46.2%). Adj. PAT rose over 200% YoY to INR3.1b (est. of INR3.3b), driven by revenue growth.
- Subvention schemes help churn inventory: OBER had announced subvention schemes in April 2018 for its Goregaon/Mulund projects, which helped it build significant traction. This is reflected in the number of bookings – Esquire project had 54 units booked in 1QFY19 v/s 48 units booked in full-year FY18, and Eternia project had 19 units booked in 1QFY19 v/s 23 units booked in full-year FY18.
- 1QFY19 earnings call highlights: (a) Raised INR12b through QIP, which will be used for land acquisition. (b) The construction of two malls – one in Borivali and another one in Worli (luxury mall) – has commenced. OBER has already commenced leasing activity at Borivali Mall by pre-leasing ~1 lakh sf. (c) Construction of Exquisite phase III has commenced and is expected to be launched in FY19. (d) Management continues exploring opportunities in new business models like DM/JVs.
Oberoi Realty is a real estate development company operating in Mumbai, focused on premium developments. Co.'s main focus is residential projects but they also have a diversified portfolio of projects covering segments of the real estate market, which target the upper end of the respective income or market segment. Co.'s operating investments comprise the Oberoi Mall, Commerz (commercial tower), Oberoi International School (social infrastructure) and The Westin Mumbai Garden City (269- keys five-star hospitality property).
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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