August 2, 2018
ICICI Securities Ltd | Retail Equity Research
Result Update
Strong all-round performance…
Oberoi Realty's (ORL) sales volumes jumped 118.3% sequentially to
2.86 lakh sq ft (our estimate: 1.65 lakh sq ft) clocking sales value of
| 166.4 crore. Higher-than-expected sales volume of 1.29 lakh sq ft in
‘Esquire’ project (our estimate: 50000 sq ft) primarily led this growth
Revenues grew robustly by 239.0% YoY to | 884.0 crore (our
estimate: | 818.7) crore as SkyCity project (Borivali) hit revenue
recognition threshold during the quarter
EBITDA margin was steady at 52% (our estimate: 45%) due to lower
employee cost (2.1% in Q1FY19 vs. 6.9% Q1FY18)
Net income grew 238.5% YoY to | 309.4 crore (our expectation:
| 244.2 crore) on account of higher-than-expected EBITDA margin
Sales volumes rises phenomenal 118.3% QoQ to 2.86 lakh sq ft…
Oberoi’s sales volumes grew at a phenomenal rate of 118.3% QoQ to 2.86
lakh sq ft (lsf) in Q1FY19 due to the exceptional performance in the
Esquire and Eternia projects. These projects benefited significantly from
the subvention scheme that ORL launched, which was reflected in the
volume numbers. Also, the SkyCity project hit revenue recognition
threshold in Q1FY19. Now, with construction at both Goregaon projects
i.e. Exquisite and Enigma, the company is planning to launch its third
project in the area in FY19E. With launches planned at Thane, Goregaon
and subsequent phases of Borivali and Mulund projects, we expect sales
volumes to grow at a healthy pace of 65.7% CAGR from 0.6 msf in FY18
to 1.5 msf in FY20E.
Raises | 1200 crore through QIP to aid growth…
ORL raised | 1200 crore by allotting 2.4 crore equity shares at
| 500/equity share through QIP on June 21, 2018. The company will
deploy these funds towards acquiring land as a part of its growth plans.
Also, the construction of its ongoing and new projects would be funded
through a mix of internal accruals and debt.
Revenue recognition from new projects to boost bottomline…
SkyCity hit revenue recognition threshold in Q1FY19 while Eternia &
Enigma are near the threshold level. These would start contributing to the
topline and bottomline in FY19E. Consequently, we expect the company
to post healthy topline, PAT growth of 46.5%, 42.0% CAGR to | 2714.7
crore, | 925.6 crore, respectively, in FY18-20E.
Rental portfolio to aid revenue growth…
Commerz II achieved 63.4% occupancy in Q1FY19 (47.4% in Q4FY18).
The management aims to achieve 85-90% occupancy by FY19E end, post
which it would start construction of Commerz III. Also, revenues of Oberoi
mall grew robustly by 32.9% YoY to | 35.4 crore led by upward revision
of rental rates to | 200/ sq ft per month. ORL leased 1 lakh sq ft at its
upcoming Borivali mall (total leasable area: 1.56 msf). ORL is also setting
up a luxury mall with leasable area of ~1 msf in Worli (Glaxo land) along
with a hotel with developable area of ~0.68 msf adjacent to mall.
Await volume improvement at some key projects; maintain HOLD…
We like the company given the quality of land bank, its healthy balance
sheet and management bandwidth to execute large projects. ORL also
showed strong sales performance at Goregaon and Borivali projects.
However, sales performance of Worli & Mulund projects has been below
expectations and we await improvement. We would be closely tracking
volumes at these projects. Consequently, we continue to maintain our
HOLD rating on the stock with a revised target price of | 530.
Rating matrix
Rating : Hold
Target : | 530
Target Period : 12 months
Potential Upside : 9%
What’s Changed?
