Oberoi Realty: 3QFY15 - numbers better than estimates, at last:: Kotak Securities

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3QFY15—numbers better than estimates, at last. Oberoi reported better-thanexpected
sales at its ongoing project, Oberoi Garden City, Goregaon (E), resulting in
better-than-expected recognition for 3QFY15. The launch in Andheri (E), Prisma,
recorded strong sales and the Mulund launch in January 2015 (4QFY15) too is expected
to have a better-than-expected response, for which we revise upwards our FY2015
sales estimates. We maintain our BUY rating and target price.

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3QFY15 results—better sales at Exquisite results in better revenue recognition
Revenue recognized in 3QFY15 was better than our estimates, as sales at Oberoi Exquisite (only
development project under revenue recognition) were higher than our estimates. Margins
however, dropped marginally. We believe this was due to adding interest costs and minor cost
escalations. Debt continued to increase as expenditure in the Oasis JV was higher than
collections at the project (with no incremental sales yet).
3QFY15 operations review—better sales at existing projects, strong project launch
 Oberoi sold over a quarter of the offered area at its new project launch, Oberoi Prisma, in
3QFY15 (project launched in December 2014). Realizations at this project were high at over
`17,000/sq. ft. Sales at its nearly completed, project Oberoi Exquisite, also surprised as
50,000 sq. ft were sold for over `1.2 bn.
 In January 2015, Oberoi launched its Mulund properties under the Eternia and Enigma
brands, offering three and four BHK units. Oberoi launched both land parcels at one go,
versus its initial plan to launch one parcel of land at a time. Channel checks suggest a strong
response to the launches. We revise our sales estimates for FY2015 as we include the other
launch and increased pre-sales at the projects.
After a long wait, a slew of launches
Oberoi launched two projects over the past 30 days (one in 3QFY15 and one in 4QFY15). The
management is confident of launching another high volume project in Borivali in 1QFY16. With
all requisite tie-ups done, we believe the management is now pushing sales at its Oasis JV
aggressively. The sales will begin to reflect from FY2016, albeit at a slower pace, given their
luxury prices.
We alter our revenue recognition to account for changes in Oberoi Esquire
Oberoi Esquire is likely to cross the revenue-recognition threshold in FY2016, as per the
management. We alter our numbers to account for changes in Esquire as well as in the Oasis JV
(potential increase in area).

LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily19012015tn.pdf