Release Date: January 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Oberoi Realty Ltd (BOM:533273, Financial) reported a healthy quarter driven by strong performance in their integrated development at Garden City Thane.
- The company achieved over 95% occupancy in their commercial assets, indicating strong leasing interest.
- Oberoi Realty Ltd (BOM:533273) has entered into a joint development agreement for a significant land parcel, enhancing future growth prospects.
- The company has been appointed as developers by SRA for a project with a free sale potential of about 3.2 lakh square feet.
- Oberoi Realty Ltd (BOM:533273) has a strong cash flow visibility with ready inventory and expected rental income from malls and commercial offices.
Negative Points
- There was a disappointment in sales for the quarter, particularly with the 360 West project, which did not meet high expectations.
- The company experienced a relatively soft quarter in terms of pre-sales, attributed to strategic pricing adjustments and market absorption time.
- Operating cash flow was softer this quarter due to advances for acquisitions and land payments impacting cash flow.
- There is a delay in major project launches, with the current year relying heavily on sustenance sales rather than new launches.
- Concerns were raised about the competitive intensity in the Mumbai market and the potential impact on business development.
Q & A Highlights
Q: What were the reasons for the underperformance in sales this quarter, particularly with 360 West and Borivali?
A: We evaluate sales on an annual basis rather than quarterly. The decision-making time for projects like 360 West is typically three to four months. The previous quarter's strong performance was a buildup from earlier quarters. We expect deals to culminate in the next quarter. In Borivali, we increased prices as resale was happening at 20-25% higher than our selling price. This strategic move is similar to past price adjustments, and we anticipate the market will absorb the new pricing soon. - Chairman and Managing Director
Q: Given the business development efforts, why haven't there been more major launches this year?
A: We focus on perfecting the product before launching. We have several projects ready for launch, with planning completed for multiple locations. These diverse projects will not compete with each other. Expect launches between the second and third quarters of next year. Meanwhile, we have enough inventory to sell from existing projects. - Chairman and Managing Director
Q: How do you plan to utilize the cash flow from ready inventory and expected rental income?
A: We have significant ready inventory and expect substantial rental income. This cash flow will be reinvested into business development, primarily for acquiring more land. This cycle of reinvesting cash flow into land acquisition is a core part of our strategy. - Chairman and Managing Director
Q: What is the status of the Supreme Court case and its impact on your capital plans?
A: We have multiple avenues to raise capital, including internal resources. The Supreme Court case is ongoing, and we will take decisions based on opportunities as they arise. We have an enabling resolution for capital actions, but specifics will be shared at the appropriate time. - Chairman and Managing Director
Q: How do you view the residential demand in both luxury and mass market segments?
A: We are agnostic to demand fluctuations because of our strong brand and quality products. People gravitate towards quality, and we are well-positioned to capitalize on any market conditions. Buying a house remains a priority for consumers, and we are confident in our market position. - Chairman and Managing Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
