05

Company Profile

With its headquarters located in Mumbai, Oberoi Realty Ltd is a multinational Indian real estate development company that is publicly listed. Vikas Oberoi, Chairman and Managing Director of Oberoi Realty, is in charge of the business. The company debuted in 2010 on both the National Stock Exchange and the Bombay Stock Exchange. 1998 saw the incorporation of Oberoi Realty as Kingston Properties Private Limited. Oberoi Constructions Private Ltd (OCPL). OCPL was established in 1993, in accordance with the Companies Act is a wholly owned subsidiary of Oberoi Realty Ltd; and is engaged in the real estate development industry as well. In the year 2009, the name Oberoi Realty was officially adopted in order to make its precise nature and operations more clear. The name of the company was changed to Oberoi Realty Limited immediately after it became a “Public Limited” entity.

Real Estate Sector in India

•  One of the industries with the greatest international recognition is real estate. The sub-sectors that make up this industry are housing, retail, hospitality and commercial. The expansion of the corporate environment, the need for office space, and the desire for urban and semi-urban housing all nicely complement the growth of this industry. After the agriculture sector, the real estate industry in India generates the second-highest amount of employment. Long-term and short-term increases in Non-Resident Indian (NRI) investment are also anticipated in this sector. Bengaluru is likely to be the most popular location for NRIs to invest in real estate.
•  The value of the real estate market is expected to increase from Rs. 12,000 crore in 2019 to Rs. 65,000 crore by 2040 and by 2025, it will account for 13% of the nation’s GDP. 

In the first nine months of FY22, over 1,700 acres of land were sold in the top eight cities in India's real estate market. Between 2017 and 2021, foreign investments in the commercial real estate market totalled US$10.3 billion. Following the replacement of the current SEZs Act, developers saw a sharp increase in demand for office space in SEZs (Special Economic Zone) starting in February 2022. Investment Information and Credit Rating Agency (ICRA) of India Ltd estimated that Indian companies will raise more than ` 3.5 trillion through infrastructure and Real Estate Investment Trusts (REIT) by the year 2022. In the first quarter of 2023 (January-March), new real estate launches in India’s top seven cities took up 41% of the market. The Real Estate Investment Trust (REIT) platform has received approval from the Securities and Exchange Board of India (SEBI), enabling investors of all kind to participate in the Indian real estate market. Indian real estate developers have changed course and taken on new challenges in response to a more knowledgeable and aware consumer base in light of globalization and transition from family-owned to professionally managed businesses.

•  The residential sector is expected to grow significantly, with the central government aiming to build 20 million affordable houses in urban areas across the country by 2022, under the ambitious Pradhan Mantri Awas Yojana (PMAY) scheme of the Union Ministry of Housing and Urban Affairs.
• There is an estimated 10 million units of housing shortage in urban areas at the moment. By 2030, 25 million more affordable housing units will be needed to accommodate the Nation’s growing urban population. Growing Foreign Direct Investment (FDI) in Indian real estate is promoting greater transparency. Developers have updated their accounting and management systems to comply with due diligence requirements in an effort to secure funding. In the present two-three years, Indian real estate saw a significant amount of foreign direct investment (FDI), with a US$ 56.03 billion capital infusion from 2000 - 2023.

Company Perspective and Review

•  The balance sheet of the company reflects a growing asset base, with significant investments in capital work-in-progress and inventory. The steady increase in reserves and surplus, along with the variations in borrowings, depict the company’s evolving financial strategies and commitments over these years.
• The financial overview reflects a growing profitability marked by a substantial increase in net revenue and profit after tax. The sharp rise in operating and direct expenses in

March 2023, along with the significant change in inventory levels, are key factors influencing the company's financial outcomes. Overall, the Profit & Loss Account indicates robust financial health and effective management of operations and costs by Oberoi Realty.

• Additionally, Oberoi Realty Ltd. has demonstrated revenue growth over the years, though it's below the industry median. On the other hand, its net profit growth percentage is above the industry median. With a consistent dividend record over the years, the company also distributed an interim dividend of Rs. 2.00 per share on November 8, 2023.
•   As of the latest reports, analysts have set a long-term average target for Oberoi Realty Ltd. at Rs.  1151.67. Although there is a mixed perspective regarding its stock valuation and growth potential in comparison to industry standards; but can be included in any portfolio.