Oberoi Realty-A simple real estate story

(hemtan100) #21

Excerpts from this year’s AR:

Real Estate bill will add tailwinds to Oberoi’s biz.

Going forward,we foresee some sectorial consolidation with the new real estate regulation acting
as a catalyst.

CMD paid a token salary of INR 1 p.m. Only income through dividends.

Mumbai real estate market has shown signs of improvement and increase in off-take of inventory.

Brand recall, strong cash flows, conservative debt practice are key strengths.

Looking at land parcels in NCR and Bangalore. This to me is a big negative!

No mention on Pune land parcel.

(hemtan100) #22

Attended Oberoi AGM and concal. A few notes:

a. Company looking at venturing into NCR and Bangalore only through the JV route where the JV partner has land parcels.
b. Strong sales in the Worli project in Q1.
c. Revenue recognition for Borivli to start in H1 FY18.
d. Mulund and Worli revenue recognition hopefully towards end of FY17. If not, FY18 surely.
e. Company able to raise debt (via NCDs’) at 9.25%. This to me is extremely cheap. HFC’s and even individual home loan borrowers get it more expensive than this.
f. Looking at mall projects in Borivli and Worli. Brilliant, more annuity income.
g. Oberoi mall to see the biggest Zara store opening up soon.
h. Worli 360 west may have a further upside if additional FSI approval obtained.
I. No change in base selling prices. Prices to see an uptick 6 months from here on. Buyer confidence slowly coming back.
j. Goregaon phase III - evaluating right now. want the new DC rules to fall in place. Q3 of FY17 a good bet for launch. 1.6 m sq ft
k. 0.2 D/E is a threshold for now. all projects spinning cash for the company.

To me, this is a AAA real estate player where FY18 should be a phenomenal year with Worli, Mulund and Borivli all set to hit revenue recognition in FY18.


(hemtan100) #24

Prior to DeMo, Oberoi planned to capitalize on the festive season (Oct-Dec). It was also expecting to see a significant uptick in Worli project.
Would be fascinating to assess the exact impact of Demo on Q3, Vivek Oberoi’s frank commentary on the same and their strategy going forward.

([email protected]) #27

(Sandeep Patel) #28

An excerpt from “The Consolidators” by Prince Mathews Thomas. The book takes us through the stories of seven super successful second-generation entrepreneurs who showed imagination, gumption and foresight in turning around the companies. Inspiring, revealing and gripping stories.

Vikas Oberoi

  • Don’t obsess about money: If you want to make good buildings, money will be a by-product. But if the intention is to make lots of money, then good buildings need not be a by-product.
  • Mistakes are good: I learnt from those mistakes, that’s why I’m here. Had my father, or we, not made those mistakes I would have never been here.
  • Follow your passion: People say greed is good, I don’t think so. People say one has to be hungry. I don’t think even that is good. Greed can make you do bad things. Hunger can make you desperate. Passion is the only thing that will never force you to cut corners for a result.
  • Understand what is important: A pilot is surrounded by around 100 meters. But he is not looking at all of them. He needs to know the destination, fuel, speed and elevation. The rest is data. That ability to split data from the noise is extremely important.
  • Discipline matters: I can actually say that I don’t have a single project that is a ghost project. I don’t have a single project in which I have not given occupation certificates to the customers, or a project which is complete but in which people are unable to stay because of regulatory issues. That has been our discipline from the beginning.
  • Keep debt minimal: So we don’t choose debt as an option. Especially when you are building a company that should last its lifetime, and not your lifetime.
  • Think ahead: There was no mall here. It would become a natural attraction for people to drive to this location. Even if this area was in the middle of nowhere earlier, now suddenly there would be things happening around the mall.
  • Live your product: Hand on heart, every apartment I have built, irrespective of the financial status it reflects, I would be happy living in it.

Source: https://www.amazon.in/Consolidators-Prince-Mathews-Thomas/dp/0143429302/ - Insightful read.

Disc: Invested. No transaction in last 30 days.

