 "Oberoi Realty")
Mumbai reported record residential sales by value last year. Property registrations at over 13,000 units were the highest in 12 months. However, compared to the year-ago period’s stamp duty concession-led high base, registrations were down 22 per cent.
Volumes were lower year-on-year (YoY), but in terms of value, sales were up 4 per cent. In fact, sales hit a 10-year monthly high due to a rise in property prices, a preference for premium property, and an improved product mix. Rupesh Sankhe and Tanvi Tambat of Elara Capital said that Mumbai's residential market remained stable due to robust consumer confidence supported by a rise in income levels.
Since the onset of the pandemic, sustained inclination towards house ownership was seen despite higher home loan rates, no sops from the state government, and a rise in capital values versus the past year, which stretched house purchase affordability. While the brokerage expects an unrelenting appetite for home ownership to drive demand, it cautions against persistent inflation and possible rate hike by the Reserve Bank of India, which might hit the housing growth trajectory.
Among larger listed players, Oberoi Realty would be a major beneficiary of the high residential demand in Mumbai given its entire revenue comes from this key market. The gains are expected both on account of higher residential momentum in the Mumbai market, as well as from its commercial portfolio of office and mall assets.
After the muted performance in the December quarter due to weak bookings, the launch of the Thane-based Kolshet road project, which is expected in the June quarter, and the launch of a new tower in the Elysian project are triggers. The company recently acquired an 8.5-acre land parcel from Blue Star at Pokhran Road, Thane, and the project is expected to be launched in the current financial year.
While the company reported ~639-crore bookings in the December quarter, the Street expects bookings in the March quarter to be around ~1,100 crore on expectation of new launches and sales in current projects.
In addition to the residential projects, its annuity portfolio too is expected to see robust growth. The company’s Commerz III project is expected to get the occupation certificate by the end of FY24, and Morgan Stanley has booked about half of the saleable area in this project. Its Borivali mall project is also expected to be completed by November this year. The company’s annuity portfolio is expected to generate rentals of ~1,200 crore by FY26 compared to an estimated ~300 crore in FY23, said Motilal Oswal Research.
Rerating triggers are the launch of the Thane project, and customer response to the same, new project additions, healthy traction at 360-West project in Worli, Mumbai, and significant scale-up in rentals, according to the brokerage.
At the current price, the stock is trading at a 23 per cent discount to its net asset value and can be accumulated on dips, say experts.