Target Changed from | 550 to | 530
EPS FY19E Changed from | 24.3 to | 27.1
EPS FY20E Changed from | 21.5 to | 25.5
Rating Unchanged
Quarterly Performance
| crore Q1FY19 Q1FY18 YoY (%) Q4FY18 QoQ (%)
Revenue 884.0 260.7 239.0 344.9 156.3
EBITDA 457.5 135.6 237.5 183.3 149.6
EBITDA (%) 51.7 52.0 -24 bps 53.1 -140 bps
PAT 305.2 91.4 233.9 142.9 113.6
Key Financials
| Crore FY17 FY18 FY19E FY20E
Net Sales 1,113.7 1,265.4 2,926.5 2,714.7
EBITDA 569.9 675.3 1,421.6 1,335.8
Net Profit 378.7 458.8 986.8 925.6
EPS (|) 10.4 12.6 27.1 25.5
Valuation summary
(x) FY17 FY18 FY19E FY20E
P/E 43.5 35.9 16.7 17.8
Target P/E 47.5 39.2 18.2 19.4
EV / EBITDA 28.6 24.7 10.1 10.3
P/BV 3.1 2.9 2.2 2.0
RoNW (%) 6.6 7.5 11.0 9.2
RoCE (%) 8.6 8.5 14.4 12.5
Stock data
Particular Amount (| crore)
Market Capitalization 17,631.5
Total Debt 1,600.0
Cash 2,540.9
EV 16,690.6
52 week H/L (|) 609 / 352
Equity capital 328.2
Face value (|) 10.0
Price performance (%)
Return % 1M 3M 6M 12M
Sunteck Realty (11.3) (7.6) (5.9) 61.7
Oberoi Realty (2.1) 2.3 7.8 30.8
Sobha Ltd (8.8) (12.9) (15.2) 25.0
Mahindra Lifespace 11.5 17.0 13.3 26.3
BSE Realty (9.5) (12.8) (10.8) 7.9
Research Analyst
Deepak Purswani, CFA
Vaibhav Shah
Harsh Pathak
Oberoi Realty (OBEREA) | 485
ICICI Securities Ltd | Retail Equity Research Page 2
Variance analysis
[
Q1FY19 Q1FY19E Q1FY18 YoY (Chg %) Q4FY18 QoQ (Chg %) Comments
Income from Operation 884.0 818.7 260.7 239.0 344.9 156.3 Revenues grew robustly on account of strong execution
Other Income 7.1 7.9 9.6 -25.7 7.9 -9.5
Operating Cost 375.5 370.8 97.7 284.1 132.0 184.5
Employee cost 18.6 43.4 18.0 3.5 15.7 18.9
Other expenditure 32.5 35.7 9.4 244.1 14.0 132.0
EBITDA 457.5 368.7 135.6 237.5 183.3 149.6
EBITDA Margin (%) 51.7 45.0 52.0 -24 bps 53.1 -140 bps The EBITDA margin expansion was led by change in project mix
Depreciation 10.6 11.8 12.4 -14.2 11.8 -9.7
Interest 4.9 1.9 1.6 215.4 1.9 161.7
PBT 449.1 362.9 131.2 242.3 177.6 152.9
Taxes 145.0 119.8 40.5 257.6 35.7 305.6
PAT 305.2 244.2 91.4 233.9 142.9 113.6 Robust PAT growth was led by strong topline growth and EBITDA margin
expansion
Source: Company, ICICI Direct Research
Change in estimates
FY20E
(| Crore) Actual Old New % Change Old New % Change Comments
Revenue 1265.4 2674.1 2926.5 9.4 2532.1 2714.7 7.2 We factor in strong Q1FY19 performance
EBITDA 675.3 1320.6 1421.6 7.7 1204.8 1335.8 10.9
EBITDA Margin (%) 53.4 49.4 48.6 -82 bps 47.6 49.2 161 bps
PAT 458.8 929.1 986.8 6.2 852.3 925.6 8.6
EPS (|) 12.6 27.4 27.1 6.2 25.1 25.5 8.6
FY18 FY19E
Source: Company, ICICI Direct Research
Assumptions
FY16 FY17 FY18 FY19E FY19E FY20E FY20E Comments
Volume sold in msf New Earlier New Earlier
Goregaon 0.2 0.1 0.2 0.4 0.3 0.6 0.3
Andheri/Borivali 1.1 0.2 0.2 0.3 0.3 0.4 0.4
Worli 0.0 0.2 0.1 0.1 0.2 0.2 0.3
Mulund 0.0 0.1 0.1 0.1 0.1 0.2 0.1
Pune 0.0 0.0 0.0 0.0 0.1 0.2 0.2
Total 1.3 0.6 0.6 1.0 1.0 1.5 1.3 We upgrade our FY20 estimates given the improvement in
sales momentum
Source: Company, ICICI Direct Research Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 3
Conference call highlights:
Commerz II update: The company achieved 63.4% occupancy in
Q1FY19 and clocked an average revenue of | 120 psf per month.
The management is further confident on achieving 90-100%
occupancy in FY19E. Upon achieving this target, it will commence
construction of Commerz III instantly
Prisma project: The company has received full occupational
certificate for Prisma project
Esquire project: The subvention scheme panned out well for the
project, which resulted in exceptional sales of 1.29 lakh sq. ft. in
Q1FY19
Malls update: The management expects to launch its luxury Worli
mall with leasable area of ~1 msf by December, 2019. Also, the
company would be constructing its Borivali mall in single stretch
with leasable area of 1.56 msf
Goregaon project: The company is looking to launch Exquisite
Phase III in Goregaon in FY19E. The contract for construction has
been awarded to L&T
Tardeo update: The management indicated that ORL will have to
complete the redevelopment at Tardeo, Mumbai post which it
would develop project on free sale land
Revenue recognition threshold: The company has achieved
threshold for revenue recognition for SkyCity project while Eternia
and Enigma projects are near the threshold. Unlike some other
listed peers, ORL has continued with percentage completion
method for recognizing revenues, as their sales contracts do not
give flexibility for customer to cancel the sale. However, ORL has
adopted two accounting changes:- (a) consideration of only
construction spends to measure threshold of project completion
(excluding land cost), & (b) recognition of revenue without
margins (to the extent of costs incurred) until revenue recognition
threshold have been met
ICICI Securities Ltd | Retail Equity Research Page 4
Company Analysis
Sales volumes grow robustly…
ORL’s sales volumes jumped 118.3% QoQ to 2.86 lakh sq ft (lsf) in
Q1FY19 due to exceptional performance in the Esquire and Eternia
projects. The subvention scheme panned out well for ORL resulting in
phenomenal sales volume of 1.29 lsf in ‘Esquire’ project (our estimate: 0.5
lsf). Also, SkyCity project hit revenue recognition threshold in Q1FY19.
