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    Oberoi Realty Q1 FY26 earnings call

    OBEROIRLTY
    Realty·22 Jul 2025
    Management Summary

    Oberoi Realty reported a mixed Q1 FY26, marked by strong progress on new projects and significant cash inflow from the I-Ven Realty transaction. Elysian Tower D saw excellent response, and annuity assets maintained high occupancy. However, sales momentum for some ongoing projects slowed, and operating cash flow remained weak, impacting return metrics. The company is actively preparing for multiple new launches in the coming quarters, including Gurgaon, Borivali, and NCR.

    Highlights

    5

    • Elysian Tower D at Oberoi Garden City Goregaon received tremendous response, indicating strong demand for new launches.

    • Completed private equity transaction in I-Ven Realty, resulting in ₹1,250 crores received in the joint venture entity, bolstering liquidity.

    • Annuity assets continue to perform exceedingly well, with Commerz III achieving over 85% occupancy and Commerz I & II being fully leased, driven by strong leasing demands.

    • Gurgaon project has commenced demolition work, with design complete, contracts negotiated, and all approvals secured, positioning it for an imminent launch.

    • Borivali projects are clocking high realizations of ₹45,000 to ₹50,000 per square foot on carpet, reflecting strong product acceptance and premium pricing.

    Concerns

    3

    • Sales momentum for existing projects (Forestville, Eternia, Sky City) slowed to 45 units in Q1 FY26, down from over 90 units in Q1 FY25, and Jardin sales also fell to approximately 20 units per quarter post-launch.

    • Operating cash flow has been 'weak' for the last two quarters, raising questions about cash generation despite strong pre-sales.

    • Return on Net Worth (RONW) or Return on Capital Employed (ROCE) for the quarter was 'a little bit lower at 10%', compared to 15% in FY25.

    What Changed3

    vs Q2 FY26

    Guidance items6 → 7 (+1)Risks discussed2 → 4 (+2)Q&A highlights8 → 6 (-2)
    Key financials

    Metrics

    5

    Periods

    3

    Headline

    3
    • I-Ven Realty Transaction Proceeds
      ₹1,250 Cr
    • Borivali Realization
      45,000 Rs/sq ft
    • Thane Cumulative Sales (Preponed)
      ₹1,800 Cr

    Q1 FY26

    1
    • RONW/ROCE
      10%

    FY25

    1
    • RONW/ROCE
      15%

    Order Book

    high confidence

    Composition

    Mix4 projects
    • Forestville, Eternia, Sky City (Q1 FY26)45 units2.3%
    • Forestville, Eternia, Sky City (Q1 FY25)90 units4.6%
    • Jardin (post-launch)20 units/quarter1.0%
    • Thane (cumulative for two projects)₹ 1,800 crores92.1%

    Share of order book by project (derived from disclosed amounts)

    Pipeline

    other

    Upcoming project launches in Gurgaon, Adarsh Nagar, Borivali (next tower), Pedder Road, and NCR.

    "Sales momentum for existing projects has slowed post-initial launch spike, but the company is not perturbed, attributing it to the nature of high-ticket real estate sales and preponed sales in Thane."

    Source:
    Prepared remarks

    Capital allocation

    4
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    M&A

    I-Ven Realty

    joint venture · closed · Consideration ₹NaN (cash)

    M&A

    Hotel Horizon Private Limited

    acquisition · signed · Consideration ₹NaN (cash)

    Liquidity

    Liquidity disclosed

    Management noted that the company has cash available for new land deals.

    Guidance & targets

    7
    CategoryTargetPriority
    Occupancy
    Commerz III Occupancy
    100%
    		High
    Project Launch
    Gurgaon Project Launch
    Ready to roll/launch
    		High
    Project Launch
    Adarsh Nagar Project Launch
    Ready to roll/launch after RERA
    		Medium
    Project Launch
    Borivali Next Tower Launch
    Launch
    		High
    Project Launch
    NCR Project Launch
    Launch
    		High
    Project Launch
    Pedder Road Project Launch
    Launch
    		High
    Project Launch
    Adarsh Project Launch
    Launch (maybe)
    		Medium

    What to watch in Q2 FY26

    5

    Gurgaon Project Launch

    Next quarter
    CurrentDemolition started, approvals in place, ready to roll
    TargetOfficial launch announcement

    Why it matters

    This is a significant new market entry for Oberoi Realty, and its launch will be a key indicator of execution and market acceptance.

