Oberoi Realty (ORL) is a Mumbai-focused premium real estate developer with presence in the residential, commercial and hospitality segments.
ORL reported a strong operating performance.
ORL’s share price has grown at ~22% CAGR over the past five years.
We value ORL at ₹ 1000/share.
Besides ORL, we like Phoenix Mills in the real estate space.
|Particulars||FY19||FY20||FY21||5 Year CAGR(FY16-FY21)||FY22E||FY23E||FY24E||3 Year CAGR (FY21-FY24E)|
|EBITDA Margin (%)||44.7||46.8||48.7||-||46.2||42.9||42.9||-|
OLR sold ~1.04 msf, up 104% YoY, with sales value of | 1965 crore, up 102% YoY driven by newly launched Elysian Tower B in Goregaon in the last week of October 2021 (details of project wise bookings on page 5). Also, the company is expecting to launch a new project in Thane in Q4FY22 or Q1FY23 (we bake in Q1FY23), with delay being due to change in design. Additionally, the management is contemplating launching subsequent phase of Borivali/Goregaon in FY23. On a healthy base of 1.7 msf sales volume in FY21, we bake in 1.8 msf, 2.2 msf, 2.5 msf volumes in FY22E, FY23E, and FY24E respectively, with Borivali/Thane/Goregaon volumes traction driving the same along with pick up in Worli.
Performance of Westin improved drastically during Q3FY22 (revenue up 121% YoY to | 24.9 crore) with occupancy level at 72.2% and increase in average room rates (to | 6,918 in Q3FY22 vs. | 5,669 in Q3FY21). For Commerz-II, the occupancy level remains stable of 97.4% while rental rate declined to | 142/sq ft per month (vs.
| 148/sq ft per month in Q3FY21). Stable occupancy and decline in rental rate in Commerz-II translated into 3.8% YoY fall in revenue (to | 32.5 crore). Going forward, the management expects rental rates and occupancy, both, to inch upward with easy accessibility to under-construction near-by metro station. Commerz-I revenues improved 16.3% YoY to | 7.1 crore with increase in occupancy level to 53.5%. The management expects the occupancy in Commerz-I to improve in the medium term with uptick in demand for office space arising during normalized period. Commerz-III, having ~2.4 mn sq ft area, is under construction and already ~50% got leased. For Oberoi Mall, the company has booked revenue of | 24.7 crore during Q3FY22 (vs | 49.9 crore reported in Q3FY21). We highlight that base quarter had cumulative revenues recorded for previous quarters during wave 1.
We expect sales momentum in FY23 to be robust driven by new launches in Thane and Goregaon/Borivali subsequent phases. However, at the CMP, a lot of these expectations are priced in. We maintain HOLD with a target price of | 1000/share. Further value accretion will be seen once new foray into non MMR and society redevelopment projects are seen. A pick-up in Worli also remains key.
Quarter financial variance
|Q3FY22||Q3FY22E||Q3FY21||YoY (Chg %)||Q3FY22||QoQ (Chg %)||Comments|
|Income from Operation||832.0||889.5||828.4||0.4||754.3||10.3|
|EBITDA Margin (%)||39.9||46.5||46.2||-632 bps||49.5||-962 bps|
|Sales Volume (in sq ft)||10,40,679||5,10,383||103.9||4,43,806||134.5|
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