Oberoi Realty Limited ($OBEROIRLTY)

Ladies and gentlemen, good day, and welcome to the Oberoi Realty Q4 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] The conference call is being recorded. The transcript for the same may be put up on the company website. [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 prospect. 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, sir.

Thank you. Good morning, good afternoon, good evening to you all as per the time zones from which you have logged in, and welcome to the conference call of Q4 FY 2026 results and business updates. Thank you all for taking time for this call. I will now start with some business updates, specifically business development. FY 2026 has witnessed a strong momentum in all parameters. We've announced business development activities close to 4 million square feet of development potential areas across diverse locations in MMR in Bandra East, 11 acres in Banga East, Aram Nagar Versa, 2 million square feet. We also have entered into agreements with societies in South Bombay for redevelopment, Pedder Road, Malbar Hill and Nipppine Road. We've also received approval from NCLT for our resolution plan submitted for a company in consortium to acquire Verizon Hotel Private Limited. In fact, as we speak, we have received possession of the property on 7th May 2026. On the operations front, the release of higher floor inventory at Elysian Goregaon has received robust booking momentum. Sky City Mall has achieved occupancy of over 72% within first year of operations. Commerce 3 continues to scale up strongly, attracting marquee tenants and has driven robust leasing demand with an occupancy reaching 98%. With this, now I open the floor for question and answer. And both Saumil and I will be very happy to take your questions. Thank you.

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

Congrats on good performance. My first question is on your strategy for 360 in Gurugram. Do you intend to launch and sell everything upfront, like most of the other [indiscernible] developer? Or do you want to follow a more calibrated strategy of selling over a longer period of time?

We haven't really dwelled that deep into our strategy. We want to see how the how we are received in Gurgaon. It's a new market for us. We've set a certain internal target, which given the way there is a buzz in the market because everybody knows we are coming. I feel we are in for some exciting time there. .

And secondly, if you can also talk a bit about -- where are you in terms of approvals for Adarsh Nagar? .

Adarsh Nagar, we are awaiting IoT. I mean, within like a week or 10 days or, let's say, 2 weeks. .

Okay. And then what are the steps from there on? .

Business as usual, we should -- we'll be applying for CC, a lot of work has already been done on that account also. So 3 more months for CC and then we can break down .

We will apply for RERA, then we are good to go. .

Yes, good to even market.

And any time line for evacuation of existing residents? .

As soon as we get all the approvals, and that's been our strategy everywhere. Once we get 100% approval, we only then ask the existing residents to move out, so that gives them good mental comfort and security also. .

Okay. And lastly, any update on the progress for the [indiscernible]? .

We, in fact, have applied for renewed CC, and you will basically be seeing work in the next 30 days starting. .

Our next question is from the line of Parikshit Kandpal with HDFC Securities. .

Congratulations on a great quarter, sir. So my first question is if I figure premium projects, 360-odd decline, 360-resort decline in this year as well as a whole on the resale -- and even in the new tower at [indiscernible], you did not see a great response, unlike little much better. So are you seeing impact of [indiscernible] on our presales? And if have any impact on our launch pipeline for this year, if the impact so long to the quarter and the first half. So if you can help us understand this on the demand side. .

So firstly, let me begin by Borivali. Good observations. Firstly, we have just delivered I mean literally 5 towers, we've given possession. We have 3 more towers, which SNG were launched last year than a year before that. There's enough inventory in -- within the project itself, which is kind of ready or under construction. So obviously, this eighth tower was received. But I would say it was received well. We only opened limited inventory there, and it received well. We priced it high because we ourselves didn't want to rush into too much of sales. We had created a target for that, and we've been able to achieve that. . As far as Elysian goes, you can see that this project has been on for the last 15 years, people are staying. The base of this clientele is much wider and bigger. So obviously, like whatever we launch gets lapped up very quickly, and yes, so that's about it. 360 also, I mean, there have been enough launches within Burley -- and moreover, whatever was the residual inventory of our partner, even that's now sold. So within 360, we are reasonably, I can say, monopoly now. and we will now start getting traction. .

