Oberoi Realty (OBEREA) 343

Result Update Rating matrix Rating : Hold Target : 375 Target Period : 12 months Potential Upside : 9% What s Changed? Target Changed from 340 to 375 EPS FY17E Changed from 12.1 to 12.0 EPS FY18E Changed from 31.9 to 29.0 Rating Unchanged Quarterly Performance crore Q2FY17 Q2FY16 YoY (%) Q1FY17 QoQ (%) Revenue 252.0 189.2 33.2 32-21.3 EBITDA 125.8 109.0 15.4 165.4-23.9 EBITDA (%) 49.9 57.6-770 bps 51.7-176 bps PAT 83.7 72.9 14.9 107.7-22.3 Key Financials Crore FY15 FY16 FY17E FY18E Net Sales 910.9 1,399.7 1,200.2 2,879.7 EBITDA 514.4 667.4 570.7 1,425.3 Net Profit 317.8 425.9 393.5 951.5 EPS ( ) 9.7 13.0 12.0 29.0 Valuation summary (x) FY15 FY16E FY17E FY18E P/E 35.4 26.4 28.6 11.8 Target P/E 38.7 28.9 31.3 12.9 EV / EBITDA 23.1 17.2 19.4 7.5 P/BV 2.4 2.1 2.0 1.8 RoNW (%) 6.9 8.0 6.6 14.1 RoCE (%) 8.8 11.0 8.4 19.3 Stock data Particular Amount ( crore) Market Capitalization 11,255.3 Total Debt 901.6 Cash 395.3 EV 11,761.6 52 week H/L ( ) 349 / 210 Equity capital 328.2 Face value ( ) 1 Price performance (%) Return % 1M 3M 6M 12M Oberoi Realty 11.7 11.7 21.4 23.8 Mahindra Lifespace (2.0) (4.1) 0.2 (6.0) BSE Realty 0.9 (2.3) 18.4 9.8 Research Analyst Deepak Purswani, CFA deepak.purswani@icicisecurities.com Vaibhav Shah vaibhav.shah@icicisecurities.com October 25, 2016 Oberoi Realty (OBEREA) 343 Three Sixty West boosts Q2 sales volumes Oberoi Realty's Q2FY17 sales performance was better-than-expected mainly on the back of the Three Sixty West project. On the financial front, the result was largely in line with our estimates The topline grew 33.7% YoY to 250.9 crore marginally below our expectation of 262.7 crore The EBITDA margin contracted 769 bps YoY to 49.9% mainly on account of a change in the project mix with topline mainly driven by the relatively lower margin Esquire project. It was in line with our expectation of 49.7% The bottomline grew 15.6% YoY to 83.7 crore largely in line with our estimate of 85.8 crore Sales volume grows 2.8x YoY to 1.77 lakh sq ft ORL s sales volume zoomed 2.8x YoY to 1.77 lakh sq ft in Q2FY17 boosted by Three Sixty West project where it manage to sell eight flats worth 300.4 crore with sales volume of 68828 sq ft. Going ahead, with significant inquiries happening for the project, the company is hopeful of selling 50 flats (currently 29 flats sold) to meet revenue recognition threshold by FY17 end. Further, the Esquire project also reported strong sales with 10 flats sold worth 53.5 crore with sales volume of 25102 sq ft. The quarter also witnessed strong presales worth ~ 500.4 crore. New launches to boost sales volumes, going forward Barring a couple of projects, a slowdown in sales momentum was witnessed across ORL s project portfolio with muted bookings in most projects viz. for Exquisite project. Average quarterly run rate has slowed down from ~49000 sq ft to ~16000 sq ft in the past few quarters due to weak real estate market. Going forward, launch of subsequent phases of Goregaon, Borivali and Mulund projects is expected to drive sales momentum. Consequently, we expect ORL s sales volume to grow 75% YoY to 1.4 msf in FY18E post a dip in FY17E (0.8 mn sq ft). With better sales volume & revenue recognition from newly launched projects, we expect topline, bottomline to grow at 43.4%, 49.5% CAGR to 3121.7 crore, 951.5 crore, respectively, in FY16-18E. Occupancy doubles at Commerz II Phase I ORL currently has four operational assets under its leasing & hospitality portfolio. It includes Oberoi Mall, Commerz-I, Westin Hotel & Commerz-II Phase I. In Q2FY17, its leasing revenues grew strongly by 9.5% YoY to 46.4 crore. Further, the company struck a deal with Teva Pharmaceuticals to lease out ~1.0 lakh sq ft (four floors leased) @ 130-135 per sq ft per month in Commerz II Phase I. This resulted in double occupancy at Commerz II Phase I to ~27.1%. Going forward, we expect rental revenues to grow at 14.0% CAGR to 195.0 crore in FY16-18E with the anticipated revival in leasing activity. Await sustainability in sales volumes; maintain HOLD We like ORL given the quality of land bank, its healthy balance sheet and management bandwidth to execute large projects. Though a pick-up in sales volumes was seen in Q2FY17 post a strong performance in a couple of projects, we would like to see a further improvement in sales volumes, going forward. Further, sales momentum has slowed down across ORL s project portfolio with muted bookings in most projects. With the stock running up ~22% in the past six months, we see limited upside at current levels despite rolling over our NAV to FY18E. Hence, we continue to maintain our HOLD rating on the stock with a revised target price of 375. ICICI Securities Ltd Retail Equity Research

