Oberoi Realty: On strong growth foundation with domination in luxury market

Oberoi Realty is a Mumbai-focussed real estate player across residential, retail, hospitality, and social infrastructure. It is one of the strongest brands in the Mumbai Metropolitan Region (MMR).

 

The company has seen robust growth in pre-sales and collections and is likely to achieve a compound annual growth rate (CAGR) of 25 per cent in pre-sales numbers between FY24 and FY27.

 

It intends to raise Rs 6,000 crore, which may be deployed in the next 1-2 years. Such an amount could be used to acquire land parcels and may add a gross development value (GDV) of Rs 70,000 crore. Oberoi’s net debt to equity stands at a negligible 0.02x as of H1FY25. Oberoi has completed over 35 projects till date in FY25 and has a portfolio of 30 million sq ft of ongoing and forthcoming developments. 

 

The company can rely on internal accruals and collections for upcoming projects, with up to 25 per cent booked in the first month of launch. It is seeing better flows of annuity income from its commercial, retail, and hospitality segments. This cash-rich model plus fundraising and reduced leverage will accelerate its business development trajectory.

 

Oberoi Realty reported a revenue CAGR of 19 per cent during FY20-FY24, with a reported revenue of Rs 4,496 crore for FY24. There is a pipeline of residential launches, including new towers in Elysian, Skycity, and Forestville and premium projects in Peddar Road, Malabar Hill, Tardeo, and Bandra in Mumbai. 

 

In Delhi NCR, there is a possible launch in Gurugram. Oberoi's rental avenues, including commercial and retail properties, are set to increase, given the higher contributions. By FY27, bookings are projected to exceed Rs 9,000 crore, driven by launches in Thane, South Mumbai, and NCR.

 

A 22 per cent CAGR during FY24-27 is possible, implying a revenue of Rs 8,171 crore by FY27. Residential is expected to contribute 80 per cent of the total revenue, with the remaining from annuity and hospitality.

 

Earnings before interest, taxes, depreciation and amortisation (Ebitda) margins of over 50 per cent are among the highest in the realty sector.

 

For FY24, Oberoi Realty reported Ebitda margins of 53.6 per cent, with an increase of 106 basis points (bps) from FY23. Ebitda margins may sustain at 55 per cent or better from FY25-27, translating into an estimated Ebitda of Rs 4,536 crore for FY27. Over FY20 to FY24, the Ebitda CAGR was 23 per cent.

 

Oberoi Realty reported a profit after tax (PAT) of Rs 1,926 crore for FY24, reflecting 1.1 per cent year-on-year (Y-o-Y) increase.

 

The PAT CAGR for FY20-FY24 was 60 per cent. PAT CAGR over FY24-27 could be about 20 per cent with PAT margins expected to stabilise at 40 per cent.

 

Oberoi has a dominant position in MMR’s luxury segment. The retail segment continues to perform well and the hospitality segment remains buoyant, with travel momentum being sustained. Oberoi has a substantial leasing portfolio in marquee locations, with occupancy levels of 90 per cent and above. Its current projects include Commerz, Commerz II, and Oberoi Mall, along with recent additions such as Commerz III, the Borivali Skycity extension, and Borivali Mall.

 

Ebitda margins for these properties are consistently above 90 per cent.

 

Overall occupancy for its annuity portfolio is projected to surpass 90 per cent by FY27. Post-RERA implementation, branded players have benefited, with Oberoi Realty emerging as one of the top players in Mumbai.