So what will be the launch pipeline for this financial year and I mean high visibility projects? Because last year was more sustained additional towers and that helps you to [indiscernible] of figures, but we didn't see much growth. So I think this year in the recon I mean what are the major launches? And if you can give some color .

Okay. Good idea. I'll actually tell you all. We are planning to launch a 360 not. We are planning to launch a small development on [indiscernible] Oceanic. We are -- we've topped up this again another small project at [indiscernible] fair view. We will be launching Tower D of Forest wheel. These are all 4 launches in this first quarter itself. Then we have Jardine Tower A, which will be launched in Q2. We launched [indiscernible] in Q2 as well. Adarsh Nagar that never could be Q2 or Q3. So safely Q3. Enigma, we have a commercial building, we might look at doing Stratastat also will be launched or release on [indiscernible] could be Q2 or Q3 or something like that, yes. Again, if things go well, RLDA within this year itself. And then Borivali, we've got land parcel next to ours, which was an SRA. Again, land-cleared SRA development happening, the free sale component of that also within the next 3 quarters or the fourth quarter probably. So a lot on the pipeline. And again, I have not named a few redevelopment projects because the tail to launch our project we got a little longer given one needs to take all approvals in place. And we are very mindful of that, that's about it. Otherwise, all these projects are up and running and ready to go. .

Next question is from the line of Pritesh Sheth from Axis Capital. .

Conrad from the good year. Just one question. If I see the pending launch pipeline, A lot of them are 80,000 per square feet to 1 lakh and above the pricing kind of product. Just one question on how would we differentiate so that we don't cannibalize our product and demand in each of these projects because [indiscernible] are the although they are in different locations but still in a close by vicinity. So how are we going to manage the offerings here? .

Very good question. In fact, very mindful of that. We do have forest field Tower D. We do have Jardine Tower A. We also have [indiscernible]. These are 3 projects which are much lower in value like we are talking about INR 3 crores and INR 5 crores within INR 2.5 crores, INR 3 crores and then INR 5 crores apartment like. So we do have enough on that account as well. . But yes, I mean -- and we have this luxury bit to go. But again, here, what we will be doing is even within this area, let's say, when we will launch [indiscernible] were beautiful and parcel in are there There, we are really looking at a ticket size of INR 12.5 crores to INR 15 crores. And then when you go into the Adardh Nagar and all that, that probably is like the INR 50 crore, INR 60 crore mark. These are not INR 100 crores or whatever. And so we are mindful of that. And we see now the market is mature to these numbers. .

And just on the RLDA, have we decided on the mix of how much would be for leasing and how much would be for sale, considering we will be launching it per se in Q4? So just one question on that, yes. .

What we realize is that there are very few Grade A developers willing to sell commercial. So we feel that if we strategize and do [indiscernible] sale, we will end up doing really well, and it will be great for the cash flows also. So we will focus on RLDA being a sale model rather than a lease model. So again, the percentage is not decided to be 50-50, it could be 60% sale and 40% held back or whatever. But by and large, we want to do a sale model. We see, in fact, big houses approaching us and wanting to do a stand-alone building. for us. So there is a big market for people like that also. So again, very excited with that project. .

Our next question is from the line of Murtuza Arsiwalla with Kotak Securities. .

Just on [indiscernible], Obviously, it's a big launch in. It's in the North market. Any sense on pricing, like it size, GDV sales value that you can create? Are we all set for a 1Q launch? Or you go more to the festive, -- just some color on the [indiscernible] project? -[indiscernible]And the second 1 is more on the balance sheet for some -- when I look at your balance sheet and other current liabilities, the advance from customers seeing a smaller number and then many other current liabilities. Just some color on that, that's more much in '25, '26?

Okay. So start with 360 not, less pricing by a little bit of suspense. We are still -- not ready to diverge. We have a very good idea of what we want, but we don't want to divert the price. So we'll all that. Everybody now knows that we are doing very similar to a product that we've done, which is 360 West. So the sizes are up big. These are 5,000-plus and 8,000-plus square feet apartments, and they are like top on luxury. You must have read in the paper. We've also appointed L&T as our contractors. So we are good to go on that and demolition happening at a good pace as we speak. The show apartment getting ready there on site. So physically, also work has started in a way. And yes, but as far as prices go, like I said, that let that be a bit of a spend because we still have some more time to go I'll leave Saumil to answer the more complex question you raised. .

