Oberoi Realty Limited (NSE: OBEROIRLTY) Q2 2025 Earnings Call dated Oct. 21, 2024
Corporate Participants:
Vikas Oberoi — Chairman and Managing Director
Saumil Daru — Director of Finance
Analysts:
Parikshit Kandpal — Analyst
Praveen Choudhary — Analyst
Puneet Gulati — Analyst
Ritesh Sheth — Analyst
Abhinav Sinha — Analyst
Abhishek Lodhiya — Analyst
Vignesh Iyer — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Oberoi Realty Q2 FY 2025 Earnings Conference Call. We have Mr. Oberoi, the Chairman & Managing Director of the Company and Mr. Saumil Daru, Director of Finance of the company with us for the call. [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 relating 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 risk and uncertainties and other factors that could cause actual results, opportunities and growth potential to differ materially for those suggested by such statements.
I now hand over the call to Mr. Oberoi, the Chairman & Managing Director of the company. Thank you. And over to you, sir.
Vikas Oberoi — Chairman and Managing Director
Thank you. Good morning, good afternoon, good evening. This is the time zone you have logged in and welcome to the conference call Q2 FY 2025 results and business update. Thank you all for taking time out for this call. Before I begin, I would like to share with you a quick business update. I’m happy to announce yet another strong quarter driven by healthy residential sale momentum and strong growing performance across our annual assets — annuity assets. During the quarter, we received full occupation certificate for Enigma, our project at Mulund and this project continues to see a steady sustainance sale. We continue to see strong leasing interest across our office assets and occupancies are also ramping up.
We have received occupation certificate for Sky City Mall, Borivali and are gearing up for its launch. On Friday, we also launched our residential project, the first phase of our integrated development Oberoi Garden City, Thane and we are very happy with the overwhelming response. We have recorded a sale of close to INR1,350 crores, which is almost 50% of our launch inventory. And yes, for now, I mean both Saumil and I are available for any question and answer.
Questions and Answers:
Operator
Thank you. [Operator Instructions] Our first question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Parikshit Kandpal
Yeah. Hi Vikas, congratulations on a great quarter and a great launch and also a strong uptake in Three Sixty West. Sir, my first question is on the fundraiser of INR6000 crore, which was kind of a surprise for all of us because Three Sixty is doing so well now, so much of cash. So if you can delve into the deeper on what is the purpose of this INR6000 crores of fundraise? Is it something imminent right now? How do you intend to deploy it? Whether this will get deployed in this year? Can you some more cloud on the utilization of this?
Vikas Oberoi
Hi Parikshit. Firstly, thank you for the compliment. See, the fundraiser is basically, you know, literally to expand, buy new property and really expedite the pace of growth of the company. We are at a, you know, we feel that we actually are in a great position. Our brand is strong, there is opportunity, the entire India story playing out so well. And we know that we have a lot of cash coming in from our own sales, but we want chunky amount where we want to go and buy some large lands, we would want to use it for that. So basically this is all for growth.
Parikshit Kandpal
Are you looking to deploy this? What will be the timeline if you’re able to raise one of the timelines to deploy? I understand that such a quantum of fundraise and you may have something in hand to deploy it. So do you — what kind of time rising you’re looking at to deploy this capital?
Vikas Oberoi
See, if things go well, we will deploy this in the next four, five months like that aggressively.
Parikshit Kandpal
And potentially it can add close to about — what kind of GDV multiples we have close to about INR70,000 crores, INR80,000 crores of development value with this kind of a fundraise?
Vikas Oberoi
We all know the back end math, I don’t want to say something on the call, but yes, we are clearly looking at deploying this and yeah, this is money going in the business.
Parikshit Kandpal
And will this be largely MMR or are you looking at even some part of this will go to NCR? So what kind of concentration, business development you’ll be running on this kind of fundraise?
Vikas Oberoi
See, I don’t want to disclose a lot. All I can tell you is that this money will go in business. We have opportunities, we want to deploy this in those opportunities and, you know, let it unfold, the rest will happen.
Parikshit Kandpal
Okay. Sir, this is the last question on the launch pipeline. So now we have Thane, which has given us huge numbers and kind of sustain and things we are doing, so we were looking at a very strong Q3. But in terms of launches for the rest of the financial year, so is there anything coming in from Borivali or any, I think last hour we have so Borivali, Goregaon or thane anything more we see coming in that for launches which can help us understand that?