Going forward, Eternia & Enigma projects are nearing threshold and will
start contributing to topline & bottomline in FY19E. Furthermore, ORL has
a strong line-up of project launches in FY19E, with launches planned in
subsequent phases of Borivali & Mulund projects and planning to launch
third phase of Goregaon project. Consequently, we expect the sales
volumes to grow from 0.6 msf in FY18 to 1.5 msf in FY20E
Exhibit 1: Sales volume picking up
1.4
7 1.7
7
1.0
6
0.9
8
1.7
3
1.3
1
2.8
7
1.3
5
1.5
2
0.50
1.00
1.50
2.00
2.50
3.00
Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Q1FY19
(la
kh s
q f
t)
Source: Company, ICICI Direct Research
Exhibit 2: Sales volumes to improve here on…
0.2 0.2 0.1 0.20.4
0.60.0
0.1
0.3
0.4
0.1
0.1
0.2
0.1
0.2
0.0
0.2
0.3
1.0
1.3
0.6 0.6
1.0
1.5
0.2
1.1
0.2
0.0
0.5
1.0
1.5
2.0
FY14 FY15 FY16 FY17 FY18 FY19E FY20E
(m
n s
q f
t)
Goregaon Andheri/Borivali Worli Mulund Pune
Source: Company, ICICI Direct Research
Launches in Borivali, Mulund to adversely impact overall realisation…
ORL’s average realisation has been at a higher level mainly due to the
higher proportion of Oberoi Exquisite and Oberoi Esquire projects.
However, going ahead, with higher proportion of sales volume to be
derived from its Mulund and Borivali projects, we expect average
realisation to come down from current levels.
Exhibit 3: Quarterly average realisation trend
23,5
56
19,1
53
22,6
44
17,2
33
23,4
99
22,6
44
17,0
11
23,4
99
19,6
71
22,6
44
17,5
19
23,4
99
19,4
21
22,6
44
17,6
10
19,6
71
10,000
15,000
20,000
25,000
30,000
Goregaon
(Exquisite)
Goregaon
(Escquire)
Andheri Overall
(|
per s
q f
t)
Q2FY18 Q3FY18 Q4FY18 Q1FY19
Source: Company, ICICI Direct Research
Exhibit 4: Annual realisation trend across projects
10,000
15,000
20,000
25,000
30,000
Goregaon
(Exquisite)
Goregaon
(Escquire)
Mulund Borivali Overall
(|
per s
q f
t)
FY16 FY17 FY18 FY19E FY20E
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 5
Exhibit 5: Ongoing residential projects operational metrics
Particulars Q1FY19 Q4FY18 Q3FY18 Q2FY18 Q1FY18
Area Booked (sq ft)
Oberoi Esquire 129633 42248 24432 50051 21106
Oberoi Exquisite 5070 3640 17550 5330 6890
Three Sixty West 35324 9562 47479 15020 45427
Priviera - - - - -
Prisma 14588 8778 8595 8958 12364
Eternia 30190 6900 6680 21270 13140
Enigma 14005 5360 0 16860 10107
Sky City 57879 54564 47027 55914 26362
Total 286,689 131,052 151,763 173,403 135,396
Sales Value (| crore)
Oberoi Esquire 267.4 92.1 48.1 103.0 38.2
Oberoi Exquisite 12.0 9.0 41.2 12.8 16.2
Three Sixty West 166.4 43.0 214.7 76.1 187.8
Priviera - - - - -
Prisma 26.3 16.1 15.2 16.1 22.3
Eternia 42.3 10.1 10.3 32.1 20.7
Enigma 20.0 8.3 - 25.3 16.9
Sky City 89.1 84.8 76.9 88.0 43.3
Average Realization for the quarter (|/sq ft)
Oberoi Esquire 20,626 21,790 19,671 20,583 18,113
Oberoi Exquisite 23,669 24,670 23,499 23,996 23,556
Three Sixty West 47,112 44,970 45,222 50,646 41,341
Priviera** - - - - -
Prisma 18,049 18,330 17,708 17,962 18,012
Eternia 14,011 14,696 15,359 15,068 15,769
Enigma - - - 14,994 16,721
Sky City 15,389 15,536 16,342 15,740 16,421
Project Completion (%)
Oberoi Esquire 97.4 93.4 88.3 82.2 71.4
Oberoi Exquisite 100 100 100 100 100
Three Sixty West * * * * *
Priviera 100 100 100 100 100
Prisma 82.7 82.7 74.0 62.0 58.1
Eternia * * * * *
Enigma * * * * *
Sky City 26 * * * *
Inventory as on Date (sq ft)
Oberoi Exquisite 140365 145435 149075 166625 185865
Three Sixty West 1804753 1929009 1938571 1986050 1442777
Priviera ** 0 0 0 0 0
Prisma 45151 59739 68517 77112 89248
Eternia# 243720 273910 280810 287490 311880
Enigma# 417134 431139 436499 436499 455434
Sky City# 632740 690619 745183 792210 880021
Source: Company, ICICI Direct Research
Note : * Yet to reach threshold # Basis area opened for booking ** Calculated on carpet area
ICICI Securities Ltd | Retail Equity Research Page 6
Rental, hospitality portfolio – Icing on the cake…
ORL also enjoys a strong leasing and profitable hospitality portfolio
wherein it has Commerz I & II (commercial space), Oberoi Mall (retail
property) and The Westin Mumbai Garden City (hospitality).