So the advance from customers is purely the advance that we received from customers, this is at times customers end up giving you a couple of installments in advance and all of that. So if you look at that, INR 82 crores versus INR 97 crores. I think that's the smaller number that you're referring to. So not a material movement in that one. The critical one as you have pointed out, is in the other current liabilities, which is from INR 1,855 crores to about INR 2,700 crores, INR 2,800-odd crores. A large component of that or the largest component of that would basically be the unrecognized revenue. So this will flush through P&L under the percentage completion method. This is purely billing in excess of revenue. So where we have built much more than what we are recognizing. So if you look at all the projects in the initial stages, so if you look at, for example, both the Thane projects, in terms of billing, there will be upwards of 45%, 50%, whereas in terms of revenue recognition, they'll be barely there at about 11%, 12% or something like that. So this is basically the entire component of unrecognized revenue. Over a period of time, this will flush through P&L.

Our next question is from the line of Gaurav Khandelwal with JPMorgan.

I've got 3 on gating. I'll take it one by one. My first question is with the entire pipeline, the launch pipeline that we're talking about. Is it fair to assume that FY '27, '28, we should be able to deliver double-digit growth in sales? .

Frankly, it could have been possible this year also, had we been able to launch 360 North. So obviously, the numbers have been much better. But again, like as a company since we don't give -- we don't give any forward-looking statement or past any of those. I would refrain from saying anything. But yes, I mean, everybody can do their math and figure out what we will actually be at, if these things play out. .

Got it. Okay. The next question I have is with all the BD that we've done, how much are we looking for in terms of CapEx, cash outlay, which is yet to be completed in FY '27?

Most of our land parcels do not require us to pay cash upfront, either it's like -- even RLDA, we have a [indiscernible] to pay. So there is a small component that goes upfront. -- and everything else is linked to revenue generated and then passed on to them or a finite date which is much later. So we genuinely don't have any major cash going out for the land acquisition. At least not in the current 1 that we spoke about. .

Okay. The other thing I wanted to check with you is, are you seeing any impact from the West Asia conflict at all, whether in terms of customer interest, especially for the higher ticket size apartments? Or on your construction front, are these impacting your raw material -- raw material construction expenses or anything at all across any part of the business? .

Thank you for asking. Yes, costs are going up. And luckily, we literally -- we really make sure we have a lot of contingency built in when we do our budgeting. But yes, costs have gone up. Energy cost has gone up, aluminum has gone up, glass has gone up, labor has become expensive. So all these are -- and then again, I mean availability of materials become a bit of a challenge. So these are stressing us out. But like I said, it's a problem for the entire industry, and we all are grappling with it. But yes, now it's like slowly starting to hurt you -- and yes, -- that's .

In that case, would it be possible for you to quantify in terms of margins, EPS, any number that you can share on how bad this is?

Frankly, like I said, that we build this contingency in advance to make sure that our margins are not affected. But -- but yes, I mean, like the contingencies are getting consumed or eroded as we speak. So we're really lucky. Another very important aspect is that the reason also we've repriced many things. Somebody asked us that Tower G, we actually made sure that we now know for a fact that there will be a cost increase, and we are factoring that within the projects that we are doing. .

Amazing. Okay. And if I can just squeeze in one more. I'm sorry if I'm being a bit naive here. But when I look at the residential prices...

I'll tell you on the cost front, overall cost front, about 2% to 3% is what we are looking at as a cost increase. But we -- like I said, it's within the contingencies built, so really, it won't affect the bottom line right now. .

Okay. So 2% to 3% in season cost base. Okay. And just a final one, just wanted to get your thoughts here, a bigger picture question. When I look at your residential price between Goregaon Borivali, so the price delta is not feeling that much. But if I were to compare the mall rentals, then there's almost 30%, 35% delta. AT some point over the next 12, 24 months, do you expect this more rental delta to narrow? Or is it how the market structure is .

