Oberoi Realty

The stock was in the limelight yesterday after the company stated that it was the highest bidder for Tata Steel’s land at Borivali, Mumbai. It is now clear that Oberoi is the new owner, bidding at Rs.1155 crore for the 25 acre land.  On the financial front, for Q3FY14, the numbers were not encouraging with consolidated net profit literally getting sliced into half, from Rs.134 crore to Rs. 68 crore (YoY). This was on the back of lower topline; total income dropped 40% at Rs.170 crore. EBITDA was down 47% at Rs.90 crore and margin plunged by a jaw dropping 690 bps to 52.7% (YoY). The numbers for Q3 are dismal but the tide seems to have turned with this SC judgement. Morgan Stanley stated that it expects this project to contribute nearly Rs 1,200 crore to Oberoi’s NAV. The stock price is expected to remain buoyant despite the poor Q3 numbers.

Oberoi seems to be finally getting back into some aggressive bidding and developing projects, after having stayed staid for some time now.  A few months ago, in Jan’14, the much awaited nod from the Supreme Court was received for its land at Mulund, Mumbai. The SC dismissed a lower court judgement that had declared as private forest certain properties that a unit of the real estate developer wanted to develop. This means that the company, which was sitting on this prime property for a long time now will be able to start developing this project. The project, named Exotica has been stuck for many years now and this judgement comprises of 3.3 million square feet and could bring in sales for the company to the tune of Rs.4000 crore. The company is also working on getting finalized a partner for its hospitality project in Worli, known as ‘Oasis’. And the announcement of this partner, expected any time soon, will lead to some more spurt in stock price. Q4 could also see revenues coming from its Esquire project in Goregaon, which till mid-Feb had already seen bookings of around Rs.1300 crore.