In the leasing portfolio, ORL has leased out ~0.9 mn sq feet (~94% of the
total available area) in Commerz I and Oberoi Mall. Beside this, ORL has
also completed Commerz-II Phase I (0.7 mn sq ft). Furthermore, Samsung
India Electronics has leased ~1.1 lakh sq ft space in Oberoi Commerz II in
Goregaon for ~| 145/ sq ft per month. The lease is for nine years with
15% rental escalation every three years. Recently, it concluded a deal to
lease out ~0.7 lakh sq ft. Overall, the lease revenue is expected to grow
to | 293 crore in FY20E vs. | 204 crore in FY18 driven by the incremental
leasing in Commerz II phase I.
Exhibit 6: Leasing trend
0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
0.6 0.60.5 0.5 0.50.6
0.6
0.5
0.50.6
0.8 0.9 0.80.9
1.0
1.1
1.41.4
0.0
0.3
0.6
0.9
1.2
1.5
FY13 FY14 FY15 FY16 FY17 FY18 FY19E FY20E
(m
n s
q f
t)
Commerz I Commerz II Phase I Oberoi Mall
Source: Company, ICICI Direct Research
Exhibit 7: Leasing revenue trend
46 48 47 47 46 45 43 48
7497
79 8794 94
100
111
142
147
126135
147 150
173
204
259
293
0
75
150
225
300
FY13 FY14 FY15 FY16 FY17 FY18 FY19E FY20E
(|
crore)
Commerz I Commerz II Phase I Oberoi Mall
Source: Company, ICICI Direct Research
ORL also has The Westin Mumbai Garden City Hotel in Goregaon, which
is part of the mixed development in Oberoi Garden City. It is a five star
hotel with 269 rooms and is managed by the Westin Group. In FY18, it
reported revenue and EBITDA of | 128.7 crore and | 34.5 crore,
respectively. Going ahead, we expect it to post a topline and bottomline
of | 145.3 crore and | 53.1 crore, respectively, in FY20E.
Exhibit 8: Hotel revenue trend
122.8128.0 126.6 128.7
134.0
145.3
0
35
70
105
140
175
FY15 FY16 FY17 FY18 FY19E FY20E
(|
crore)
Source: Company, ICICI Direct Research
Exhibit 9: Westin’s operating profit trend
33.0
41.6
43.6
42.0
46.3
53.1
32.5
26.9
34.5
32.7
34.5
36.5
0.0
15.0
30.0
45.0
60.0
75.0
FY15 FY16 FY17 FY18 FY19E FY20E
(|
crore)
24
27
30
33
36
39(%
)
EBITDA Margins (RHS)
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 7
Exhibit 10: Operational trend in Oberoi’s rental and hospitality portfolio
Particulars Q1FY19 Q4FY18 Q3FY18 Q2FY18 Q1FY18
Oberoi Mall (Retail Property)
Operating Revenue (| crore) 35.4 29.0 28.0 26.8 26.7
EBITDA margin (%) 94.0 96.5 95.0 73.4 92.7
Occupancy (%) 97.3 99.4 99.4 98.7 99.1
Realisation (|/sqft/month) 220 176 170 164 162
Commerz I (Commercial Space)
Operating Revenue (| crore) 10.7 11.1 11.1 11.1 12.0
EBITDA margin(%) 98.3 109.2 99.0 99.0 99.6
Occupancy (%) 78.5 82.1 82.1 82.1 88.5
Realisation (|/sqft/month) 143 142 141 142 142
Commerz II Phase I (Commercial Space)
Operating Revenue (| crore) 16.6 12.7 11.4 12.6 11.5
EBITDA margin(%) 87.5 84.5 81.5 82.8 84.2
Occupancy (%) 63.4 47.5 44.7 44.7 44.7
Realisation (|/sqft/month) 120 123 117 130 119
The Westin Mumbai Garden City
(Hospitality)
Operating Revenue (| crore) 30.9 34.0 35.4 29.2 30.1
EBITDA margin(%) 34.5 28.2 36.1 31.8 34.5
Average Room Rate (|) 8366 9093 9401 8209 8030
Occupancy (%) 84.3 83.6 80.0 78.0 81.6
RevPAR (|) 7052 7615 7582 6416 6546
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 8
Revenues recognised to grow at 46.5% CAGR over FY18-20E…
Revenues grew steadily by 13.6% YoY to | 1265.4 crore in FY18. Going
forward, we expect ORL’s revenues to grow robustly at 46.5% CAGR over
FY18-20E to | 2714.7 crore as its Mulund, Borivali and Worli projects are
expected to hit the revenue recognition threshold in the next couple of
years. More revenues are expected to get recognised from completed
projects such as Oberoi Exquisite.
