ICICI Securities research report on Oberoi Realty
FY23 was a year of consolidation for Oberoi Realty (OBER) as it focused on, a) completion of purchase of 50% of residual inventory in its 360 West, Worli project from Oasis Realty, the JV entity where it held 32.5% stake, for Rs34bn, b) seeking fresh approvals for its two upcoming Thane projects (Pokhran and Kolshet) under the unified DCPR, and c) bringing the Commerz III office and Borivali mall projects near to completion. FY24E is all set to be a year of heavy launches with both Thane launches (Kolshet and Pokhran Road) set to be finally launched, along with a new tower at Elysian, Goregaon and completed Worli/Mulund/Borivali inventory. Hence, we expect OBER to clock at least Rs60bn of sales bookings each in FY24E and FY25E. Further, we expect company’s rental income to rise to Rs11.3bn in FY25E from Rs2.9bn in FY23 as Commerz III/Borivali malls rentals commence rentals from Q1FY25E.
Outlook
We retain our BUY rating with a revised SoTP based target price of 1,210/share (earlier Rs1,125) as we roll forward to Mar’24E NAV and assume a 15% premium to NAV considering business development opportunities. Key risks are decline in demand for residential housing and weak office leasing.
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