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Oberoi Realty, one of the leading real estate development company operating in Mumbai market has registered 66% growth in its consolidated revenue to Rs 573.51 crore for the quarter ended March 2019. But with operating profit margin (OPM) contract by sharp 1650 bps to 36.6%, the growth at operating profit was restricted at 14% to Rs 209.73 crore. However the PBT before share of profit from associate was up by 23% to Rs 218.72 crore gained largely by higher other income and lower depreciation cost (as % of operating profit) as interest cost (as % of operating profit) stand higher. With share of profit from associates stand higher by 31% to Rs 1.40 crore, the PBT was up by 23% to Rs 220.12 crore. But the growth at PAT stood restricted at 9% to Rs 155.76 crore with taxation stand higher by 80% to Rs 64.36 crore and tax rate up at 29.2% compared to 20% in the corresponding previous period. The other comprehensive income was up by 16% to Rs 0.22 crore and thus the total comprehensive income was up by 9% to Rs 155.98 crore.
The Company has opted to apply the modified retrospective approach as per the new accounting standard i.e. Ind AS 115 [Revenue from Contracts with Customers] that become effective from 1st April 2018, and in respect of the contracts not complete as of April I, 2018 (being the transition date), has made adjustments to retained earnings, recognizing revenue of Rs 493.24 crore, only to the extent of costs incurred, as the relevant projects were in early stages of development. Consequently, there is no impact on retained earnings as at the transition date. While recognizing revenue, the cost of land has been allocated in proportion to the construction cost incurred as compared to the accounting treatment hitherto of recognizing revenue in proportion to the actual cost incurred (including land cost). Consequently, in respect of the quarter ended March 31, 2019, revenue and profit after tax was higher by Rs 133.87 crore and Rs 15.52 crore respectively. Under modified retrospective approach, the comparatives for the previous period figures are not required to be restated and hence are not comparable.
- Sale was up by 66% to Rs 573.51 crore driven largely by strong growth in revenue in both developmental projects as well as rentals. While the revenue of developmental projects was up by 84% to Rs 436.58 crore driven largely by revenue recognition from newer projects that are under construction especially the Sky City project at Borivli, Mumbai. Revenue recognition at Sky City, Eternia and Enigma together was Rs 338.66 crore compared to nil in the corresponding previous period. The revenue recognition of completed projects such as Esquire, Exquisite and Prisma together was down by 59% to Rs 97.92 crore. Similarly the rental income was up by 43% to Rs 87.98 crore with additional area under lease at Commerz II. While the Hospitality revenue was up by 9% to Rs 36.97 crore that of property management revenue was up by 15% to Rs 11.18 crore.
- The operating margin crashed by 1650 bps to 36.6% largely due to project mix as well as newer project not crossing the profit recognition threshold. Thus the growth at operating profit was restricted at 14% to Rs 209.73 crore.
- Other income was up by 202% to Rs 23.79 crore and thus the PBIDT was up by 22% to Rs 233.52 crore. With interest up by 100% to Rs 3.76 crore the growth at PBDT was restricted at 21% to Rs 229.76 crore. The depreciation was down by 6% to Rs 11.04 crore and thus the PBT before profit/loss from associate was up by 23% to Rs 218.72 crore.
- Share of profit from associate was up by 31% to Rs 1.40 crore and thus the PBT was up by 23% to Rs 220.12 crore. Taxation was up by 80% to Rs 64.36 crore and thus the PAT was up by just 9% to Rs 155.76 crore.
Yearly performance
Sale for the period more than doubled (up 104%) to Rs 2582.50 crore. But with OPM contract by 570 bps to 44.7%, the growth at operating profit moderated and stood at 71% to Rs 1155.37 crore. After accounting for higher OI, higher interest cost, lower depreciation and higher share of profit from JVs the PBT was up by 81% to Rs 1177.62 crore. Taxation in absolute term stand higher by 89% to Rs 360.69 crore and the tax rate was higher at 30.6% compared to 29.4% in corresponding previous period. Thus the PAT was up by 78% to Rs 816.93 crore.
Impact on account of the company adopt ‘Revenue from Contracts with Customers' of Ind AS 115, for the half year ended Sep 30, 2018, are : revenue was lower by Rs 1009.05 crore and profit after tax was lower by 105.25 crore respectively. Under modified retrospective approach, the comparatives for the previous period figures are not required to be restated and hence are not comparable.
Management Comment
Commenting on the results, Vikas Oberoi, Chairman & Managing Director, Oberoi Realty said "2018 saw the formalization of the Indian economy and a complete transformation of the real estate sector. Despite dynamic changes in the macro economy we showcased a strong performance at Oberoi Realty, which is an indication of the credibility and trust reposed in our brand by our customers and the market. Our healthy performance is a result of our ability to adapt seamlessly to market and customer entiments. The residential projects continue to receive a promising response from home buyers and our diversified verticals have also been performing well. In the coming year, we expect the demand to further consolidate in favour of credible developers like Oberoi Realty with a healthy track record".
Other developments
The Board of Directors of the Company have recommended dividend of Rs.2 per share (20% of face value of equity shares) for the financial year 2018- 19. The payment of dividend is subject to approval of the shareholders in the ensuing Annual General Meeting of the Company.
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