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ICICI Securities Report
Q1FY21 was a washout quarter for Oberoi Realty along expected lines with negligible sales bookings in its residential projects and malls, hotels also being impacted by Covid-19 lockdown. We expect FY21 to be a tough year for OBER considering its exposure to the Mumbai luxury residential market and continued weakness in malls/hotel businesses. However, H2FY21 could see some green shoots with expected launch of Thane residential project which may drive sales bookings.
We cut our rating on OBER to Add from Buy with a revised target price of Rs 412 per share (earlier Rs 605) as we factor in an elongated sales cycle, higher cap rates and lower rentals in upcoming annuity projects. A strong balance sheet with net debt to equity ratio of 0.2 times and minimal debt on annuity/hotel assets should enable OBER to sail through the transient Covid-19 induced pain.
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