Exhibit 11: Revenues to grow at 46.5% CAGR over FY18-20E…
1,408.1
1,113.7
1,265.4
2,714.72,926.5
500
1000
1500
2000
2500
3000
3500
FY16 FY17 FY18E FY19E FY20E
(|
crore)
CAGR - 46.5%
Source: Company, ICICI Direct Research
EBITDA margin to contract ahead…
The EBITDA margin has dropped significantly in FY16 to 47.4%. However,
with a change in the project mix, margins rose to 51.2% in FY17. Going
ahead, we expect margins to be in the range of 48-50% given the larger
share of residential revenues recognition, which is typically of lower
margins compared to hospitality and leasing segments.
Exhibit 12: EBITDA margin trend
47.4
51.2 53.4
48.6 49.2
35
40
45
50
55
60
FY16 FY17 FY18E FY19E FY20E
(%
)
Source: Company, ICICI Direct Research
ORL’s revenues are expected to grow at a CAGR of 46.5%
CAGR during FY18-20E
ICICI Securities Ltd | Retail Equity Research Page 9
Net profit to grow at 42.0% CAGR during FY18-20E…
Overall, we expect ORL’s bottomline to grow at a CAGR of 42.0% during
FY18-20E to | 925.6 crore, with Eternia, Enigma & SkyCity projects hitting
revenue recognition during this period. This would aid the bottomline
significantly, going forward.
Exhibit 13: PAT to grow at 42.0% CAGR during FY18-20E
425.9 378.7 458.8 986.8 925.6
0
250
500
750
1000
FY16 FY17 FY18E FY19E FY20E
(|
crore)
CAGR - 42.0%
Source: Company, ICICI Direct Research
Return ratio to improve over FY18-20E…
Given the lower revenue recognition and profitability in FY17, ORL’s
return ratio dropped to single digit in FY17. However, with better
revenues and profitability coming in FY18E & FY19E, we expect ORL’s
return ratio to bounce to levels of 12.5% RoCE and 9.2% RoE in FY20E.
Exhibit 14: Return ratio to bounce back
11.3
8.0
8.6
8.5
14.4
12.5
6.6
7.5
11.0
9.2
0
4
8
12
16
FY16 FY17 FY18E FY19E FY20E
(%
)
RoCE RoNW
Source: Company, ICICI Direct Research
We expect ORL’s bottomline to grow at a CAGR of 42.0%
during FY18-20E to | 925.6 crore, with Eternia & Enigma
projects hitting revenue recognition during this period
ICICI Securities Ltd | Retail Equity Research Page 10
Outlook and Valuation
We like the company given the quality of land bank, its healthy balance
sheet and management bandwidth to execute large projects. ORL also
showed strong sales performance at Goregaon and Borivali projects.
However, sales performance of Worli & Mulund projects has been below
expectations and we await improvement. We would be closely tracking
volumes at these projects. Consequently, we continue to maintain our
HOLD rating on the stock with a revised target price of | 530.
Exhibit 15: Valuation
Location Type Status
Saleable Area ( in mn
sq ft) NAV NAV Multiple Value (| cr) |/share
Goregaon 10.1 8,339.0 7,731.7 212.7
Oberoi Mall Retail Completed 0.6 1,787.5 1.0 1,787.5 49.2
Commerz I Commercial Completed 0.4 602.2 1.0 602.2 16.6
Westin Hotel Completed 0.4 1,068.7 1.0 1,068.7 29.4
Exquisite I Residential Ongoing 1.5 259.7 1.0 259.7 7.1
Exquisite II Residential Ongoing 1.5 502.9 1.0 502.9 13.8
Commerz II Phase I Commercial Ongoing 0.7 1,447.9 0.9 1,303.1 35.8
Exquisite III Residential Planned 1.9 1,016.4 1.0 1,016.4 28.0
Commerz II Phase II Commercial Planned 1.7 1,541.9 0.7 1,079.3 29.7
Oberoi International school Social Infrastructure Ongoing 0.3
Education complex Planned 0.9
Hospital Planned 0.4
Andheri/Khar/Borivali 3.1 3,644.1 3,612.2 99.4
Oberoi Maxima Commercial Ongoing 0.3 242.9 0.9 218.6 6.0
Oberoi Prisma Residential Ongoing 0.7 45.0 1.0 45.0 1.2
Oberoi Splendour IT park Commercial Planned 0.1 75.9 0.9 68.3 1.9
Oberoi Splendour school Social Infrastructre Planned 0.4 14.7 1.0 14.7 0.4
Borivali Residential 4.5 3,265.6 1.0 3,265.6 89.8
Worli 3.4 2,505.8 2,069.5 56.9
Oasis Residential Residential Ongoing 2.3 648.7 0.9 583.8 16.1
Oasis Commercial Commercial Ongoing 0.2 244.2 0.8 195.4 5.4
Oasis Mall Retail Ongoing 0.1 111.4 0.8 89.1 2.5
Oasis Hospitality Hospital Ongoing 0.2 191.6 0.8 153.3 4.2
I-Ventures Residential 0.5 1,309.9 0.8 1,047.9 28.8
