Oberoi Realty's inventory position remains sticky1 min read . Updated: 19 Oct 2020, 07:33 PM IST
Analysts say that a full-fledged recovery would take more time. Little wonder then that the initial euphoria seen in the stock on Monday, fizzled out as the trading session ended
Mumbai-focused real estate developer Oberoi Realty Ltd’s Q2 results suggest things are slowly picking up. It sold a total of 45 apartments during the September quarter, which compares with 58 units sold in the year ago period.
Volumes were driven by ready-to-move-in projects Exquisite and Esquire. Its Sky City project in Borivali and Enigma in Mulund also saw some sales. As for its luxury project, the Three Sixty West in Worli, which is nearing completion, the company sold three units in the September quarter.
In a post earnings conference call, the management said that the sale of apartments at its Three Sixty West project is below the desired run-rate. However, the company expects to see increased traction once the project is fully completed. The management said that it has not offered any discounts or reduced prices to push sales of its units in the September quarter.
According to analysts, there are some indications of recovery in the residential space in Mumbai. However, the company’s inventory position remains sticky, which is a key concern for the Street. According to the company, excluding the Three Sixty West project, its inventory currently stands at 41,70,729 square feet. In the June quarter, this number stood at 42,76,354 square feet. That said, most of its projects are completed so that could aid faster recovery once the demand scenario further improves, analysts said.
It should be noted that in fiscal year 2020, the company sold more than 300 units. So, based on this parameter, analysts say that a full-fledged recovery would take more time. Little wonder then that the initial euphoria seen in the stock on Monday, fizzled out as the trading session ended.
Meanwhile, there wasn’t much to cheer in the performance of its other segments. As expected, its hospitality segment remained impacted due to extended lockdown and travel restrictions. Analysts do not see a turnaround in the segment anytime soon.
Similarly, business activity in the leasing segment was dull. Occupancy at its commercial property Commerze I remained muted at 34% in the September quarter, similar to June quarter levels. Commerze II saw a sequential decline in occupancy rate to 97.4% in the September quarter.