Oberoi Realty share price dips 5%, hits seven month low; here's why

The Supreme Court has asked the Environment Ministry and Maharashtra government to clarify the status of Sahara's 106-acre plot in Versova, Mumbai, according to reports

Oberoi Realty shares hit a seven month low of Rs 1,561, falling 5 per cent on the BSE in Thursday’s intra-day trade after the Supreme Court sought a response from the Maharashtra government on the environmental status of Sahara's 106-acre plot in Versova, Mumbai. The court decided not to examine the bids at this stage and ordered the return of deposits amounting to Rs 1,000 crore by Oberoi Realty, for now.

 

At 10:45 AM; Oberoi Realty was quoting 2 per cent lower at Rs 1,605, as compared to the 0.64 per cent rise in the BSE Sensex. The stock price of the real estate company has corrected 34 per cent from its record high level of Rs 2,349.80 touched on December 27, 2024. It is trading at its lowest level since May 2024.

 

 

According to a Economic Times report, the Supreme Court has asked the Environment Ministry and Maharashtra government to clarify the status of Sahara's 106-acre plot in Versova, Mumbai; and whether it's fully or partially a mangrove forest. The court aims to optimise the property's value, considering either joint venture development or outright sale to meet Sahara's pending dues.

 

Consequently, it has decided not to examine the bids at this stage and ordered a return of Oberoi Realty’s Rs 1,000 crore deposits for now. The court has also instructed Sahara India Commercial Corp. to discuss ways to maximise the land’s commercial value with real estate experts and Sebi officials.

 

According to ICICI Securities, the development is sentimentally negative for Oberoi Realty as the land provided significant opportunity for new business development. However, the stock has corrected by almost 30 per cent in less than two months led by the overall correction in the markets. The same has led to an erosion in premium-to-NAV, while providing a good opportunity to buy for the long-term.

 

Meanwhile, in the past one month, Oberoi Realty has underperformed the market, by falling 22 per cent after it reported mixed earnings for the quarter ended December 2024 (Q3FY25).

 

Oberoi Realty reported presales of Rs 1,900 crore, up 33 per cent quarter-on-quarter (QoQ) and 144 per cent year-on-year (YoY), missing Elara Capital's estimates of Rs 3,100 crore. This was partly led by lower-than-anticipated sales in 360 West that was impacted by deal closures slipping into Q4FY25. Also, sustenance sales in other projects was hit by a combination of price hikes and holding back of higher floor inventory (ex-Mulund), said analysts at Elara Capital in the company's Q3 results update.

 

In Q4FY25, the only new launch that may come through is another tower in the Borivali project (planned around the soft launch of the Borivali mall), in mid-February to early-March. The brokerage firm sees the focus of the market moving to FY26, for which the outlook is upbeat. The company's management is confident of activating at least four new markets, including Sector 58 (Gurugram), Adarsh Nagar (Worli), Tardeo and Peddar Road (Mumbai), all amounting to a gross development value (GDV) of Rs 24,000 crore.

 

The brokerage firm said it favours Oberoi Realty given its prudent underwriting through cycles – land cost at less than 5 per cent of gross development value (GDV), deep micro-market presence at 25 per cent/ 15 per cent/ 10 per cent volume market share in the Goregaon/ Borivali/ Mulund micro markets, respectively, through FY21-24, and convergence to a multi-regional play with entry into Gurugram.