Thane Residential Planned 10.2 3,490.3 0.9 3,141.3 86.4
Mulund 3.2 1,029.0 1,029.0 28.3
Eternia Residential Ongoing 1.6 441.8 1.0 441.8 12.2
Enigma Residential Ongoing 1.6 587.2 1.0 587.2 16.2
Pune 1.3 126.7 113.3 3.1
Sangam city - Residential Residential Planned 0.8 59.4 1.0 59.4 1.6
Sangam city - Commercial Commercial Planned 0.3 35.8 0.8 28.6 0.8
Sangam city - Retail Retail Planned 0.3 31.6 0.8 25.3 0.7
Net cash/ (Debt) 1,456.1 1.0 1,456.1 40.1
Total 31.4 20,591.1 0.9 19,153.1 527
Rounded off Target price 530
111.9 1.0 111.9 3.1
Source: Company, ICICI Direct Research
Exhibit 16: Valuation
Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE
(| cr) (%) (|) (%) (x) (x) (%) (%)
FY17 1113.7 -20.9 10.4 -11.1 46.6 28.6 6.6 8.6
FY18 1265.4 13.6 12.6 21.2 38.4 24.7 7.5 8.5
FY19E 2926.5 131.3 27.1 115.1 17.9 10.1 11.0 14.4
FY20E 2714.7 -7.2 25.5 -6.2 19.0 10.3 9.2 12.5
Source: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 11
Recommendation History vs. Consensus
0
150
300
450
600
750
Aug-18May-18Feb-18Nov-17Aug-17May-17Feb-17Nov-16Aug-16Jun-16Mar-16Dec-15Sep-15Jun-15
(|
)
0.0
20.0
40.0
60.0
80.0
100.0
(%
)
Price Idirect target Consensus Target Mean % Consensus with BUY
Source: Bloomberg, Company, ICICI Direct Research
Key events
Date Event
Jun-15 Oberoi Realty approves raising of | 324 crore through preferential issue of shares to Aranda Investments, an indirect subsidiary of Temasek Holdings
Aug-15 As per media sources, Oberoi Realty to buy Crompton Greaves’ Worli building spread over ~1 acre for over | 200 crore.
Oct-15 Oberoi Realty launches its multi-tower project “Sky City” at Borivali spread across 25 acres consisting of multiple towers of up to 60 storeys each. The project has a
saleable area of ~4.5 million square feet (msf) and the company expects to earn revenues of ~| 6000-7000 crore from the project
Mar-16
The Bombay High Court stays new constructions of either residential/commercial buildings or hotels in Mumbai from March 1, 2016 because the state government
and Brihanmumbai Municipal Corporation (BMC) have failed to comply with the municipal solid waste (MSW) rules at Deonar and Mulund dumping grounds,due to
which Oberoi will be unable to launch projects until the ban is lifted
Mar-16 Rajya Sabha passes the real estate regulation bill paving the way for regulation in the real estate sector. The bill would promote timely execution of projects, ensure
speedy adjudication of disputes and help promote private participation, positive for Oberoi
Apr-16 Swedish furniture retailing giant Ikea in talks with Oberoi Realty to buy a built-to-suit retail space for over | 900 crore in Borivali. As per media reports, if the deal
happens, this will monetise Oberoi's landbank at better prices of ~| 112.5 crore per acre vs. Oberoi's acquisition price of ~| 46.2 crore per acre
May-16 Oberoi allots 59,104 equity Shares of | 10 each to certain option grantee(s) pursuant to exercise by them of options granted to them under Company’s Employee
Stock Option Scheme 2009. The exercise price for options is | 260/ share. Post allotment, share capital has increased to | 339.4 crore.
Aug-16
According to media sources, Oberoi Realty is in talks with US-based investor Morgan Stanley and Singapore’s sovereign fund, GIC, to set up a joint venture (JV) for
developing malls. The venture would have a corpus of | 1,000 crore. Oberoi is expected to hold about 75%. Further, it could also initiate talks with Canada Pension
Plan Investment Board, which has shown an interest in buying in malls
Sep-16 Teva Pharmaceuticals buys ~1.0 lakh sq ft space in Oberoi Commerz II in Goregaon
Mar-17 Samsung India Electronics leases ~1.1 lakh sq ft space in Oberoi Commerz II in Goregaon for ~| 145/ sq ft per month. The lease is for nine years with 15% rental
escalation every three years
Sep-17 Oberoi Realty acquires GlaxoSmithKline (GSK) Pharmaceuticals’ 60 acre land parcel at Thane for | 555 crore.
