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On the back of a robust order book, Oberoi Realty is optimisticly looking forward to FY13.
On the back of a robust order book, Oberoi Realty is optimisticly looking forward to FY13. In an interview to CNBC-TV18, chairman and managing director Vikas Oberoi said their order book stand at Rs 1,500 crore, which is a 40-50% increase in sales.
For this year, Oberoi says they plan to launch the Worli project this quarter and the Mulund project in Q2.
Oberoi posted strong Q4 FY12 results, with margins coming in at 68% and profit at Rs 188 crore. “This was on the back of higher revenue recognition,” admits Oberoi, adding that margins gained on the back of a price rise.
Below is an edited transcript of his interview with Latha Venkatesh and Gautam Broker. Also watch the accompanying video.
Q: Most of your Q4 numbers look better than the overall average. Will this better performance continue in the current quarter?
A: All this is basically recognition of revenue. If there is a lot work that’s happened around this quarter, that amount of revenue gets recognized. Instead of looking at a real estate company from a quarter on quarter perspective, I am trying to push everyone to look at it on an annual basis because with that we have some margin in showing how we are doing.
I would ideally insist not even to look at us on a annual basis because there are some years where construction has not been so robust, so one can’t recognize that revenue. Let’s say if you pick a project which is really huge, then until you touch 20-25% of your cost you don’t end up recognizing. So these problems really give you different indications, but one shouldn’t look into all that.
Q: How is the general trend in terms of sales that you have done? I thought your overall sales were flat year to year, FY12 compared to FY11. Does FY13 look at least as good?
A: So here again if you see that the sales are also based on the construction that I do and the recognition that I can do for that. Unless and until I cross a particular threshold, I am not able to do that. So just to give you a flavour of what 2013 could look like, our order book this year is Rs 1,500 crore, which is almost a 50% increase. I would think 33% but it is almost between 40-50% increase in sales. So in fact the future looks a lot brighter I would say.
Q: You mange to sell about 700,000 square feet in this fiscal. What's the expectation for the next year?
A: Let me tell you that we were able to sell a lot more, but the only amount of recognition we could do were for 700,000 square feet because we have to cross the threshold of 20-25% of construction. Esquire alone has sold for a good over Rs 850 crore, this is one project in Goregoan. Exquisite where we are doing some amount of revenue recognition is over Rs 1,000 crore. All this will come into play the next year, so suddenly the next year will look a lot better.
Q: Where do you think you might end up in FY13 in terms of being able to recognize sales?
A: I can’t give forward looking statement, but look at the order book. If the order book has an increase and we continue to build, then the obvious is that the sales will also probably look that much higher.
Read on to know more about Oberoi's projects this year..
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