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Ladies and gentlemen, good day, and welcome to the Oberoi Realty Q4 FY '22 Earnings Conference Call. We have Mr. Vikas Oberoi, the Chairman and Managing Director of the company; and Mr. Saumil Daru, Director of Finance of the company, with us for the call. Please note that this call will be for 30 minutes. [Operator Instructions] And this conference call is being recorded, and the transcript of the same may be put up on the website of the company. [Operator Instructions]
Before I hand the conference over to the management, I would like to remind you that certain statements made during the course of this call may not be based on historical information or facts and may be forward-looking statements, including those related to general business statements, plans, strategy of the company, the future financial condition and growth prospect.
The forward-looking statements are based on expectations and projections and may involve a number of risks and uncertainties and other factors that could cause actual results, opportunities and growth potential to differ materially from those suggested by such statements.
I now hand the conference over to Mr. Vikas Oberoi, the Chairman and Managing Director of the company. Thank you, and over to you, sir.
Thank you. Good morning, good afternoon, good evening to all of you as per the time zone from which you have logged in, and welcome to the conference call of fourth quarter financial year 2022 results and business updates. Thank you all for taking time to attend this call. I hope your family and you are doing well and keeping yourself safe.
Before we begin, I would like to share a few quick updates. We closed FY 2022 with our best-ever bottom line and the path of the company crossing INR 1,000 crores mark for the first time. This gives us immense confidence to continue to grow and deliver value to all our stakeholders.
On the business development side, I'm very happy to let you know that in the last quarter, we closed 2 land acquisitions. One is a land parcel at Peddar Road and the other one is a land parcel at Kolshet Road, Thane. The Peddar Road property has a potential of 75,000 square feet carpet, say about 125,000 square feet sellable. And the Kolshet Road property could give us another 2.5 million square feet. I'm sure most of you have gone through the numbers in the presentation. And as you would have seen, all the projects have contributed to driving the top line.
With this, I will open the floor to question and answer and happy to address each of you individually.
[Operator Instructions] The first question is from the line of Pritesh Sheth from Motilal Oswal.
So congrats on the new deal signings. So first question is on when are we looking to launch those projects? Are they near to -- or near to the launch or you are still yet to building the design and development part of it?
So Pritesh, we obviously did acquire the property, and we immediately got on to designing. I mean, whatever it takes in terms of getting our approvals in place, we will then quickly go out and launch these projects. From our past experience, we feel that it could safely happen within now, the new financial year for sure. Whether it's the third quarter or the fourth quarter is something one needs to see, but it's certainly within this year.
Okay. And can you provide an update on the first Thane project that you acquired? In terms of launch, how far we are?
So now waiting for final approval. As you know that RERA does not allow you to start marketing the project until you have all the permissions in hand. We do have an approval, but you need environment clearance, even that is like literally happening as we speak. So once we have that in our hand, we would probably roll that out too. That looks like more like the second quarter this financial year, '22, '23.
Sure. And lastly on Mulund projects, we are still seeing the construction progress at 70% on an average for both these projects and I think the delivery time is scheduled at December '22. Are we on time to deliver that? I mean, 30% of construction will we complete that within the next couple of quarters? Or we have -- or do you see some delay in terms of possession?
No, no, no delay at all. We are absolutely pushing to complete it within the given time lines.
We'll move to the next question from the line of Dhruvesh Sanghvi from Prospero Tree.
Yes. I just want to know -- first question is related to the 360. I mean we have been talking about the OC. If you can guide us in terms of where exactly are we stuck? I understand that there may be a lot of buyers looking to go for the post-GST, that project is almost complete. So some thoughts on that will really help thinking where is it going?
So we are very certain this should happen within this month and we ourselves are waiting. You know this is a fully built, fully paid up project and really looking forward to now getting down to selling it.
Right. Right. And in terms of Thane, when you say the environmental clearances, is it -- I mean I know that you are more excited and naturally the entire organization is working towards that, and we are awaiting for it. But does it look like this Q2 '23 looks like a really strong time line that we will be able to mostly manage and go for it, considering no pandemic and no such thing of course?
Obviously, No. So firstly, we are ready with our show apartments, almost getting ready with our apartments. We should have our approvals in hand within the next maybe 1 month or 1.5 months. And then we'll be ready to roll. So second quarter of this financial year looks absolutely achievable. Now the idea is how you want to time it. Again, the -- let's -- what's the early period in which you want to launch and stuff like that. So that probably will be the only consideration, barring that we will be ready in the next 60 days.
Can I squeeze in one more, please?
Yes, yes. Sure, please.
Yes. In terms of -- similarly, the kind of runways that we're having including Mulund, Borivali and Goregaon is just fantastic, and it looks very clearly that in no time you may launch another individual towers at Borivali and Goregaon, considering less than -- very, very less inventory available now.