Source: Company, ICICI Direct Research
Top 10 Shareholders Shareholding Pattern
Rank Name Latest Filing Date % O/S Position (m) Change (m)
1 Oberoi (Vikas Ranvir) 30-Jun-18 58.5% 212.9 0.0
2 R S Estate Developers Pvt. Ltd. 30-Jun-18 9.2% 33.3 0.0
3 Franklin Advisers, Inc. 30-Jun-18 2.6% 9.4 -0.2
4 Franklin Templeton Investment Management Ltd. 30-Jun-18 2.6% 9.3 -1.1
5 APG Asset Management 30-Jun-18 1.6% 6.0 0.3
6 GIC Private Limited 30-Jun-18 1.3% 4.6 4.6
7 OppenheimerFunds, Inc. 30-Jun-18 1.1% 4.2 0.0
8 L&T Investment Management Limited 31-Mar-18 1.1% 4.0 -0.5
9 Wellington Management Company, LLP 30-Jun-18 1.0% 3.7 -0.2
10 BlackRock Asset Management North Asia Limited 31-Mar-18 1.0% 3.7 0.1
(in %) Sep-17 Dec-17 Mar-18 Jun-18
Promoter 72.5 72.5 72.5 67.7
FII 25.4 24.9 22.6 26.4
DII 0.6 0.7 2.9 3.4
Others 1.6 1.8 2.0 2.5
Source: Reuters, ICICI Direct Research
Recent Activity
Investor name Value (m) Shares (m) Investor name Value (m) Shares (m)
GIC Private Limited 31.8 4.6 BlackRock Investment Management (UK) Ltd. -12.0 -1.5
Reliance Nippon Life Asset Management Limited 8.5 1.2 Franklin Templeton Investment Management Ltd. -7.3 -1.1
APG Asset Management 2.4 0.3 BlackRock Financial Management, Inc. -7.1 -0.9
Norges Bank Investment Management (NBIM) 2.4 0.3 GaveKal Capital Limited -4.5 -0.6
Florida State Board of Administration 1.4 0.2 L&T Investment Management Limited -3.6 -0.5
Buys Sells
Source: Reuters, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 12
Financial summary
Profit and loss statement (| Crore)
(Year-end March) FY17 FY18 FY19E FY20E
Net Sales 1,113.7 1,265.4 2,926.5 2,714.7
Other Operating Income 0.0 0.0 0.0 0.0
Total Operating Income 1,113.7 1,265.4 2,926.5 2,714.7
Growth (%) -20.9 13.6 131.3 -7.2
Operating Costs 428.7 467.9 1,376.4 1,244.1
Employee Expenses 64.2 67.2 70.5 74.0
Other Expenses 51.0 55.1 57.9 60.8
Total Operating Expenditure 543.9 590.1 1,504.8 1,378.9
EBITDA 569.9 675.3 1,421.6 1,335.8
Growth (%) -14.6 18.5 110.5 -6.0
Depreciation 49.5 49.1 52.5 53.7
Interest 5.6 6.9 64.0 96.0
Other Income 47.6 26.6 29.2 32.2
PBT 562.4 645.9 1,334.4 1,218.3
Prior Period Adjustments 0.0 0.0 0.0 0.0
Total Tax 186.9 190.7 440.4 402.0
PAT before profit from associates 375.6 455.2 894.1 816.3
Minoriy Interest 0.0 0.0 0.0 0.0
Profit from associates 3.1 3.6 92.7 109.3
PAT 378.7 458.8 986.8 925.6
EPS (|) 10.4 12.6 27.1 25.5
Source: Company, ICICI Direct Research
Cash flow statement (| Crore)
(Year-end March) FY17 FY18 FY19E FY20E
Profit after Tax 378.7 458.8 986.8 925.6
Depreciation 49.5 49.1 52.5 53.7
Interest 71.8 6.9 64.0 96.0
Others -46.2 -26.6 -121.9 -141.5
Net Increase in Current Assets -475.2 -1343.0 -280.5 -46.1
Net Increase in Current Liabilities 190.7 672.8 532.5 -148.0
Net cf from operating activities 173.6 -212.2 1,233.2 739.7
(Purchase)/Sale of Fixed Assets -76.3 -27.9 -25.0 -25.0
Others -46.2 -26.6 -121.9 -141.5
Net cf from Investing Activities -438.9 -601.2 96.9 116.5
Inc / (Dec) in Equity Capital 6.0 0.0 1,200.0 0.0
Inc / (Dec) in Loan Funds -18.0 731.4 0.0 0.0
(Payment) of Dividend & Div. Tax 0.0 -68.8 -148.0 -138.8
Interest paid -52.5 -6.9 -64.0 -96.0
Net cf from Financing Activities 335.6 655.7 988.0 -234.8
Net Cash flow 39.8 -157.8 2,318.1 621.3
Opening Cash/Cash Equivalent 311.9 351.7 116.7 2,434.8
Closing Cash/ Cash Equivalent 351.7 116.7 2,434.8 3,056.1
Source: Company, ICICI Direct Research
Balance sheet (| Crore)
