Launch momentum picks up- Oberoi Realty :: HDFC Securities

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Launch momentum picks up
Our channel checks indicate that Oberoi Realty is all
set to launch four new projects in CY15 that will spur
volumes and cash flows from 4QFY15 onwards. In
Dec-14, Oberoi has done a prelaunch of the Prisma
project at JVLR (91 units with ticket size of Rs 40-
60mn having saleable area of 2,600-3,200 sft) with
approvals in place.
Also, the Mulund project (3.2msf) is expected to open
bookings from Jan-15 onwards across four towers
having configurations of 3-4 BHK. While we await
final details on the project’s pricing, Oberoi is
expected to launch four towers initially (two towers
each on two plots of nine acres) having 59 storeys
with completion expected by FY20E. Indicative
pricing is expected at BSP of Rs 14,000/psf with ticket
size of Rs 22.5-40mn (excluding government charges)
across 3 and 4 BHKs. We believe that Oberoi’s pricing
is at a marginal premium of ~10% to competing
projects in the vicinity that are priced between Rs
11,000-13,000/psf (Runwal Bliss, Wadhwa
Atmosphere, Runwal Greens, Tata Gateway Towers
and Neptune 100 Above). We believe that the project
launches have come at the right time for Oberoi
given the fact that the company’s cash on books
(including liquid investments) declined to Rs 1.2bn in
Sep-14 owing to continued construction spend on
Oasis Worli project and muted collections from
ongoing projects.
Further, the Worli project has seen a soft launch and
the Borivali project is expected to be launched in
1HFY16E that provides visibility on cash flows over
the medium term. With a strong pipeline of launches,
OBER is well placed to ride a recovery in the Mumbai
property market. Announcement for fresh leasing of
office space at Commerz II property is an additional
trigger. Hence, we reiterate our BUY rating with
FY16ENAV of Rs 328/sh.
 Key risk remains a sluggish Mumbai market : The
key risk to our call remains continued sluggishness in
the Mumbai property market. Although we expect
Oberoi to clock decent sales volumes on launch (30-
40% of inventory off take in first six months), concerns
remain on the company’s ability to generate sales
beyond this period.

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http://www.hdfcsec.com/Share-Market-Research/Research-Details/StockReports/3010657