We cut our earnings estimates by 3-9% in FY16-18e as we factor in slower sales from Exquisite and slower sales of high ticket projects in Worli. We also roll forward our NAV to September 2016 from June 2016 previously, and increase our target price to R290 (up from R285) based on a 16% discount (unchanged) at 0.5SD above the historical mean from our NAV of R368 (down from R370).
Oberoi’s presence is limited to Mumbai currently. We remain negative on this market, as inventory levels are high with more than 40 months; however, Oberoi’s projects command premia and better offtake. We think the response to its newly launched Prisma and Mulund projects is testimony to its brand strength. Launches in Borivili, Mulund, Goregaon, Worli and Maxima would support continued sales momentum and enthusiasm.
The company launched its long-awaited Borivali project (25 acres) in the quarter, which received good response. The construction commencement certificate for Enigma (Mulund) has been received and construction has already begun.
On the Goregaon projects, Exquisite will likely not be fully monetised until 1QFY17 (versus earlier expectations of 4QFY16) and Esquire is likely to come for revenue recognition by 3QFY16.
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