Oberoi Realty Limited

Oberoi Realty reported a solid start to the festive season in Q2 FY26, driven by robust sustenance sales across all projects. Sky City demonstrated strong sales velocity despite recent price hikes, indicating healthy demand for luxury real estate. The uber-luxury project Three Sixty West also continued to attract significant inquiries and sales. Management highlighted a strategic approach to sales, sometimes slowing down or stopping sales in projects to optimize pricing and manage RERA-mandated cash lock-up, ensuring higher realizations rather than pushing for early sales at lower prices.

The company is making significant progress on key projects. The Ritz-Carlton hotel is 70-80% complete by volume and is targeted for launch within this financial year. The I-Ven Realty mixed-use development (shopping mall, office, hotel) is expected to break ground within the current financial year. Oberoi Realty also opened an office in Gurugram, signaling its expansion into the NCR market, with the Gurugram project itself targeted for launch within this financial year after loading 100% TDR and securing approvals.

Commerz III and Sky City Mall are scaling up effectively, driven by strong leasing demand for office and retail tenants. Sky City Mall, in particular, has exceeded expectations, with footfalls now comparable to the Goregaon Mall. Management anticipates the mall will achieve a 'huge amount of stability' within this financial year, with potential for further rental escalations as the market matures.

Oberoi Realty maintains a strong and diverse launch pipeline for the coming quarters, with multiple projects 'queued up and raring to go.' These include projects in Gurugram, Worli, several redevelopment projects, an additional tower in Borivali, a new tower in Thane, and a tower in Goregaon. The Pedder Road and Carter Road projects also have approvals in place, indicating a continuous flow of new offerings.

Residential margins were noted to be lower this quarter, primarily due to accounting standards where projects like Jardin have not yet reached margin recognition, resulting in revenue being equal to cost. Management clarified that a significant capital outflow of approximately Rs. 125 crores was allocated to construction activities for Ritz-Carlton, Sky City, and Commerz III completion. The remaining outflow was attributed to treasury activities, including investments in mutual funds.

Management observed exceptionally strong demand for its upcoming uber-luxury projects in Gurugram and Adarsh Nagar, with potential buyers actively approaching the company even before official advertising or RERA registration. This robust demand, coupled with the company's focus on quality, provides confidence for further price increases across projects, as Oberoi Realty believes its offerings justify a premium.