(Kumar Saurabh) #29

@spatel Read this book few days back. On a broader level including Vikas Oberoi, few patterns I saw across quality entrepreneurs who have created wealth for shareholders worth mentioning (Mr Vikas also exhibits most of them ):

  1. They were super passionate about what they were doing and it was about the experience n process not money
  2. They had huge learning and carrying experience from their parents which benefitted them and shareholders (Mr Oberoi initial fight with debt and what family went through n Now why he remains debt free)
  3. They are pioneers in industry to accept newness which can differentiate organization (on technology adaptation, quality adaptation. In Oberoi case , the 1st LEED certified mall, Samsung contract n SAP installation )
  4. They did their soul searching much early in life and by the time they turned 30, they had a decade of focused experience

(hegman12) #31

Oberoi realty posted 3 fold increase in profit in Q1 19.

HIGHLIGHTS of Consolidated Financial results for Q1FY19

  • Revenue for Q1FY19 at Rs. 895.38 crore as against Rs. 270.32 crore for Q1FY18 and EBITDA at
    Rs. 468.83 crore for Q1FY19 as against Rs.145.11 crore for Q1FY18
  • Profit Before Tax (PBT) for Q1FY19 at Rs. 454.39 crore as against Rs. 131.91 crore for Q1FY18
    and Profit After Tax (PAT) for Q1FY19 at Rs. 309.42 crore as against Rs. 91.37 crore for Q1FY18
  • Total area booked for Q1FY19 was 2.87 lakh sq. ft. as against 0.98 lakh sq. ft. booked in Q1FY18
    and the total value was Rs. 623.46 crore for Q1FY19 as against Rs. 287.92 crore for Q1FY18

([email protected]) #32


This stock has fallen ~15% in last 4 days. Is this linked to DHFL crisis?

(Kumar Saurabh) #34

My sense is : It is one of few companies in real estate with least debt and hence the issue can not be because of debt. But there could be a panic due to second order effect: BFSI is crashing, so, Mumbai being hub of financial market will witness pessimism, so, employment will get affected,so, those, who could buy premium real estate in Mumbai could get affected and hence, oberoi could get affected. Also, if in a country economic activity slows down and jobs get on risk, real estate will always get affected. One more thing, if you see last 1 year chart, most of real estate stocks are down 30-40% and short term moving average is almost below medium term moving average (20 days and 50 days)Disc : Hold 1.5% at 450 rs and slowly nibbling more at fall

([email protected]) #35

Hi @suru27 As Oberoi Reality is more concentrated towards Mumbai region dont you see that as a risk albeit having a good d/e ratio, your thoughts please

(Kumar Saurabh) #36

Yes, Not only Mumbai. I would say currently it is much concentrated, it is risk of CST airport. But then, in equity, nothing comes without risk. Each and every company has some risk which may get triggered or may not get triggered. That is why why have a portfolio to manage which we need to handle well to balance out these risks at stock, sector, group, currency, geography etc etc levels

(smehta) #37

Oberoi Realty

Highlights Of Q2 FY19 and H1 FY 19 Results

Key Highlights

Company has commence revenue recognition for Sky City project in Q1 and now commenceprofit for Etonia project in Mulund . Commerce-2 has achieved 97 % occupancy and rest will achieve in Q3 and Q4 of current financial year.