Vikas Oberoi
So, you know, we have two towers in Goregaon, we have one in Borivali. We have, you know, two towers in Thane that we can launch, which is in Kolshet. And of course, Pokhran — within this, what you call project that we’ve launched is another three towers. And so we have and by the way, like, we have started work at all these projects. Some of them are on 10th level, 15th floor and all that. So we are not wasting any time waiting to launch. The day we launch, we can straight away book that as our revenue and profit once it crosses 25% of our sales and construction. So all that is happening as we speak.
Parikshit Kandpal
But any launches, I mean, for H2 beyond the current state, like at least Borivali, do you think it can come and one more tower in Goregaon in this financial year?
Vikas Oberoi
There is tremendous demand. We are not taking that away, but frankly, I don’t want to commit right now. There could be a possibility in the like, you know, last quarter this financial year we may launch. But I don’t want to commit as such right now. Like I said that for us is just press the trigger and there you go like work is happening, everything is in place. We don’t really need to wait for anything.
Parikshit Kandpal
Okay, Mr. Oberoi, thank you and wish you the best.
Operator
Thank you. The next question is from the line of Praveen from Morgan Stanley. Please go ahead.
Praveen Choudhary
Thank you. Thank you for taking my call. Hi, Vikas. Hi, Saumil. Again, congratulation on fantastic quarter…
Vikas Oberoi
Hi, Praveen.
Praveen Choudhary
And great launch. Hi, Vikas. So, a couple of questions you’ve already answered. So I have just one or two very small question if you can indulge. One was just trying to understand your strategy outside of Mumbai region. I know you had taken a very good land parcel in Gurgaon, if there is any launch timeline for that. But also with this money, are you planning to go aggressively outside Mumbai or not? And the second question again, also very simple question. What are you seeing the ASP trend like-for-like in your properties or MMR region in general as well as the land price trend? Thank you.
Vikas Oberoi
So as far as Gurgaon, we are — we are in the design phase, actually we are almost ready with our design. We are in the approval stage now and hopefully maybe the first quarter next financial year or second quarter next financial year when we would likely launch that project. So that’s as far as NCR goes. And, sorry, what was your other question? I should have actually made a list.
Praveen Choudhary
And the other question was your strategy to go outside of MMR other than the project you already mentioned, Gurgaon, with the new money coming in.
Vikas Oberoi
Okay. So very aggressively looking at opportunities everywhere, we, you know, we’ll be ready with our office probably in the first, last quarter this financial year itself, around Jan is when our office will be ready and we are looking at a long-term and a strong play in NCR. And obviously some bit of this money can go in looking at land parcels there as well.
Praveen Choudhary
Right. And then the last question I had was about the pricing trend in MMR for project, as well as land price trend, please.
Vikas Oberoi
Again, both looking very stable, I would say. In fact, I thought we positioned and priced our product really well with this Thane launch. And I would say that markets have both width and depth and I see this trend continuing and like really, I think India is truly shining I would say and it’s really working well and I mean, there’s enough money and there’s enough appetite, people really want, you know, to spend money on homes and people want to spend on good quality. They want branded product, somebody they can trust. So, I think all in all a great story, great future for us.
Praveen Choudhary
Indeed, indeed. Thank you so much, Vikas and again congratulations.
Vikas Oberoi
Thank you.
Operator
Thank you. The next question is from the line of Puneet Gulati from HSBC. Please go ahead.
Puneet Gulati
Yeah. Thank you so much and congratulations on great new launch for Thane and great [Technical Issues]. My first question is, if you can comment upon how do you think about launching new projects given that demand is not a problem for you. Most of the approvals, I presume, for Borivali and Goregaon are in place. So how are you deciding on facing these launches? What is the broad criteria that you would [Technical Issues].
Vikas Oberoi
So, hi, Puneet, with regards to Borivali and Goregaon, we have reasonable inventory within the projects that we’ve launched, that’s point number one. We also have inventory beyond, let’s say a particular level where we’ve opened up.
So we will open those up. And again, I’m not saying that we won’t launch, I’m just wanting to wait and watch and then probably take that call. We could probably launch either within this quarter, next quarter or the first quarter of next year, either of these, you know, we have this opportunity, like I said, that we are very ready. We’re just looking at, you know, another thing I see is like the resale that is happening in these projects, Borivali and Goregaon actually surprising me in terms of the prices they are getting and all that.