(Year-end March) FY17 FY18 FY19E FY20E
Equity Capital 339.5 339.5 363.5 363.5
Preference Capital 0.0 0.0 0.0 0.0
Reserve and Surplus 5,386.4 5,752.8 7,767.5 8,554.3
Total Shareholders funds 5,726.0 6,092.3 8,131.0 8,917.8
Total Debt 868.6 1,600.0 1,600.0 1,600.0
Total Liabilities 8,454 10,225 12,796 13,435
Assets
Gross Block 1,042.8 1,067.8 1,092.8 1,117.8
Less Accumulated Depreciation 98.3 91.2 143.7 197.3
Net Block 944.5 976.5 949.1 920.4
Capital WIP 109.5 112.5 112.5 112.5
Total Fixed Assets 1,054.0 1,089.0 1,061.5 1,032.9
Goodwill on consolidation 0.0 0.0 0.0 0.0
Investments 1,824.3 2,424.2 2,424.2 2,424.2
Inventory 3,766.4 4,246.7 4,216.9 4,387.5
Debtors 105.8 181.3 171.7 206.1
Loans and Advances 1,234.0 1,874.9 2,194.8 2,036.0
Cash 351.7 116.7 2,434.8 3,056.1
Other Current Assets 0.0 146.2 146.2 146.2
Total Current Assets 5,457.8 6,565.8 9,164.5 9,831.9
Creditors 1,855.2 2,527.9 3,060.4 2,912.4
Provisions 4.4 4.4 4.4 4.4
Net Current Assets 3,598.2 4,033.5 6,099.7 6,915.1
Deferred Tax Assets 118.1 145.8 145.8 145.8
Total Assets 8,454 10,225 12,796 13,435
Source: Company, ICICI Direct Research
Key ratios
(Year-end March) FY17 FY18 FY19E FY20E
Per share data (|)
EPS 10.4 12.6 27.1 25.5
Cash EPS 11.8 14.0 28.6 26.9
BV 157.5 167.6 223.7 245.3
Operating profit per share 15.7 18.6 39.1 36.7
Cash Per Share 9.7 3.2 67.0 84.1
Operating Ratios (%)
EBITDA Margin 51.2 53.4 48.6 49.2
PBT / Net Sales 50.5 51.0 45.6 44.9
PAT Margin 33.7 36.0 30.6 30.1
Inventory days 1,234 1,225 526 590
Debtor days 35 52 21 28
Creditor days 609 730 382 392
Return Ratios (%)
RoE 6.6 7.5 11.0 9.2
RoCE 8.6 8.5 14.4 12.5
RoIC 12.4 12.8 29.7 26.8
Valuation Ratios (x)
P/E 46.6 38.4 17.9 19.0
EV / EBITDA 28.6 24.7 10.1 10.3
EV / Net Sales 14.7 13.2 4.9 5.1
Market Cap / Sales 15.8 13.9 6.0 6.5
Price to Book Value 3.1 2.9 2.2 2.0
Solvency Ratios (x)
Debt / EBITDA 1.5 2.4 1.1 1.2
Debt / Equity 0.2 0.3 0.2 0.2
Current Ratio 2.7 2.5 2.2 2.3
Quick Ratio 0.7 0.9 0.8 0.8S
ource: Company, ICICI Direct Research
ICICI Securities Ltd | Retail Equity Research Page 13
ICICI Direct Research coverage universe (Real Estate)
CMP M Cap
(|) TP(|) Rating (| Cr) FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E
Oberoi Realty (OBEREA) 485 530 Hold 15,918 10.4 12.6 27.1 46.6 38.4 17.9 28.6 24.7 10.1 3.1 2.9 2.2 6.6 7.5 11.0
Mahindra Lifespace (GESCOR) 525 525 Buy 2,145 24.9 19.5 19.9 10.6 30.7 27.5 7.9 42.4 52.3 1.5 1.4 1.3 18.0 5.9 6.0
Sobha (SOBDEV) 475 550 Hold 4,913 14.1 16.7 22.5 35.6 30.0 22.3 15.7 16.6 13.7 1.9 1.8 1.7 5.4 6.1 7.8
Sunteck Realty (SUNRE) 409 475 Buy 4,910 14.8 15.2 17.8 27.8 27.1 23.1 18.9 16.5 14.5 3.2 2.2 2.0 11.6 8.1 8.8
Source: Company, ICICI Direct Research
P/B (x) RoE (%)
Sector / Company
EPS (|) P/E (x) EV/EBITDA (x)
ICICI Securities Ltd | Retail Equity Research Page 14
RATING RATIONALE
ICICI Direct Research endeavours to provide objective opinions and recommendations. ICICI Direct Research
assigns ratings to its stocks according to their notional target price vs. current market price and then
categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and
the notional target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;
Pankaj Pandey Head – Research [email protected]
ICICI Direct Research,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
ICICI Securities Ltd | Retail Equity Research Page 15
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