  • Revenue stood at 699 Cr compare to 895 Cr preceding quarter and 308 Cr last year same quarter.
  • PBT stood at 703 Cr compare to 451 Cr preceding quarter and 155 Cr last year same quarter.
  • PAT stood at 213 Cr compare to 309 Cr preceding quarter and 104 Cr last year same quarter.
  • Oberoi Mall contribute 37 % to the operating revenue against 35 Cr from preceding quarter and 26 Cr from last year same quarter. EBITDA margin stood at 95 %.
  • Commerce contributed 10 Cr against 10 Cr from preceding quarter and 11 Cr last year same quarter.
  • Commerce-2 Phase-1 contributed 18 Cr compare to 16 Cr preceding quarter and 12 Cr last year same quarter.
  • Western Mumbai garden city contribute 32 Cr for operational revenue against 30 Cr in preceding quarter and 29 Cr last year same quarter. EBITDA margin was in excess of 33 %
  • Development Properties
  • In One project of total 22.21 lakh sqft company booked around 52,000 sqft in the quarter and total till date company booked 15.16 lakh sqft which is about 71 % of inventory. Total booking value for the quarter was 110 Cr compare to 267 Cr for preceding year and 123 Cr last year same quarter. Cumulative booking value till date is 2389 Cr and total revenue recognition in the quarter was 110 Cr and cumulative revenue recognition till date is 2889 Cr on account of 100 % project completion.
  • In second project out of 15.47 lakh sqftcompany have booked about 17000 sqft in the quarter. Till date 14.2 lakh is booked till date is 19.13 % of total inventorytill date. Total booking value stood at 39 Cr compare to 12 Cr in preceding quarter and 12 Cr in last year same quarter. Cumulative booking till date is 2346 Cr and revenue recognized for the project is 39 Crand cumulative revenue recognized till date is 2346 Cr on account of 100 % project completion.
  • On Prisma Project , Out of 2.68 lakh sqft companybook about 8400 sqft in this quarter and till date is 2.31 lakh sqft that is 86 % of inventory in this project. Total booking value for Q2 is 17 Cr compare to 26 Cr in preceding quarter and 16 Cr last year same quarter. Cumulative booking value till date is 407 Cr. Total revenue recognize for the project in Q2 is 17 Cr and cumulative revenue recognition is 407 Cr on account of 100 % project completed.
  • On MulundEterna , Booking of 24000 sqft and till date is 5.64 lakh sq ft.Total booking value for the quarter is 34 Cr compare to 42 Cr in Q1 FY19 and 32 Cr last year same quarter. Cumulative booking value till date is 124 Cr. Total Revenue is 120 Cr and cumulative revenue is 234 Cr.
  • On Enigma Project, Booking done for 7600 sqftand till date is 3.7 lakh sq ft. Total booking value for this quarter is Rs 10 Cr against 19 Cr for Q1 FY19 and 25 Cr last year same quarter. Cumulative booking dateis 552 Cr and total revenue recognize is 18 Cr and cumulative recognition is 86 Cr.
  • On Sky City Project, Booking nearly 77,500 sqft in Q1 till date booked 14.72 lakh sqft and total booking value for this is 130 Cr compare to 89 Cr for Q1 FY19 and 88 Cr last year same quarter. Till date booking value is about 2356 Cr. Total revenue recognized for the project is 162 Cr and cumulative recognition till date is about 742 Cr.
  • On Varli Project OASS , Total booking stood at 51,500 sqftfor the quarter and till date company have booked about 5.29 lakh sq ft. Total booking value for the quarter was 223 Cr and till date the booking value is 2149 Cr. EBITDA margin stood at 49 % . PAT margin for mall and commerce is much higher than the average rate and 45 % is for residential for the quarter.