So you know, we are also hoping and probably thinking what is it that we can really get in terms of, you know, price and that is something that we are closely monitoring and then we take that call. Let me [Foreign Speech].
Operator
Sir, do you have any questions for the participant? Since there is no response, we move on to our next question, which is from the line of Ritesh Sheth with Access capital. Please go ahead.
Ritesh Sheth
Yeah, thanks for the opportunity and congrats on [Indecipherable] as well as launch. First, you know, on couple of line transactions we did this quarter. So if you’re in a Nirmal Lifestyle, you know, how are we going to plan the development here? It would be like continuing phase of existing Uttar Nainimar [Phonetic] towers or what is the development plans there?
Vikas Oberoi
Yeah, see you know, again, that’s a market we now really know well, we’ve been there. We’ve done two very large projects, very successful. So we know that market. Again, we are planning something really interesting, very interesting.
Ritesh Sheth
And do we have additional potential coming from the line platforms that we might be holding and approaching NCLT or this was the only one which we are targeting here?
Vikas Oberoi
We do have a commercial development left in the existing project. We will be doing that also and we will be building this as well.
Ritesh Sheth
No, apart from these two, any other opportunities that we will — we continue to look there from Nirmal Lifestyle or this was the only one which was we are targeting?
Vikas Oberoi
So, and this is also, this is not bilateral, this is more, you know, we got it from NCLT.
Ritesh Sheth
Yeah.
Vikas Oberoi
We haven’t dealt with them as such.
Ritesh Sheth
Sure, sure. And second on the Sky City Mall that you mentioned, when is the opening planned and any progress on leasing there?
Vikas Oberoi
So leasing is going on very, very well. We are hoping that we can launch, we can launch our mall probably, you know, maybe mid-December, you know, ideally want to catch the season, mid-December and if not for sure within January is when we will be completely ready. My team tells me that we should be fully operational by, rather we should be ready by 15 November. But let’s say for any reason, if there’s a delay, then maybe by like another 30 days and then we’ll be ready.
Ritesh Sheth
And when we open, we would be at what 50%, 60% kind of occupancy, trading occupancy already there?
Vikas Oberoi
So, you know, leasing far beyond that would be done. But, you know, everybody will be in that fit out mode and so on and so forth by, let’s say, you know, within two, two to three quarters of our operations, we will reach a very high level of, you know, occupancy, it could go up to 80%, 90% also.
Ritesh Sheth
Got it. That’s it from my side. All the best.
Vikas Oberoi
Thanks.
Operator
Thank you. The next question is from the line of Abhinav Sinha from Jefferies, India. Please go ahead.
Abhinav Sinha
Hi, Vikas and team, very strong performance and congrats for that. Sir, can you highlight how you’re seeing the pipeline in Three Sixty West from here on? So that’s first. And secondly on pricing, if you look at from, let’s say, two, three year perspective, the pricing on Three Sixty has jumped quite a lot, but in the other projects it’s also rising, but not to that extent. So do you see that gap narrowing?
Vikas Oberoi
So, hi, Abhinav. Firstly, Three Sixty West, you know, we had a lag because our partner was selling his apartments and he obviously was selling them a lot cheaper because he needed the money or whatever. And once his talk got over, we started getting the price that the project deserves. And — and that’s why, I mean, you know, like, what you see as a slow build up or rather as a quick buildup is actually from my end, a real slow buildup and, yeah, I mean, that’s about it. So it’s not like, you know and moreover, I would say that the building has been received very well by the people. Most people say that, you know, this is the best building and all that. So, yeah, I mean, I would say this building got a destiny of its own. It’s really doing well and there is great momentum and you know, the kind of people that are coming to stay the community that it got built within that building is also helping, you know. So, yeah, it’s unique, I would say very thankful to God.
Abhinav Sinha
Right. And you would expect the sales space to continue?
Vikas Oberoi
Yeah, I guess I would hope to. But, yeah, I mean, the way things are — there is really no resistance on price and the demand is great. Everybody like really, closures are happening very quickly and we’ve been really lucky and very happy with the response at Three Sixty.
Abhinav Sinha
Right. Sir, secondly, I wanted to check also on the capital structure with the large fundraise that we have planned. And, you know, historically we’ve seen a gearing in the 0 to 0.25 range. So will we, like, go back to that range, you know, once we have all our land deployment done?