So in that light, how are the customers responding when they hear the RERA time lines will be 2027 for new towers like F and maybe anything else? And even when we check on the ground side about the A, B, C, D, there is a slight delay because of the COVID and all of it due to the construction activity getting affected.
So when will we see possessions coming in, in a big way, for example, Mulund is scheduled, I'm assuming. So some lines on possession. And along with the Oberoi mall at Borivali because that will add to the charm and maybe help us on the driving side also.
No, absolutely. I appreciate your study on our project. In fact, we top up with our mall this month itself. We are done with the mall then internal finishing. Our internal target is to make sure that we have our mall operational by next year. And we are also doing a 5-tower sell on top of the mall. So you're absolutely right. It's almost like a mini Oberoi Garden City in Borivali, it is 25 acres. 5 towers have topped up, finishing going on, and the club house work is happening.
So really, I mean, as a product, I shouldn't be tom-toming about my own product. But I want to use this forum to say that probably there is nothing parallel to what we built and we ourselves are very happy and excited about what we've done.
As far as time lines go, we've always tried to beat expectations of people. Had it not been for COVID, we would have done that even within the existing 5 towers. But maybe RERA time lines are more of a safety net for us, we obviously try and do them faster. And we've set these dates and people with God's grace have so much trust in the brand, which we want to, at all costs, retained. We don't see any resistance in people wanting to buy flat irrespective.
And I just want to add because you did say about Goregaon. Today, we almost don't have a single flat to sell in Goregaon. And the next inventory for Goregaon will be delivered only once Elysian is ready. So you can imagine what it will do to the pricing in Goregaon, it will completely go through the roof because as a location it is so well established, everybody wants to stay here of the way it's been built. And second, clearly see the way it's gone, we literally don't have anything to sell anymore.
Just to add on, I mean, there's the feedback there also that prices are already 10% to 15% higher than what you are selling the last apartment pending.
Yes, absolutely. In fact, I was personally very surprised to see pricing at beyond INR 40,000 a square foot on carpet also in resale. And I was looking and telling my people that our customers do a better job selling at higher prices than we do. So yes, you're right. I mean I'm happy for them. And I'm happy that we have enough to sell also. But unfortunately, it will only get ready and built 1/5th of that. But our work has picked up. Elysian is like today beyond 13, 14 floor. So it's picked up well. I think there also, we will top up our construction in the next 18 months and then we'll start finishing.
So people will see volume of work happening. And yes, I mean, no complaint really. I mean things could have been faster, but you know how it is. Everybody is going through this entire post-pandemic challenges of labor, of growth, of people, but it's a good problem to have. So we are not continuing to worry.
One last question on strategy is the way we are establishing our -- super established in Mumbai. Why are we not -- I mean, of course, you have been talking that you are keen and you will some point in time see outside Mumbai. But any thoughts on where any progress made? And how are things shaping up there, if at all?
So we have made progress. Again, don't want to set expectations. I'd rather close them and come back to you. We're very close to closing things. And some of them we in fact have been signed an MOU, very excited. But like I said, I don't want to set any expectations. I'd rather do it and then tell. We're often blamed for being conservative, but in a market where everyone is always a cowboy, it's okay to be conservative.
[Operator Instructions] The next question is from the line of Parvez Akhtar Qazi from Edelweiss Securities.
Just 2 questions from my side. First, when can we see incremental launches in Goregaon, Borivali and the Kandivali project, that is question number one? And the second, in light of the commodity price increase, what is the outlook on the pricing front, both in our projects to mitigate the impact of commodity price and also in general at a systemic level? These are my 2 questions.
So Parvez, firstly, Goregaon and Borivali towers will happen as I spoke earlier. We did say that they are on the cards, the inventories are low, so we will probably start rolling out one tower reach pretty much maybe the next quarter or quarter after that.
And on the commodity price increase, we are very lucky. We -- our price points are much higher and the contribution of construction cost is significantly lower compared to many other developers. So let's say, if my construction cost probably is about 20% of my overall cost of 25%. If there is a 10%, 15% increase or 20% increase, it's effectively only about 4% or 5% on the sales wise. So we are -- and of course, I mean, the sensitivity to price increase by 5%, 10%, customers are not really bothered because they also see commodity cycle catching up or there is an increase in steel and cement prices. So they are -- they don't mind that increase.
And we have actually introduced projects with higher pricing, and we have had no resistance at all. And -- so we're not very unduly worried about commodity. Only wherever developers are selling at lower price and where the construction cost contributes normally 50%, 60% of sale price, they have to really worry. And -- so yes, that's my 2 bits.
Sir, and lastly, any update on the Bhandup that we had applied? When can you see a launch, sir?
