OBER delivered a steady 1QFY23 in terms of bookings, which fell 18% QoQ to INR7.6b due to seasonality, but grew 348% YoY.
The sequential decline was attributed to moderate sales performance in Sky City (Borivali) and Maxima (JVLR project) due to limited inventory. Elysian (Goregaon) and Eternia (Mulund) projects gained further traction, with bookings of 39 units (v/s 27 units in 4QFY22) and 30 units, respectively.
The pipeline for FY23 remains strong as it is planning to launch the first phase of its Thane project, along with a tower each at Elysian and Sky City. Coupled with a restart in sales at Three Sixty West (Worli), we expect OBER's pre-sales to increase by 22% YoY to INR48b in FY23.
Rentals for its Office assets were stable at INR145/sq. ft., but blended occupancy remained low at 73%. On the contrary, occupancy at its Retail mall stood at 96% - the highest since the onset of the COVID-19 pandemic.
OBER's Rental revenue from two Commercial towers stood flat QoQ at INR350m. The Retail mall recorded an income of INR376m. Leasing EBITDA grew 73% YoY to INR671m, with a margin of 92%.
Hospitality assets reported a sharp uptick in performance. Occupancy stood at 91% - its highest ever (v/s 75% in 4QFY22), while ARR came in at INR9,116, which was higher than pre-COVID levels.
Three Sixty West: The company has received occupancy certificate (OC) for its Ultra-Luxury project - Three Sixty West (Worli), and now expects an improved sales velocity. Going by the recent transactions in the vicinity, the management expects a realization of INR110,000-120,000/sq. ft. on the carpet area (i.e. 10-20% higher than the current average).
Commercial assets: The management aims to lease out its operational Commerz towers by FY23-end. Rental for Sky City mall/Commerz III is expected to commence from 2HFY24/FY25.
Business development: The Company is constantly on the lookout for new project opportunities in both Mumbai and beyond, and wants to make sure its product offerings are right while entering a new market.
As launches and deliveries largely remain on track, we keep our pre-sales and revenue estimates unchanged. While the management is optimistic about launching the recently added projects in FY23E, we have not built them into our estimates yet.
However, renewed focus on business development is a positive sign and will continue to provide further growth visibility for OBER. We reiterate our Buy rating on the stock with an unchanged SoTP-based TP of INR1,100 per share, implying an upside potential of 28%. We reiterate our Buy rating.
