Oberoi Realty Limited (OBEROIRLTY) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Oberoi Realty Q3 FY '26 Earnings Conference Call. We have Mr. Oberoi, the Chairman and Managing Director of the company; and Mr. Saumil Daru, Director of Finance of the company, with us for the call. Please note that this call will be for 30 minutes. [Operator Instructions] and this conference call is being recorded, and the transcript for the same may be put up on the website of the company. [Operator Instructions]. Before I hand the conference over to the management, I would like to remind you that certain statements made during the course of this call may not be based on historical information or facts and may be forward-looking statements, including those relating to general business statements, plans, strategy of the company, the future financial condition and growth prospects. The forward-looking statements are based on expectations and projections and may involve a number of risks and uncertainties and other factors that could cause actual results, opportunities and growth potential to differ materially from those suggested by such statements. I now hand the conference over to Mr. Oberoi, the Chairman and Managing Director of the company. Thank you, and over to you, Mr. Oberoi.

Thank you. Good morning, good afternoon, good evening to all of you as per the time zones from which you have logged in, and welcome to the conference call Q3 FY 2026 results and business update. Thank you all for taking the time to attend this call. Before I begin, I would like -- before I begin, I'd like to share with you a few quick business updates. We have received full occupation certificate for Eternia. We have also entered into a development agreement for redevelopment of land in Nepean Sea Road. Three Sixty West continues to attract strong inquiries. Our office portfolio front, Commerz II occupancy is about 100%. Commerz III is also at 90%. Sky City Mall continues to scale up well on strong leasing demands and for retail tenants, while Oberoi Mall continues with an occupancy of 99%. We continue to actively pursue attractive land opportunities, and we remain optimistic about the year ahead, supported by strong development pipeline. With this, I will now open the floor for question and answer, and both Saumil and I'll be happy to take your questions. Thank you.

[Operator Instructions] The first question comes from the line of Puneet Gulati with HSBC.

My first question is, if you can talk a bit about the launch plan for this quarter and for next year. How should we think about the phasing of launches and potential sizes?

So Puneet, firstly, we have our own Goregaon one more tower launch. We have additional higher floors that need to be launched. We have Borivali, which also has one tower. And when I talk about one tower, these are like 6 lakh to 8 lakh square feet towers with revenue of -- revenue potential of more than INR 3,000 crores. We have both towers in Thane, Forestville as well as the Pokhran Road. We have Pedder Road coming up. We have -- NCR, we have Gurugram coming up. So a lot of project launches. In fact, we were expecting at least one of the few to be done in the third quarter, which ended up slipping into now the fourth quarter and first quarter next year. So a lot of launches planned, a lot of business development activities happened in this quarter and happening in the next quarter.

So which one should we pencil in for this quarter?

We are desperately trying to get -- see, Goregaon and Borivali are very much in our control. We will do Borivali and Goregaon both. And we are desperately trying to get NCR within this quarter. In a worst-case scenario, it will be probably first quarter next year.

Okay. And how do you view the market demand environment in the current context?

So market...

On volume and pricing, both.

So again, we have increased pricing when it comes to Goregaon and Borivali both. We have kept pricing in Thane stable for now, but these 2 markets have seen an upward price increase. And I mean, there is no shortage of traction. In fact, this quarter, we've opened higher floors, and we've seen great response even for the higher floors at a higher price. So I don't see that there will be any issue going forward in terms of demand and pricing. Pricing continues to either stay put. And if, let's say, the product exceeds people's expectation like what they did in Borivali. We ourselves never expected. Today, some of our apartments are going beyond INR 50,000 a square foot on carpet. So this clearly shows that the product or the project is an outlier and people have just loved the way it's come about. Goregaon, I mean, I don't really need to say or sell anything about that. That's anyway a super established location. Again, there, we are doing -- ready apartments are selling upward of INR 50,000. Some of them are selling at INR 60,000 on carpet, like probably 30%, 35% premium over market. And there is no resistance when we increase price. And so this is how the market is.

Okay. And lastly, when should we expect 100% occupancy for the Sky City Mall?

I think max, another 2 quarters, very large deals have been -- we've done LOIs. We're just waiting for the agreement to be done. Once agreements are done, then we will cross that threshold also. And hopefully, February, Apple also opens its store there. So even that kind of will -- again, I must say the footfalls in Sky City are literally double of Oberoi Mall even within the first 6 to 9 months of its operation. So I mean, we are pleasantly surprised. It's doing exceptionally well.

