Oberoi Realty Ltd - Q1 FY22 Result Report - YES Securities

(Rating: BUY, TP: Rs1,001, Upside: 49%)

- We have accommodated for expected price hikes (2-3% escalations which we earlier considered -ive) for residential projects on the back of growing input cost. We believe OBER's sales velocity to increase from coming quarters, hence we have shortened project cycle. Residential business valued at Rs67.4bn (Rs185/share).

- We assumed company to actively add redevelopment projects of atleast similar size of Shiv Shahi society going ahead so added business development (BD) on Redevelopment and valued at Rs15.4bn translating to Rs42/share (WACC 12%).

- Management is enthusiastic to take 'Oberoi' brand to other geographies and actively evaluating opportunities. Hence, we have added BD looking at track record of projects addition. We assumed company to add project to the tune of 5msf each with gap of 3-5years and came out with value of Rs6.6bn (Rs18/share).

- We believe with consolidation witnessed in sector, better player like OBER will always have upper edge on the back of quality product, delivery track record and lean balance sheet (D/E of 0.17x). Entry in redevelopment business and geographical diversification will further increase brand visibility along with market share gain. We have given 20% premium to current portfolio for being leader in premium residential segment and arrived at SoTP based NAV of Rs1001/share (WACC 10%, Cap rate 8%) hence retain our 'BUY' rating on stock.

Shares of OBEROI REALTY LIMITED was last trading in BSE at Rs. 719.5 as compared to the previous close of Rs. 740.15. The total number of shares traded during the day was 52423 in over 3452 trades.

The stock hit an intraday high of Rs. 744.85 and intraday low of 713. The net turnover during the day was Rs. 38227226.

Source : Equity Bulls

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