Buy Oberoi Realty; target of Rs 515: JM Financial

JM Financial's research report on Oberoi Realty

Oberoi reported steady operations with pre-sales value at INR 5.7bn (INR 3.5bn 2QFY18) primarily on improvement in pre-sales across projects. Oberoi recognised Eternia revenues in 2QFY19 as project crossed 25% construction threshold. While company’s performance continues to improve post RERA/GST implementation, Mulund projects remain slow moving. Collections remained stable at INR 5.6bn (INR 5.7bn in 1QFY19). Net debt was reported at INR 4.1bn. Operating cash flows declined on TDR payments and higher construction spends. Company has received 97% lease commitment in Commerz II (63% at present). We believe current liquidity crisis will give lucrative business development opportunities for branded developers like Oberoi.

Outlook

Operations momentum will be contingent on launch of Goregaon ph 3, JVLR and Thane project. We maintain Buy with INR 515 TP.