Oberoi Realty reported a decline in Book Value.
The Mumbai-based realty developer reported a decline in book value of 18.7%. The book value currently is at Rs.750Cr. which was at Rs.925Cr. in March 2022. The firm sold around 164 units during the last quarter. The volume of the sold houses in the first quarter is nearly 4.01 lakh square feet area which was over 0.92 lakh sq. ft. in the equivalent period for the earlier year.
The net profit of Oberoi Realty fell by 19% to Rs.232.35 Cr. on a 4.2% increase in net sales to Rs.823.46 Cr. in Q4FY2022. Analysts are bullish on the stock and expect an upside of 40%. The dip in the book value is primarily due to seasonality, stamp due hikes accompanied by an increase in the interest rates. The sales are mainly driven by Elysian, Goregaon, Sky City, Borivali, Eternia, and Enigma in Mulund. The sales will pick up post receipt of OC. Promoters hold a 67.7% stake in the company, while the FIIs own 20.26% and DIIs have around 9.09% as of March 2022.
The trend is likely to continue because of cost inflation and an increase in the cost of capital and favor top developers. Many companies have mitigated cost impact through price hikes in FY23. There could be further increased in the prices, to improve the profit margins. The rise in interest rates was forthcoming. Conversely, despite this, developers assume that it won’t have a significant impact on demand. Any increase in the interest rate above 8% might have to dampen future demand as it is an end-user-driven demand.
The management expects the business to continue for looking at a few large redevelopment projects outside Mumbai. The company has entered into MOU and will confirm once closed. The company is optimistic about launching recent projects in FY2023. A transformed concentration on business development is a positive sign to provide further growth to the company.
It is one of the leading real estate developments Company. The realtor mainly focuses on premium developments in office spaces, hospitality, residential and social.