So Bhandup, we will probably be doing it in a different way. We will be using it to generate FSI for our other projects. So we may not do a direct sale on Bhandup, but we want to do some sort of a PAP project, which will enable us to generate FSI, and that's what we're really looking at.
The next question is from the line of Samar Sarda from Axis Capital.
Congratulations on another good fiscal gone by. All the best for FY '23. I had a couple of questions on Peddar Road and Kolshet Road since like a shareholding in the project design, should we assume that all approvals and premiums are also to be borne by us?
So the answer is yes. But there is not much of a premium to be paid in both the projects as such. So -- and they are very, very good projects. We really like the -- I mean it's a good project, I would say, very balanced and really happy having done that.
Okay. Great. And also some like news that looking to acquire another 7 acres next to OGC in Thane given the increase in FSI and the amount of FSI we're getting there. If you could help us understand that thought process?
No, no, nothing. I mean, we are not acquiring any new land anywhere as yet.
Fair enough. And just a book-keeping question for Saumil. Saumil, the balance cost to complete Tower A and B at 360 West, could you just help with that number, please?
Balance cost to compete Tower A and B of -- I can check on that and come back to you?
Yes, sure.
We will move on to the next question that is from the line of Rahul Jain from Dolat Capital.
Just have a couple of questions. First is on the Thane micro market. If you can share your thoughts on the strategy with this particular micro market? Is it to go deep into the micro market or just like some of the payers or the new land acquisition is just a one-off opportunity?
No. So frankly, let me tell you all our land acquisitions are opportunistic. We do not buy land unless and until we know that we're going to make money. And the strategy is very simple, Kolshet Road and this Pokhran Road don't really compete with each other. They are both different markets as far as price points go. And we are happy to be in both these price points. And we thought that they'll complement each other.
And yes, as far as quality goes we will be doing both these projects in the same Oberoi realty style. We will make sure that they are both comparable in terms of quality, but location will drive the area and the ticket size and the price. And that's what we've been doing, and we will do that.
Got it, sir. That's very clear. My second one is on Mulund just a data-keeping one. How much CapEx is pending there?
How much?
CapEx?
So technically, it's not a CapEx. It's an OpEx. So if you look at it, we have already told you that Mulund is about 70% complete. So the remaining 30%, you can -- so between the 2 projects put together, it will be about INR 400 crores to INR 450 crores, which will be pending.
The next question is from the line of Sameer Baisiwala from Morgan Stanley.
First question is on your update on the Glaxo Worli?
So again, we originally wanted to do commercial and then pandemic happened. Post that, obviously, we thought that we should do resi because resi is doing really well. And now again, markets say that retail is back, offices are back.
So frankly, on a side note, I'll probably call you and check with you what should one be doing, we're pretty much confused. We now have both plans ready and both make a very compelling business decision. But again, like I said, that maybe within this quarter, we will take a call and move on. And yes.
Okay. Great. And the second question is on Mulund sales momentum. It looks like you did pretty nice 65, 70 units, maybe higher than last few quarters. So anything that's helping us in Mulund?
So there are 2 things I'll tell you. One -- and you're so right. I used to always compare Mulund to Borivali. And I thought that it's always doing 60% or 70% of what Borivali does. But it's -- somebody did tell me, and I was actually even reading somewhere that one of the social media chats, where we said that this is probably by far the best project in Mulund.
And somebody's probably -- and I know it resonates and agree not just because it's my project, but it's really, really turned out well. And today, we've also started taking people to the actual apartment. And from there, they can see the landscape, they can see the clubhouse that we've done so on and so forth. And I can tell you very safely that this year could be the year for Mulund and we have a lot to sell. And I'm very hopeful that it will really, really do well. So it's great.
Okay. And just final question. You have taken a INR 3,500 crore approval for fund raise, INR 2,000 equity. So anything more to it? Or it's just enabling this?
I'll let Saumil answer this. He's not spoken about since we started.
Sameer. So we have been doing with this many years now kind of continuously. So this is, as you pointed out, only an enabling resolution. That's about it. I don't want anyone to read anything more into it than the fact that it's just an enabling resolution.
The next question is from the line of Manish Gandhi from KPMK Investments.
Yes. So my first question is regarding the Worli 360. And due to the time we have lost in last 1 year, how do you see still the demand? Because many buyers so much being in the market, they might have also bought somewhere. And of course, related to that, why would now we sell at the price we were selling, it should be much, much higher?
So Manish, you have answered your question with the answer I would have given to you. That we have lost nothing. We've only gained. I mean, we'll get a much higher price as you rightly said. So I mean, frankly, sometimes, these things help you, not always. We never predicted this would happen. But since this has happened, it's a humongous opportunity. And we are already closing deals at 30%, 40%, 50% higher than what we were hoping we would sell at. So we are not complaining.
