Oberoi Realty (NS:OEBO):
Oberoi Realty (ORL) registered presales of INR 10.6bn (+124%/-40% YoY/QoQ), it was largely backed by sales from 360 West contributing >40% of presales followed by Elysian and Sky City. 360W saw a good amount of traction in Q1FY25 as six units were sold (vs 3units in the previous quarter totaling INR 4.8bn marking a 118% QoQ growth), we believe that ORL is likely to be able to sell its inventory over the next 24-30 months.
The Pokhran project is set to launch in Q3FY25 during the festive season, with approvals and a ready-show apartment in place. Additionally, ORL is prepared to launch the final phases of its Borivali and Goregaon projects during the same festive period. Commerz 3 has seen continued interest, with over 51% of the area leased to Morgan Stanley (NYSE:MS) and as of June’24, 70% of the space has been leased out, and ORL aims for nearly 100% occupancy by the end of this fiscal year.
Borivali Mall is expected to start its operation by Oct 2024, with a leasing occupancy of >80%. For the Worli Glaxo land, ORL has finalised plans to develop a mixed-use project (commercial and retail combined) spanning 1.8msf of carpet area, with 1msf allocated for office space, approximately 0.7msf for a mall, and 0.1msf for a boutique hotel. Regarding recent business developments in Tardeo, Gurgaon, and Adarsh Nagar, ORL plans to launch these projects by the end of this fiscal year or in Q1FY26. Given the expected robust cash flows from ready-to-move-in inventory in 360W and new launches expected in FY25 along with new BD, we remain constructive on ORL and maintain BUY, with an NAV-based TP to INR 1,944/sh.
JK Cement (NS:JKCE):
We maintain our REDUCE rating on JK Cement (JKCE), with an unchanged TP of INR 4,235/sh (13x Sep-26E consolidated EBITDA), owing to its expensive valuation. In Q1FY25, JKCE’s consolidated volume growth slowed to 6% YoY on weak demand. Blended unit EBITDA declined INR 70/MT QoQ to INR 1001/MT on weak pricing and op-lev loss. The margin contraction was moderated by lower fuel prices and a rising share of low-cost green power. We estimate JKCE’s grey cement profitability will continue to benefit from its healthy ramp-up of expanded capacity, accelerated expansion (targeting 30mn MT grey cement capacity by Q3FY26), cool-off in fuel cost, increasing share of low-cost green power, and freight cost optimisation.
Can Fin Homes (NS:CNFH):
Can Fin Homes’ (CANF) Q1FY25 earnings were marginally below our estimates due to tepid loan growth (+9.4% YoY) and NIM compression, partially offset by lower-than-expected opex. Disbursements remained muted (-6% YoY) due to near-term headwinds from April to May, while the business momentum from June is upbeat, as per management. CANF is poised to deliver ~15% loan growth in FY25 on the back of investments in branches, widening of the customer funnel (digital sourcing, APF etc.), and shift towards higher ticket sizes (INR 2.7mn from INR 2.5mn in FY24). Opex efficiency ratios surprised positively due to the delay in the second phase of IT transformation, driving in-line earnings. CANF remains a robust franchise with steady profitability (RoE of 17-18%), with ongoing investments to solve the growth equation. Maintain BUY with unchanged RI-based TP of INR940 (2.1x Mar-26 ABVPS).
Route Mobile (NS:ROUT):
Route reported a strong revenue growth of 8.5% QoQ, led by the ramp-up of the VI firewall deal and ILD volume recovery. The domestic messaging volume was soft in the quarter led by seasonality and will witness recovery in Q2-Q3. The international messaging volume, which was impacted due to cost-cutting initiatives by large e-commerce and a shift to alternate channels, has started to recover after the WhatsApp price hike. The management has guided for an 18-22% growth for FY25E, considering the VI firewall deal, synergy benefits and ILD and NLD volume recovery.
The VI deal based on the current run-rate will contribute ~10% to the growth and the base business will register ~10-12% growth. The five-year strategic partnership with Microsoft (NASDAQ:MSFT) for digital communications and cloud are early signs of synergy benefits after the integration. The EBITDA margin target is ~13% and the CFO/EBITDA will be at 50-75%. We increase our revenue/EPS estimate for FY26E by ~1.7/-0.9% based on better guidance. We maintain our BUY rating with a TP of INR 2,000, based on 23x June 26E EPS. The stock is trading at 28/21x FY25/26E EPS.