In a recent market analysis, Nuvama Institutional Equities has significantly revised its price target for Oberoi Realty, lowering it to ₹1,793 from the previous ₹2,101, marking a notable 15% decrease. This adjustment comes alongside a ‘Hold’ rating for the stock, primarily driven by a troubling decline in housing volumes. Concerns about future sales growth have prompted the brokerage to reduce the net asset value (NAV) premium from 60% to 35%.

Declining Sales Figures

Oberoi Realty experienced a staggering 52% drop in new sales year-on-year, and a significant 56% decrease sequentially in the last quarter of the fiscal year 2024-25. The downturn can be attributed to a lack of new project launches during this period. In the same quarter last year, sales had benefitted from the introduction of a new tower in Goregaon, Maharashtra.

• Carpet Area Sales: The company saw its carpet area sales plummet by 69% YoY and 79% QoQ, totaling just 0.14 million square feet (msf) in Q4FY25.
• Unit Sales: Oberoi Realty sold only 78 units in this reporting quarter, a stark contrast to 554 units in the preceding quarter and 227 units during Q4FY24.

The Path Forward: New Project Launches

The spotlight is now on the upcoming launches for FY25. The company is set to introduce several new projects, including redevelopment efforts across diverse micro-markets in the Mumbai Metropolitan Region (MMR). Nuvama emphasizes the need for timely project launches, particularly with the anticipated entry into the Gurugram market, to sustain sales momentum moving forward.

Positive Highlights Amidst Challenges

Despite the challenges, Oberoi Realty concluded FY25 with a record-breaking pre-sales figure of ₹5,270 crore, reflecting a 31% YoY increase. Sales volume reached 1.3 msf, up 19% year-on-year. The firm sold 928 units in FY25, compared to 705 units in FY24. Notably, the average ticket size remained stable at ₹5.7 crore, while average realizations improved by 10% YoY, reaching ₹41,094/sft in FY25.

• Q4FY25 Highlights:
  • Average realizations surged by 58% YoY and 114% QoQ to ₹62,117/sft.
  • Average ticket sizes increased by 41% YoY and more than doubled to ₹10.9 crore QoQ.

Strategic Focus for Future Growth

Nuvama forecasts that the management will prioritize adding new projects and ensuring rapid launch cycles to leverage market demand effectively. As Oberoi Realty navigates these changes, the upcoming quarters will be crucial for restoring investor confidence and driving sustainable growth in the housing market.

In conclusion, while current sales figures present a challenge for Oberoi Realty, the company’s proactive approach to new launches and market expansions could pave the way for recovery and growth in the coming fiscal year.