ICICI Direct recommended hold rating on Oberoi Realty with a target price of Rs 410 in its research report dated July 17, 2020.
ICICI Direct's research report on Oberoi Realty
Oberoi Realty’s (ORL) weak Q1FY21 print is a clear reflection of a weak residential real estate market in Mumbai coupled with the pain of hotel and mall closure amid Covid-19. Q1 sales volumes plunged 94.9% YoY to merely 12,308 sq ft while that in Q4FY20 were down 12.2% YoY at 1.27 lakh sq ft. Revenues declined 80.4% YoY to Rs 118 crore in Q1FY21, on account of almost stalled execution in the residential segment leading to revenue recognition of Rs 57.3 crore (vs. Rs 463 crore in Q1FY20), washout performance in hospitality (revenues of Rs 2.3 crore vs. Rs 31.9 crore in Q1FY20) and zero revenue recognition for Oberoi mall due to uncertainty on account of Covid-19. EBITDA margins expanded ~10 percentage points (pp) YoY to 49.1% given lower cost recognition with insignificant execution in the residential segment. PAT declined 81.5% YoY to Rs 28.1 crore.
Hence, we assign a HOLD rating (vs. BUY earlier) with a revised target price of Rs 410.
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