  • What is going in the industry after NBFC crises ? Does sales happening in the Industry ? How are developers getting squeezed and is there any experience of approval by NBFC slowing ?
    • Company was seeing this from a long time in fact it probably take large time. Because company was stuck up with developers who don’t know how to build and there are customers who buy from them literally going out and buying land parcelsonly because there were people to fund them. This was awaiting to happen. This is good news for company because company will have less competition in buying a land. Only genuine developers will probably raiseto buying the land.
  • Does buyers are facing problem for approval from HFC ?
    • None of company buyer are facing any problem because company buyers are prudent and solid so all the banks went to go to NBFC because his credential will not approve by and probably follow off. 99.99 % of buyers are not affected. Company don’t borrow for construction , company has always sold enough to build it.
  • Will this momentum will continue in Aspire and Sky City in coming quarter as well ?
    • On part company have quoted that commercial building are doing well as many builders are not building now similar thing will happen in residential apartment also . Very few developers will be able to take material that is land and going to build finish product that is apartment and if supply is going to reduce due to financial mismanagement of developer and due to lack of availability of funds from NBFC or whatever. This is clearly going to be good for company because these people who were able to build the block off are not gone to able to do that. So going forward developer who has good reputation in market his market share will increase because the market is not shrinking because of any stress. Market share s increasing and supply reducing. So for developers who are prudent and have a good track record will continue to do well.
    • In Aspire company has set for 100 apartments in the financial year and company is at 76 in just 2 quarters and saying that probably company will easily beat that target. By today company will very easily beat that target. By today company will don’t have any apartment left exclusive to sell. Now only Duplex and Pent house are left which are not in Aspire and sold 76 apartmentafter subvention scheme momentum will be good as festival season started.
  • In Eternia and 360 degree and west there has been a price reduction so is it a MDC issue or discount offered by developer ?
    • No. All apartment sold base on floor rise and low rise. In a particular if lower facility is getting sold than there is the price must be lower but the base price continue to remain same. In Eterniacompanyhave specifically open up lower floor apartment and that get sold so ticket price look like there is a reduction but there is not. In 360 degree company had first sold all the higher floors and not opened the higher floors and not opened the high zone yet so all in low zone all the higher floor apt sold and new people are buying lower floors also.
  • On commercial side who are the tenants and what kind of rental they are paying now ?
    • They are pretty much local and international companies.
  • Will the average revenue for 3Q will be high or in normal range ?
    • 140 Cr
  • Why commerce-1 rent come down from 140 to 136 Cr ?
    • Company is falling in all in commerce-2 so company have to level both.
  • How are the rental agreement done is it same as 5 % escalation ?
    • 15 % every three year including deposit and maintenanceseparately increasing.
  • Is there more room to grow in OberoiMall ?
    • Ye the improvement come from some big deals rather than more lease. So of vanilla tenant which was 220 rs has all gone up to 400 rs.So company keeps correcting them to present rent.
  • Did rent is now shift to percentage of revenue or still on per sqftbasis ?
    • Depend on which is higher, Company is a partner in the upside only.
  • What is the update on the phase of Thane and Goreagav ?
    • Goregav 3rd phase work has commenced and able to launch in Q3 or Q4 FY19.
    • In Maxima basement is completed so it will do launch in this financial year. In thane it will get launch in Q4 or Q1 of FY21.
  • Are the developers cutting prices to liquidate their inventory who were dealing with NBFC ?
    • It doesn’t matter. There will be no pricing pressure on the company .
  • On cash flow of about 560 C and operating cash flow 540 Cr s kindly comment on the construction cost and likely pace of it for next for next few quarter ?
    • Pace of work both at Boriwali and Mulund is impressive so in Varli also company has spend 120 Cr for construction or incurred 120 Cr in this quarter. There was a little bit TDR which was purchased for Mulund so that is what accounted in cash flow.
  • Now at which type of project company is looking for ?
    • 3 bedroom and 4 bedroom
  • H1 cashflow- 1000 Cr so if moment continue than the path will end to 2000 Cr a year. What could be the cash outflow out of it as does company see any incremental debt levels ?
    • Not looking at any increase in debt level. Now company is intend to build commerce-3 because commerce-2 is now fully leased out so far very specific projectare in need of debt and company will be able to manage all the project through cash flow. Company don’t want the debt level to go higher.
  • When will be the 360 degree west come into recognition ?Of the 2150 Cr booking value company had pay less than 50 % so what keeping the balance ?
    • Very close to the number and for the revenue recognition on other front more than 50 % of money are received . 67 % of work is done. In some cases lot of these buyer has put their own milestone because they are all advised by top lawyers and they want to ensure that some basic activities should get done. Now company don’t need to pump any money in it. Company will finish most f work in next 9 month and expect occupancy certificate by march or june next year.
  • In Aspire 250 unit pending and 150 unit pending in Varli so there are pretty massive so how company is planning for liquidating all of this ?
    • Company build in a way that company get its OC in 2 years and have patience certificate until governmentstart charging rental yield. Company have another 18 months and as Aspire company has done 76 apartments and if company sold more than 100 apartment than company willbe left with 100 only for next year. Company will be focused on sell everything by march 2020. Now company has the best inventory to sell.
  • CAPEX on 2 mall and Phase-2 of commerce-2 need to complete in 3 years so it is very high CAPEX of areas 2500 Cr so that is fair amount of leverage right ?
    • Firstlycompany want to look in all deals and in shopping mall at last company get 12 month deposit from incoming tenant. So company is not worried about quantity but worried on how company will pay and before the cash flow going to come from. If there is clarity from where cash is coming so it is more about product from where money is coming rather than quantity of money. Company have not leveraged anything on existing rental portfolio. Commerce-2 fully leased is over 100 Cr. Commerce-1 , hotel , school , mall is going to through rent of 250 Cr. So company is looking at 350 Cr rental income every year . Even if company discount that then also company have enough money from rental yield that can take care of the 2 more assets which will be company is looking for 300 Cr of Rental from Borivali and similar number in Varli. So mixing all company is looking for 1200 Cr of portfolio from these 3 additional asset. Borivali is going to generate surplus and of total rental yield . So one will end up with as much asrequired. Rest of aspire that complete free cash flow , All of these will end up contributing to the cash flow. So that way company is in control.
  • Is there some change in calculation in FSI and company will get come extra area ?
    • All has been factored by company and if it is it will be marginal and it will be pretty much same as mentioned.
  • How much debt is there in 360 degree varliproject ?
    • No debt
  • Do company expect TDR in FSI purchase for boriwaliproject ?
    • Company is waiting for some policy clarity. So once it get clarity the step will be taken.
  • In Sky City did any line for Tower-E launch ?
    • Company continue to sell A,B,C,D and in this quarter company has sold flat on higher floor and that’s why price increase is shown. Company is building tower-E. Company is selling A,B,C,Dwith good momentum. The lower floor are taken first because they come cheaper literally the 58th Floor being 50 % more expensive than low floor. So people want to buy lower floor because of price hike on upper floor. So company don’t want to start . The minute A,B,C,D get drawn up then company will launch E . Company is also working on F, G , H and hotel and work has been started.
  • Does company like to cold off for some time to see how market is respondingor looking for deal ?
    • Company is looking for deals. One cannot ever time the market. At these time company get the land at reasonable rates.
  • What will be the total CAPEX in Vorli and Boriwali ?
    • Less than 4000 sqft including multiple car parking. Company spread the entire construction entire GLA.
  • In varli did company get all approval or anything pending ?
    • No costal approval is pending . Company fall under the prevent DCR so company will take approval in new DCR so there is no uncertainity on that part.
  • On Commerce-2 in Goregav as building sold out so company will immediately start construction ?
    • Yes
  • What is company plan for ENIGMA because there is problem in selling it ?
    • Company is first focused on the things which can sold immediately. ENIGMA is among 20 % of overall market with highest quality product. Rest 80 % are competing for 2.5 bedroom and company started 3 BHK . Competition is very miniscule. It will only sold near completion. Company also don’t take cash that is also a problem. So it is slow but not worry for company.