[Operator Instructions] Next question comes from the line of Kunal Lakhan with CLSA.

Just quickly on the time lines for Worli?

The new project?

Yes.

Okay. So expecting [ IOD ] any given day and then the regular time that it takes for RERA approval, this and that. Again, this also -- if everything goes right, this gets pushed into the first quarter next year -- next financial year.

Okay. Q1 FY '27?

Correct.

Okay. Okay. And secondly, just a question for Saumil. Our operating cash flow this quarter kind of tapered off, right, compared to last quarter and even the previous year's quarter. What was driving this?

Saumil, can you hear?

Yes, please go ahead. I am here.

Sorry, the question was for Saumil or for me?

It was for Saumil, Vikas. Yes.

Okay. I don't know whether Saumil is having trouble in his audio.

We cannot hear the speakers.

Sure, sure. Okay. Just Vikas, just one last question. Just stepping back a couple of quarters, right? We had -- at the beginning of the year, we had highlighted quite a few launches -- greenfield launches for this year, case in point like your -- the Goregaon project, Worli project and also a couple of launches, a couple of towers in Thane and Borivali and Goregaon. We did launch Goregaon Tower D. But barring that, I think there is some slippages there in terms of launches. Are you facing any issues in terms of approvals or on the regulatory side?

No, not at all. In fact, it's more to do with the way we want the design to be. We've really worked multiple times even on NCR. We've taken feedback from people with regards to what should be the depth of the deck. We started at 8 feet and then we said, no, 8 feet probably would be too little. We pushed it to 10 and then 12 and so on and so forth. So literally, like when you're trying to perfect a product and not really looking at what the market is expecting you to do, it kind of brings you in a situation like where we are today. But let me tell you, it's a dream to work in Goregaon. Approvals are brief, very, very, I think, like a state which is really helpful in terms of approval. It's just that we kept bettering our product, which we do all the time. And that goes for even our Pedder Road project. We created a plan. We first thought we will make podiums with ramp, and then we realized that ramps would take a long time to go up and then we replaced them with elevators. So we had to change our plans. And these days, it's not like you can simply launch. There is so much of process. Until you get commencement certificate, you can't even apply for RERA. If you can't apply for RERA, RERA takes 30 to 45 days. And it just kind of stacked up. We were -- we just got it wrong, to be very honest. We just got it wrong. We could have easily got these in like maybe at least in the third quarter. But like I said that we kept perfecting the product. which will, of course, pay us and help us in the long run and all of that. But yes, I mean, it's a missed quarter and a missed opportunity.

Sure. And lastly, if you can give some color on the time line for Nepean Sea Road?

A new one. Again, I mean, this is just a DA. It should take at least 9 months before we can actually see anything. I mean, given my past experience, I know that once the DA is signed, it takes a lot of time to make sure you hit ground.

Okay. And just a follow-up. You look at FY '27 now with the kind of spillovers that we'll see of the projects. So it looks like a very -- like a big year in terms of newer launches, right?

Absolutely. Whatever -- it looks like a very promising year for ORL because now all the hard work that was required to be done has been done. A few of these should have actually been in '26, but they're getting spilled into '27. But like whatever is lost in '26 will get covered in '27, and it will look like a much bigger year for us.

In terms of management bandwidth, are we ready for handling these many number of launches for next year?

Absolutely. I mean, this is one thing I can say that as a company, we have now really cracked the code as far as scale goes and as far as quality goes. We're really able to do that. I mean, in fact, I must say that today, I saw a presentation by our contractors for our Goregaon project. And really, I must say that it's something that people be proud of, and we will be proud of having done that. So again, execution, no issue. Launches, absolutely no issue. We have a great team. We have the bandwidth to build scale and scale with quality. We have that confidence. It's just that, I mean, we lost track of time perfecting our product. And sometimes it's all right to be less perfect, but to be on time than trying to completely perfect the product and bring it into the market. We realized that in the last 1 month that we pushed ourselves too much in that direction.

Sure. Sure, Vikas. If Saumil is available, then maybe I can...

Yes. Kunal, you can hear me now?

I can hear you, Saumil.

Yes. Sorry about that. There were some technical issues, so I think we have got it sorted out. Yes, in your question about operating cash flows. So basically, we had about close to INR 300 crores going into payments for FSI and what we can say, related acquisition rights. So that's where -- and obviously, that just goes out as pure operating cash flow. Correspondingly, those projects are not yet producing the revenues. So while they do not have any impact on the P&L per se as far as cash flows are concerned, you will see the operating cash flows net of that amount.