Oberoi Realty Ltd shares rose nearly 3.5% on the National Stock Exchange in Wednesday’s early trade, hitting a new 52-week high of ₹1,149.80. This is despite the company seeing a weak start to the financial year with Q1FY24 pre-sales or bookings slipping to an eight-quarter low.
But increased clarity on the much-awaited Thane project launches seems to have driven investors’ sentiment. Remember, a timely launch of these projects is a crucial determinant of the company’s FY24 pre-sales performance.
According to analysts at Motilal Oswal Financial Services Ltd, FY24 is likely to be a big launch year for Oberoi Realty with ₹12,000 crore of launches planned in H2FY24 and will lead to 74% growth in pre-sales in FY24. “In order to sustain a healthy 15-20% growth rate, the company would have to add new projects into the pipeline,” it added.
In its Q1FY24 earnings call, the management said that it is planning to launch phase 1, which comprises three towers at Thane in October, with the Kolshet Road launch in a few months. Further, the company has a large inventory of completed projects at Worli, Mulund and Borivali, which should aid healthy cash generation in the coming quarters, added the management.
“While the upcoming Thane launch would be cheered by the market, we believe the CMP adequately reflects the positives, following the recent run-up in the stock price,” said analysts at Kotak Institutional Equities in a report dated 2 August. In the last three months, the Oberoi Realty stock has rallied by over 20%.
On the business development front, the management said that it has an ongoing deal in Gurugram, which is nearing its conclusion. Further, it has signed a letter of intent for a redevelopment project in Mumbai and are awaiting the signing of the development agreement. Against this backdrop, the management is hopeful of announcing new acquisitions in Q2FY24.
With the spectre of interest rate hikes largely out of the sector’s way, realty stocks including Oberoi Realty are garnering increased investors’ attention. But for this excitement to last, the pace of launches is important.
“Unlike other grade A developers such as Lodha, DLF, and Godrej Properties, which are consistently witnessing growth in their sales bookings by capitalizing on the current housing upcycle, Oberoi is missing out on capitalizing on the residential demand due to a lack of new launches,” said a report by Antique Stock Broking Ltd. Also, the accelerated pre-leasing activity of the under-construction annuity assets will remain a key catalyst for the rental business, added the report.