So Borivali [indiscernible]. Goregaon has been here for more than 15 years now. So the rental difference is also because the renewals are already -- they have already kicked in, some of the terms are over. So we are literally able to reset the numbers. In Borivali, we'll first have a renewal, which would probably be a 15% over whatever is [indiscernible]. And then 5 years later, some 10 years later, some 7 years later, there's a reset of rent -- so that part of it will probably play out only after 5 years. I'd say you'll see an exponential change in numbers. But I also want to tell you that we've been able to lease or we get a very good number. And so they were very close to what we were leasing Borivali at -- sorry,. So yes, these 2, I would say, both well.

Our next question comes from the line of Karan Khanna from Ambit Capital. .

Just a couple of questions from my side. So following up -- on [indiscernible], if you can just comment on the launches, the overall GDV of launches that are planned for FY '27. And if I recollect, you didn't mention Alibaug in that. So Alibaug gotten postponed into .

No, no, no, no. Sorry. It still continues to be there. But yes, okay. No, it's a slip on our end, we should have actually said. Alibaug could be probably third quarter this year itself. .

And the overall GDV launches that are planned for?

Do you want to take that up separately with Saumil.

Sure. Sure. . Yes. And then secondly, on 360 West, FY '26, where you sold 10 units versus 7 in F5. So clearly, there is some slowdown in the Worli luxury market. In that context, how should 1 think of SP27792675 Monetization of the balance 2.7 lakh square feet of inventory. Earlier, you were confident of exhausting this by FY '28. So should we now build in a longer period here? .

Again, like I said that now we are the only ones holding that inventory and hopefully, at least within 360, we don't have any competition. So this should now pick momentum, I'm hoping that it will pick momentum now. .

And lastly...

Everybody loves it and there's enough demand. And we've seen whether it's me or my partner, ex partner, they've been able to sell that. .

And lastly, on Jarden, which seems to have seen a strong uptick this quarter. So what's driven the strong growth in sales volume in fourth quarter? And is there a change in strategy here or payment flexibility or the overall marketing? And just comment on future launches here in Thane.

No. Frankly, now the building is showing up from -- it's like some of them are at 9 level and so on and so forth, plus the way we build forest well, we were able to do almost about 38 and 40 slabs a year. So that kind of speed, if we -- now people are expecting us to do that here as well in the field that these projects will get ready faster than what they thought they would. And hence, you see this entire drive.

Our next question comes from the line of Kunal Lakhan from CLSA. .

On the RLDA project, right? I understand like a large part of the payment is back-ended once the asset becomes operational to contribute from the from the revenue share. I'm just trying to understand because I think the discount rate that we are using for the NPV is roughly about 10.5%, 11%. Would we, at some point in time, what the asset is ready look at financing this via debt where the cost of debt is much lower compared to the discount rate that we have negotiated?

So it's 10.5% exactly, and we are absolutely mindful of that. And that's why just 20 minutes ago, I said that we probably will even look at Strata sales. Of course, once we get status, we will ensure that we try and repay them faster. And of course, I mean, there is a clear delta between our cost of money versus what they are charging us, and we would love to make sure that we don't end up keeping this for too long. Only advantage is that this is not a debt, whereas you have to borrow and bring it -- so that's how it is. But anyway, nevertheless, we are mindful and we will, at some point, make sure we pay faster than 2028 for sure -- 2038 for sure. .

Sure. Sure. I just want to pick your mind on that. Like on the start-up sale bit, right, when you -- when we look at like -- because a large part of the the outlay is back ended, right? When we look at the IRR of this project, it looks quite interesting and quite lucrative, right? So what's the merit in doing the strata sale versus holding the asset and converting the land payment into debt once the asset is operation? I'm just trying to understand the merit of doing Strata sale versus holding that. .