@suru27 https://www.livemint.com/Companies/j7PAiwiugpdE3MGlk0hHpL/Mumbais-new-luxury-flats-face-harsh-realty.html it will take about 17 years to clear the current supply of luxury flats In light of companies 60% cash flows expected from Worli’s project. You still think it is worth investing?

(Karan Sharma) #39

Extrapolating the current rate 17 years forward is not the correct way to look at the inventory situation.


I just mentioned the article, I am not an expect looking for perspective from experienced people.

(tyrion lannister) #41

this is launched inventory … We should find out whats the the inventory which has got completion certificate as these luxury apartment gets sold on completion due to various reasons… like 1) effect of GSt is very high on high ened luxury . after CC , no GSt … One saves around 5-6 cr on 50 cr apartment . 2) ppl like to see feel before buying apartment of that prices… 3) wait for developer to complete as too many launch inventory is tere so prices are not going to run away in any case… 4) we are down cycle so cant extrapolate these data also… 5 ) most most imp… how is oberoi product… oberoi may be able to sell and other may not or vice versa… my estimate says we can see high uptick in sales no when oberoi will get CC for 360 west… oberoi didnt launched the product before it was more than 50% complete.

(Karan Sharma) #42

True. Even the article mentions Omkar stopped selling projects till it gets completed. This has been echoed by all developers that projects now get sold only on completion because buyers are end users. Oberoi is getting OC for 360 West in March-April 2019. It will be interesting to track sales post that

(Hardik) #43

For Oberoi 360, ticket size is upwards of 45 Cr. and all these developers are selective about who do they sell to create a network effect. There is definitely huge inventory pile up in terms of value of approx. Rs.7,000 cr.+

As per Vikas Oberoi, there are 30 deals in the pipeline within the ballpark on price.

They have still not recognised any revenue from 360 West. They have received Rs.1,005 cr. and balance receivable is ~Rs.1,144 Cr. which they are hoping to receive in March - June 2019.

Considering all of the above, there is a huge cash flow expected from already sold flats, revenue recognition and strong pipeline.

New area sold will be a key monitorable as the ticket size of ~Rs.45 Cr is considerably high.