Oberoi Realty’s fate hinges on timely new launches

In volume terms, pre-sales or bookings, declined 65% year-on-year (y-o-y) and 3% sequentially to 0.36 million square feet. In value terms, bookings fell by 68% y-o-y and 45% sequentially to Rs630 crore.

Pre-sales were adversely affected by the booking of only one unit at its Elysian, Goregaon project versus 141 in the launch quarter of Q3FY22 and nil booking at ultra-luxury project Three Sixty West situated at Worli, versus eight in 2QFY23, note analysts at Motilal Oswal Financial Services.

On the bright side, a slew of the company’s projects hit a revenue milestone during Q3, which aided its revenue performance. Also, with respect to the Worli Three Sixty West project, Oberoi has completed the settlement with its joint venture partner and now holds the entire inventory available for sale.

That said, timely launches remain a crucial trigger for the stock and overall earnings outlook.

In an earnings call, the management reiterated its intention to launch Thane projects in FY24. Its larger Pokhran Road-Thane project will see a launch likely in early FY24 and the smaller Thane-Kolshet project will get launched in mid-March (Q4).

“The Thane projects should provide Oberoi with an entry into a new geography/ticket size, and we expect the location to contribute around 20-25% of FY24 sales,” said analysts at Jefferies India Pvt Ltd.

Further, its new tower at Goregaon is scheduled for launch during the festive season of FY24. To reduce its dependency on the Mumbai Metropolitan Region, the company is also looking to make a foray into the National Capital Region.

Meanwhile, with rising home loan rates, investors’ sentiment towards the real estate sector has soured. In the last one year, shares of Oberoi Reality have declined by 10%.