BackResidential sales to hold fort for Oberoi Realty's earnings growth
Sales improved for both under-construction and completed projects in Q3 FY21
PremiumMumbai-focused developer Oberoi Realty Ltd saw its residential sales surge to a five-year high in the December quarter. New bookings rose more than two times on a year-on-year (y-o-y) basis, aided by pent-up demand and the stamp duty cut announced by the Maharashtra government. Sales improved for both under-construction and completed projects. The company reported new bookings worth Rs970 crore, up 220% y-o-y.
Analysts at Kotak Institutional Equities said the company's planned launches of around 5 million square feet in the near-term is likely to help sustain sales momentum, even as divestment of its stake in commercial assets to a strategic investor could face delays.
Oberoi Realty is looking to launch its Thane project, besides starting new phases in Goregaon and Sky City, Borivali, in the current fiscal year. It's luxury project, Three Sixty West, is expected to see an uptick in sales after receiving the occupancy certificate.
As far its other segments are concerned, hospitality, which was among key casualties amid the pandemic, showed some signs of a recovery in the December quarter. On the commercial leasing side, sequential earnings growth was stable. Occupancy at the Commerz I commercial property increased by 800 basis points, sequentially, to 42%, while occupancy at Oberoi Mall and Commerz II remained stable at 93.4% and 97.4%, respectively, on a sequential basis. One basis point is one hundredth of a percentage point.
That said, analysts said to drive earnings growth, Oberoi Realty must focus on the residential sales business. "The lack of clarity on when normalcy would return in work-related travel is likely to keep the hospitality segment rife with near-term challenges. We expect residential to do the heavy lifting and support growth, while leasing would pick up gradually with the normalization of operations at Oberoi Mall. However, Hospitality remains a dent in the near term," Motilal Oswal Securities Ltd analysts atsaid in a report on 26 January.
Meanwhile, the stock hit a fresh 52-week high of Rs628 on 7 January on the NSE, but lost steam and currently trades at Rs543.
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