Vikas Oberoi
You know, firstly, the usage of this money is obviously, you know, for growth we see opportunity. We know that we need to deploy this within the next four to five months and that’s why we are doing it. We also have restrictions in terms of usage of, you know, money when you from banks. So that also is a challenge. And I mean, this is why we are looking at equity and yeah.
Abhinav Sinha
Great, thanks and all the best.
Vikas Oberoi
Thank you.
Saumil Daru
Thank you, Abhinav.
Operator
Thank you. The next question is from the line of Puneet Gulati from HSBC. Please go ahead.
Puneet Gulati
Yeah. Thank you so much for the follow-up. Can you also talk a bit about your launch timing for charter work at Ivan [Phonetic] the Glaxo, Worli land and also the Adarsh Nagar project?
Vikas Oberoi
So, Ivan, we hope to, you know, we are now looking at doing a mall, office building and then a hotel. So we are looking at starting work somewhere in the first quarter of next financial year because, you know, we are still again in the, on the designing phase and stuff like that. Adarsh Nagar also, you know, approval should take us another nine months and then we’ll be good to go.
Puneet Gulati
Okay, that’s very good. And on the Commerz III, what kind of ramp-up do you see? You’re already at 65% level. Is there room for much higher rentals from where you are? And in terms of occupancy going to 90% within the span of one year?
Vikas Oberoi
So we would, you know, again we would be fully occupied within this financial year. We’ve already done deals which will now get reported as, you know, like because they’ve been done later, registrations are happening. 100% of Comm III should be leased within this financial year, you know, close to 100% will be leased.
Puneet Gulati
And how should we think about rentals here? What could be the average rentals?
Vikas Oberoi
I mean, rentals are doing well, you know, I think the building has turned out really, really well and probably it gets the best rentals within, you know, with a competitive set within this area, we’re really doing very well.
Puneet Gulati
Okay, excellent. Thank you so much and all the best.
Vikas Oberoi
Thanks, Puneet.
Operator
Thank you. The next question is from the line of Abhishek Lodhiya with Motilal Oswal. Please go ahead.
Abhishek Lodhiya
Hello?
Vikas Oberoi
Hi, Abhishek.
Abhishek Lodhiya
Yeah, good evening, sir. So just one question. While going through the presentation, I noticed that for Three Sixty West we have done sales of roughly INR600 plus crores and even collected that much amount, right? But the revenue recognition is that low. So just wanted to understand, I mean, what is the reason behind that? And I mean, I joined late, maybe you might have answered that, sorry.
Vikas Oberoi
Thank you for asking this question, even I was asking this to my CFO.
Saumil Daru
Hi, Abhishek, Saumil here. So very simple, you know, there are certain criteria to be met, you know, as far as recognition of revenue is concerned, even in case of, you know, finished goods. So if the booking has happened, but some of these criteria have not happened and for example, if you will know, you know, you would be aware that virtually the whole of the end of September was, you know, the Shradh period. So while people may do the booking, they may not end up doing the documentation and all of that. So then, you know, in the absence of some of these criteria, if it doesn’t fulfill the revenue recognition criteria which are there, then, you know, the recognition doesn’t happen. But very frankly speaking, you know, that doesn’t matter because, you know, we’ll end up recognizing it in the next quarter.
Abhishek Lodhiya
Understood, understood. Thank you, sir. Thank you.
Operator
Thank you. The next question is from the line of Vignesh Iyer with Sequent Investment. Please go ahead.
Vignesh Iyer
Thank you for the opportunity and rather unless have all mostly asked the question I wanted to ask, just one question from my side. On the Thane launch, can you help me understand if the pricing is a tad bit below, you know, expectation? Is there any specific reason that goes with this pricing or is it so just because it’s the initial one or two towers and subsequently we might see higher pricing coming in?
Vikas Oberoi
No, I think Vignesh, I thought we really priced it very smartly and this is why the response is so good. So I really don’t see anything wrong. We are going to make a lot of money, even at this price. So we really strategically priced it.
Vignesh Iyer
Right, right, right. Yeah. Just one question. Thank you, sir.
Vikas Oberoi
Thank you.
Operator
Thank you. As there are no further questions, I now hand the conference over to Mr. Oberoi for closing comments.
Vikas Oberoi
Thank you all for taking time out for this call. We look forward to hearing from you on an ongoing basis. Please feel free to reach out to us or our investor relation team as and when you have any question. Thank you again.
Saumil Daru
Thank you, everybody.
Operator
[Operator Closing Remarks]