After a lull of 4 years, Oberoi Realty Ltd (ORL) sold 6 units in its luxury project in Worli, Three Sixty West, for R2.37 billion (average realisation of R42,916 psf) driven by completion of its show flat. Commencement of monetisation will alleviate cash flow concerns over this project where ORL has already spent R14.5 billion.
Sales pick-up at Worli has also improved earnings visibility over FY17-18 with 3 large projects – Mulund and Borivali and now Worli – expected to cross revenue recognition threshold (cumulative sales of R35 billion till date).
With a healthy balance sheet (net D/E of 0.05x), ORL is well poised to capitalise on opportunistic land deals. Further, uncertainty over regulations and several stuck projects have polarised demand towards reputed developers such as ORL with a good execution track record.
The company booked overall sales of R4.06 billion (vs. R2.6 billion in Q4). Sales at its other projects were tepid especially in the completed project Exquisite, where it sold only 9 units (vs. 8 units and 24 units in Q4FY16 and Q1FY16). Collections declined marginally to R3.2 billion (vs R3.7 billion in Q4). Operating cash flow stood at negative R 0.35 billion mainly due to FSI payments of R0.74 billion and towards projects Esquire and Prisma to the tune of R 0.24 billion. Net debt remained steady at R3 billion (net D/E of 0.05x).