Just we want to capture both ends of the market. This is 2 million square feet, and there is -- we're also doing -- we are also doing Worli where there's commercial, again, we are enough. And given the way we are looking at demand like if there's a 9th big house, which wants 300,000 square feet office we would love to do a state sale and go ahead with it. And we have enough opportunities. So we are not really worried that we need to hold this only as such. There's a lot available, and we know how to build these land banks. It's really not an issue for us. .

Understood. My second question was on the launches, right? The launches that you have highlighted for Q1 and maybe even Q2. Assuming that these launches have to come through, we should be in a fairly advanced stage f approvals, right? Hopefully, most of them we should have applied for the plan approvals or maybe even era. .

Absolutely correct. .

And just an update, I wanted to ask that .

Oceanic, we already have approval, Favio don't need approval. -- and so on and so forth. So like, again, 360 north like we are applying as we speak and all of that. .

Sure. And lastly, just a quick update on tardive. I think the rehab tower there, we have applied for OC. Any update 0resale portion .

Correct. So we -- again, 101% within this financial year, it could be Q3 or Q4, but within this financial year, for sure. .

Okay. And lastly, launched man for Aram nagar Bandra, this will be FY '28 or 29. .

So Aramnagar, we have to do that, we have component first. we may have some free sale component within the rehab building because these are 1,000 and 2,000 square feet apartments. So we may have something going on. But the large part of that development will happen in these sides move out. So we have to build a rehab component. We will have a parallel strategy might offer them something and say that once we start their work, if they feel like moving out and allow us to launch. Otherwise, we'll be . And you know what, it's weekly timed with the ceiling getting ready. The government is also proposing like late 2028 ceiling connectivity, we feel that literally driving on the ceiling and landing on to the site is much -- like it's very different from just imagining how it will be. So we are -- for Aramnagar other, they are looking more like those dates. But yes, Bandra will be a lot earlier. .

[indiscernible] would be in FY '28? .

This one -- No. In fact, this year itself, yes. R&D. .

No, the [indiscernible] app .

[indiscernible] app? .

Yes. No, got it. Got it. Sorry, I got a little confused there. Sorry, and lastly, to Saumil -- this quarter, the OCF -- OCF was kind of flattish compared to our growth in collections. Any reason for the operating cash flow being flat? .

Yes. So typically, if you look at it, we made a payment of about INR 250 crores to RLDA. So for me, that appears as a working capital change. So the OCF is -- for us, any payments that we make typically for that -- for any advance towards TDR or towards any FSI or towards any land. -- then all of those go towards your working capital changes. And correspondingly, that has an impact on OCF. .

Our next question is from the line of Abhinav Sinha from Jefferies. .

Sir, just a quick update. So firstly, on hotel openings and mall occupancy -- what are our expectations by the end of this year? .

So Worli, early end of this year, for sure, [indiscernible] probably early first quarter, second quarter next year, that's Marriott. -- the risk carditis financial year itself. These are 2 mall -- again, which mall are you talking about Yes. .

Sorry. But what should be the occupancy there by the end of this year? .

I think it will be 100%. .

We have now tied up for the stores, which will open.

So we have -- as we mentioned in the results, we are already at about 72%. If your question was that where we will be by 31st of March 2027, then that's what we are saying that by that date, we'll be at 100%. .

Okay. Great. Sir, second question on [indiscernible]. What is the final plan now? .

So Ivan, the final plan is we do more. We do office, and we do a small hotel. And you know we signed [indiscernible], and it's public news.

And -- but what's the mix because you also want to do some branded residences, which you will sell .

No, we are tempted to do that, but still working on it. And once we finalize, we'll come back to you. .

The total salable area will be here from roughly between these 3? .

About 14 .

1.41 million .

1.4 million square .

Ladies and gentlemen, we will take that as a last question for today. I would now like to hand the conference over to Mr. Oberoi for closing comments. Over to you, sir. .

Thank you. Thank you all for taking time out for this call. We look forward to hearing from you. On an ongoing basis, please feel free to reach out to us or our Investor Relations team as and when you have any questions. Thank you again. Have a good day, guys. Bye-bye. .

Thank you. One on behalf of Oberoi Realty, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.