We maintain ?buy? on Oberoi Realty with a 12-month target price of R307 as the company?s Q1FY14 results were in line with expectations. We expect Oberoi to launch 2-3 projects in Worli, Goregaon (East) and Andheri (East) in the current fiscal.
We expect the management to give details about the launches and area to be released per launch during a conference call. With the start of construction of Oberoi Esquire, we expect it to start contributing to revenue recognition in FY14 and collections to increase.
However, we await clarity on the total area of the project, which will have a bearing on revenue-recognition estimates from the project.
Oberoi reported Q1FY14 revenue (R220 crore) and net income (R110 crore) in line with our estimates. Margins booked were strong due to higher realisation at Oberoi Exquisite, which contributed about 63% to revenue recognised in Q1FY14.
Oberoi Mall saw incremental leasing, but no leasing was recorded at Oberoi Commerz properties. Collections from ongoing projects and rental income were R150 crore in the quarter (40% below average quarterly run rate).
The company sold about 49,000 sqft for R92.5 crore, mainly in two projects. Average realisation was R18,890 per sqft. Lower sales are expected as Oberoi has sold most of its high-volume area in its ongoing projects and its completed projects are all sold. The remaining inventory is expected to move slowly.