Okay. Great. And one more question on the competition. Not the competition in selling, but the competition is doing things and buying land. So the last 1, 2 years because of whatever the tailwind in the sector and the premium -- and I see in the suburbs, every second building for redevelopment. The developers are having much better cash flow. How do you see land buying or the JV opportunity compared to the 2 years back?
Again, I'm not really complaining, but everybody kind of almost complains about the way we go about doing our business development. And yet, we continue to be most profitable and churn our projects. So I don't think -- I think we have a very good formula for buying land and the way we go about doing it.
I wouldn't want to change much on this. We want to remain opportunistic. We want to buy land -- and we want to buy land, which is large and which has scale or which is strategic and don't want to go in for like what everyone else is doing. It's not that. Our strategy has never been that. We'll continue to be doing what we do best.
I understand but I was just asking a general question. As I said, it's not a competition to us, but in the market side. But anyways, and the last one is on Commerz III. And I suppose you are having a small building also coming next to it, Commerz IV? Or any updates on how the demand is moving over there?
So again, like I said, that the window for commercial office has suddenly opened up. Every company in the world has realized, including the Apples and the Googles of the world that they need people on ground and in the office, not working from home. So the demand for offices have also spiraled up. And you have to remember that production for offices was literally like not happening in the past 3 years because people didn't know where the markets are going.
There is no Commerz IV. The building that you physically see with your eyes is only an annex to Commerz III. It's a part of Commerz. And so again, to answer, the demand is back, we have now a focused team that is going to look after all our commercial development. And so yes.
Yes. And a last small question, can I squeeze in?
Yes, yes, please.
Yes, yes. So on Khar Road, are we waiting to expand the project by redeveloping the nearby buildings or something like that because I was initially also practical that you would do that as you...
Yes, yes, yes. Why not? Yes, yes. We'll do that.
Ladies and gentlemen, we'll be taking the last question that is from the line of Parikshit from HDFC Securities.
Congratulations on a very strong year. My first question is on the redevelopment projects. You have said that you will set up a separate team and every year you require some 7, 8 projects worth around INR 1,000 crores, plus you [indiscernible].
So again, let me first tell you, we have a separate business head for commercial. We have a separate CEO for our mall business. So these are the businesses that are within our hand. We have a separate BD head for redevelopment. Again, I don't know whether you were a party to that. We, as a company, don't want to talk about projects, which are not only not signed, I mean, of course, some of these projects are signed, but until they reach a stage where development takes place.
So you will be happy that a very large -- I mean, a few very large redevelopment projects are signed but not at a stage where I want to introduce them to the world and say that these are things that we are doing. Let them happen, then we will announce.
And as far as the external non-MMR region, we -- like I said, that we again have an MOU signed close to closing a large land deal. But again, until they happen, we wouldn't want to make them a part of our commitment. But the same vigor and velocity, we are looking at all this. So just so we can tell you that.
But cumulatively, put together both the opportunities would be like if you can quantify in terms of how much opportunity in business?
Frankly, much more than what I told you but like I said, I don't want to set expectations. I want to rather do it. They are much larger than what we committed.
As if you can specify NCR or in Southern?
Let it happen. I'll surely come back to you. You know -- like I said, that we are conservative, I'd rather be that than lead the market into believing something. I'd rather have it in hand and then talk about it.
Okay. Lastly we are relooking at the office space and retail space within the Worli macro market, plus we have some land in Borivali, which earlier had a plan for the commercial office. So when the offices are retailed, if at all, will it be limited to MMR or you look at going into other markets like southern markets or the NCR market as well? So are all opportunities being looked at or if at all you will revise this to the market?
So again, we have now a specific team looking at commercial opportunity, and the mandate is very clear that ensure leasing of Commerz III, management of the assets, making sure that the rentals are taken care of, customers are serviced.
And as you rightly predicted, there will be business development. We are very, very happy to look at land parcels elsewhere. My team is looking at Bangalore, they're looking at NCR. But again, I mean, please don't ask us in the next quarter, what happened to that because this is literally exploratory and we are open to doing that. We want both commercial and malls to be a strong vertical of ORL and then we will do it.
So as a company, when we are growing, we are making sure that these verticals are in good hands, and they have their own legs to travel through the distance it has the ability to. So this is there.
We have a project in Mulund also where we will be doing offices. We've got Borivali. These are 2 projects which are within our hands. We might do Thane, again a commercial this thing. So there is a lot of opportunity. But again, like I said, that we will speak about them when they reach the right stage.
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for the closing comments.
Thank you all for taking time for this call. We take your feedback very seriously and we would encourage you to continue to give you your input. Our teams are always available to interact and speak with you. If you have any further feedback to share or any questions, feel free to connect with us or Saumil as well. Thank you once again, and have a great day ahead.
Thank you, everybody.
Thank you. Ladies and gentlemen, on behalf of Oberoi Realty, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.