Oberoi Realty (Q3 FY21 Results Review) | Blockbuster quarter, BUY says HDFC Securities

Oberoi Realty surprised positively as revenue jumped to 1.5x/2.6x YoY/QoQ. Booking value also jumped to Rs 9.7 bn during the quarter (vs 3.3 bn in Q3 FY20). We expect the momentum to continue for ORL, given the stamp duty cut, low- interest rate, strong brand recognition and market consolidation. Residential launches remain on track to hit the market from Q4 FY21 in Borivali, Goregaon and Thane. Platform deals for commercial assets are off-the table for the time being.
 
Q3 FY21 Financial Highlights: Revenue: Rs 8.3 bn (+57% YoY, 162% QoQ, 60% beat); While real estate segment contributed Rs 8.2 bn (+67% YoY, 164% QoQ), revenue from hospitality segment came in at Rs 113 mn (-71%/+72% YoY/QoQ). EBITDA stood at Rs 3.8 bn (+66% YoY, 105% QoQ, 69% beat). EBITDA margins came at 46.2% (vs 43.6% YoY/ 59% QoQ). PAT stood at Rs 2.9 bn (+93% YoY,+108% QoQ, 104% beat).
 

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Q3 FY21 Operational Highlights: Pre-sales (including Three Sixty West): Volume 0.51msf (0.11msf in Q2 FY21); Value Rs 9.7 bn (Rs 3.3bn in 2QFY21). ORL achieved lifetime high pre-sales despite having no launches and sold 231 units in the quarter, compared to 42/5 units in 2Q/1Q FY21. Oberoi mall is seeing gradual recovery with consumption varying from 70-125% from tenant to tenant.
 
Rental assets: Platform deal for rental assets is off the table for time being as ORL is confident of its execution & fund raising capabilities without BS bloating to build out rental assets, and finds ~15% asking IRR by investors in the current market unreasonable. Major assets like Commerz-3, Sky City Mall and Worli Mall are slated for completion by FY24, with FY24 exit rental guidance maintained at Rs 14 bn.
 
Balance sheet position comfortable: Consolidated gross debt stood at Rs 17.2 bn (vs Rs 16.7 bn on Sep-20 end) and net debt stood at Rs 15 bn (vs Rs 13.6 bn on Sep-20 end) with net D/E at 0.17x (vs 0.15x on Q2 FY21 end), which is comfortable in our view. With the sequential improvement in collections to Rs 2.4 bn (vs Rs 1.8/0.8 bn in 2QFY21/1QFY21), Oberoi Realty generated positive CFO of Rs 1.9 bn.