# Various Projects – Completed – Ongoing – in momentum
# New launches – The trigger
# Improving financial performance
# The venture - 50% stake in ICICI venture
# Developers try to woo buyers – Industry scenario
The Business
Oberoi Realty is a Mumbai based real estate development
firm. The company's primary focus is to develop residential
properties. They develop residential, office space, retail,
hospitality and social infrastructure projects in mixed use and
single-segment developments. On going and planned projects are
of about 2 Crorr sq. ft. It’s now a mixed play in realty and hospitality.
Currently the company has 3 completed investment property i.e.
Oberoi Mall, Commerze (a commercial property) & Westin
Mumbai Garden City, a 269 room hospitality property.
The gross lease area of Oberoi mall was 5,52,893 sq. ft and that of
Commerz was 3,64,888 sq. ft. The residential projects are Oberoi woods, Exquisite, Esquire,
splenfor, splendor Grande. The social infrastructure project of Oberoi International school.
Residential:
Oberoi Woods and Exquisite (Residential) – Revenue
recognition for both the projects.
Esquire – Launched in FY 2011. Partial revenue recognition
happening as the project is yet to reach the threshold.
Oberoi Splendor - Most of the units have been sold and partly
revenue has been recognized as part payment has been received.
The possession for the units will happen in FY 2012.
Oberoi Splendor Grande – Partly units have been sold and
revenue has been recognized.
Retail:
Oberoi Mall - The key tenants comprise Central, Lifestyle, Croma,
PVR Cinemas other various brands. Occupancy has been
91.33%. Management expects consistent improvement in FY 2012 as
well.
Office Space
Commerz - Commerz continues to attract corporate looking to
shift from island city to suburbs as well as corporate looking for a
launch pad in Mumbai. Occupancy has been at 73.71% which is
comparatively higher than last year 43.97% levels.
Hospitality
Westin - The hotel is operated and managed by Starwood under
the Westin brand. The management is confident that the hotel will
put in a better performance in FY 2012.
Social Infrastucture
Oberoi International school - The Oberoi International School
building is owned by the Company and leased to and operated by
Oberoi Foundation, a public charitable trust.
The projects are very much on track with on time revenue
recognition.
Valuations
The Oberoi Realty’s performance has been good in terms of top line growth and project execution and completion. Among the Indian realty players Oberoi realty plays safe with almost close to zero debt and cash of Rs. 1,200 Crs on books. It does not have any FCCB and ECB liability to hit the company, and no pledging of shares by the shareholders.
Also on the Indian real estate industry front, where the whole industry has shown a dismal performance Oberoi realty has been an exception, higher interest rates could not impact its profitability and therefore it has shown a stupendous performance.
On valuation terms also it is currently trading at 13.73x and 11.35x expected earnings for FY 2011-12 and FY 2012-13 respectively. Also as the Reserve Bank of India (RBI) has hinted towards peaking of rates any revision of rates downward can be beneficial for the sector and company specifically.
The outlook for the company looks positive.
Target Price Rs. 360. Time Horizon – 24 Months
Review By Anand Rathi
A.K.Prabhakar
akprabhakar@rathi.com
Shweta Prabhu
shwetaprabhu@rathi.com
CA Vivek Gujrati
vivekgujrati@rathi.com
Anand Rathi
Victoria House. Ground Floor, Kamala Mill Compound Opp. Bombay Dyeing Gate, Pandurang Budhakar Marg, Lower Parel Mumbai - 400013 www.rathi.com FaxNo: +91 22 6626 6544
Tel No: +91 22 6626 6666, Direct: +91 22 6626 6608
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