    So, we are formally and physically present there. Design work is complete. Contracts have been negotiated, ready to be issued almost likely issued. So, all ready to roll now.

    Risks & concerns

    4
    RiskSeverity

    Sales Momentum Slowdown

    Unit sales for key projects (Forestville, Eternia, Sky City, Jardin) significantly declined in Q1 FY26 compared to Q1 FY25, raising concerns about demand. Management attributed this to the natural plateauing after initial launch spikes and preponed sales. — Analyst downplayed

    medium

    Weak Operating Cash Flow

    Operating cash flow has been weak for the last two quarters, which could impact the company's ability to fund operations and new projects without external financing. Management clarified that land/development right payments are part of OCF. — Analyst acknowledged

    medium

    Sustainability of High Margins and Price Growth

    Analyst questioned if the company can sustain its historical 50% EBITDA margins and property price growth rates, especially with new land acquisitions. Management emphasized prudent land buying and value creation through development. — Analyst acknowledged

    medium

    Gurgaon Market Saturation

    Concerns were raised about market saturation in Gurgaon due to existing and new inventory. Management expressed confidence in their prudent land acquisition, quality, and ability to execute in the market. — Analyst downplayed

    low

    Q&A highlights

    6

    “Okay. So, Praveen, as far as the cash flow is concerned, one thing you'll always have to keep in mind that for us any amounts that we spend on either on land or acquiring any of the development rights or the premiums that we pay to the BMC, all of those figure as a part of my operating cash flow.”

    Analyst questioned the weakness in operating cash flow over the last two quarters and the sustainability of high margins (50% EBITDA) and price growth, which are critical for the company's return profile.

    asked by Praveen Choudhary (Morgan Stanley)

    2 min read5 chapters

    Detailed Narrative

    01

    Strong Progress on New Launches and Land Acquisitions

    Oberoi Realty is actively preparing for several new project launches. Demolition work has commenced at the Gurgaon project site, with design work complete, contracts negotiated, and all necessary approvals secured, making it ready for launch. Similarly, for Adarsh Nagar, approvals are in progress, and plans are being finalized for RERA application. The company also acquired Hotel Horizon Private Limited, a marquee land parcel, for approximately ₹500 crores per acre, which management believes offers significant optionality for residential, hotel, and retail development.

    02

    Annuity Assets and Realization Trends

    The company's annuity assets continue to perform strongly, with Commerz I and Commerz II fully leased. Commerz III has achieved over 85% occupancy and is targeted to reach 100% within the current fiscal year, driven by robust leasing demand. In terms of realizations, Borivali projects are commanding premium prices, clocking ₹45,000 to ₹50,000 per square foot on carpet area, which management attributes to superior product design and lifestyle offerings.

    03

    Sales Momentum Challenges and Management Perspective

    Q1 FY26 saw a slowdown in sales momentum for some existing projects. Combined sales for Forestville, Eternia, and Sky City dropped to 45 units from over 90 units in Q1 FY25, and Jardin sales were around 20 units per quarter post-launch. Management explained this as a natural plateauing effect after initial launch spikes, stating that high-ticket items involve longer decision cycles and sales often pick up closer to completion. They also noted that Thane projects had preponed sales, achieving approximately ₹1,800 crores cumulatively.

    04

    Capital Allocation and Financial Returns

    Oberoi Realty completed a private equity transaction in I-Ven Realty, which resulted in a significant inflow of ₹1,250 crores into the joint venture entity. While the company's Return on Net Worth (RONW) or Return on Capital Employed (ROCE) for Q1 FY26 was reported at 10%, a decrease from 15% in FY25, management reiterated their commitment to prudent land acquisitions and maintaining high profitability. They emphasized that all land acquisitions are carefully vetted to ensure target margins are met.

    05

    Upcoming Project Pipeline and Strategic Focus

    The company outlined a clear pipeline for upcoming launches: Q2 FY26 is expected to have no new launches, Q3 FY26 will see the launch of a new tower in Borivali, and Q4 FY26 is planned for launches in NCR and Pedder Road, with Adarsh Nagar also a possibility. Management highlighted their focus on Mumbai and NCR, aiming to establish sales in Gurgaon before exploring new opportunities. They also expressed confidence in the Thane market, envisioning it as a 'second Goregaon' with a phased development including school, mall, hotel, and residential components.

    This is an AI-generated summary of a publicly available earnings call transcript.