[ Variance analysis Q2FY17 Q2FY17E Q2FY16 YoY (Chg %) Q1FY17 QoQ (Chg %) Comments Income from Operation 252.0 264.4 189.2 33.2 32-21.3 Revenues grew 33.7% YoY to 250.9 crore mainly on account of strong project execution Other Income 12.7 10.3 11.6 8.8 10.3 23.4 Operating Cost 103.4 51.3 57.9 78.5 124.2-16.7 Employee cost 12.8 13.1 13.9-7.8 17.1-25.4 Other expenditure 1 9.3 8.4 19.4 12.1-17.7 EBITDA 125.8 131.5 109.0 15.4 165.4-23.9 EBITDA Margin (%) 49.9 49.7 57.6-770 bps 51.7-176 bps The EBITDA margin contracted 769 bps YoY to 49.9% mainly on account of a change in the project mix with topline mainly driven by the relatively lower margin Esquire project Depreciation 12.4 12.3 12.2 1.6 12.3 1.0 Interest 1.3 1.4 0.1 NM 1.4 NM PBT 124.8 128.0 108.4 15.1 162.0-23.0 Taxes 41.7 42.2 35.9 15.9 55.3-24.6 PAT 83.7 85.8 72.9 14.9 107.7-22.3 Net income grew 15.6% YoY to 83.7 crore largely in line with our expectation of 85.8 crore Key Metrics Sales Volume (in sq ft) 177,306 152,350 62,643 183.0 137,790 28.7 Sales volumes were mainly boosted by Three Sixty West project (sales were at 68288 sq ft) Change in estimates FY17E FY18E ( Crore) Old New % Change Old New % Change Comments Revenue 1,199.1 1,200.2 0.1 3,147.3 2879.7-8.5 EBITDA 583.0 570.7-2.1 1,577.0 1425.3-9.6 EBITDA Margin (%) 48.6 47.5-105 bps 50.1 49.5-60 bps PAT 397.8 393.5-1.1 1,048.2 951.5-9.2 FY18E bottomline was impacted as we have deferred revenue recognition of Mulund projects to H2FY18 from H1FY18 previously EPS ( ) 12.1 12.0-0.9 31.9 29.0-9.1 Assumptions Current Earlier Volume sold in msf FY14 FY15 FY16 FY17E FY18E FY17E FY18E Goregaon 0.2 0.2 0.2 0.1 0.4 0.2 0.4 Andheri/Borivali 0.1 1.1 0.2 0.4 0.2 0.4 Worli 0.1 0.2 0.2 0.1 0.2 Mulund 0.7 0.2 0.3 0.3 0.3 Pune 0.2 0.2 Total 0.3 1.0 1.3 0.8 1.4 0.8 1.4 We have maintained our estimates Comments ICICI Securities Ltd Retail Equity Research Page 2

Conference call highlights: Worli project update: The company managed to sell 14 units post the launch of the project. Significant inquiries have happened for the project. The company targets to sell 50 flats (29 sold till date) to reach the revenue recognition threshold by FY17 end with an expected pick-up in sales. Currently, the project includes ~200 apartments. The company is looking for additional FSI for the project. If it gets necessary approvals on time, number of units on offer could rise Project updates: The management expects the Mulund project to hit revenue recognition threshold probably in H2FY18E and for the Borivali project in H1FY18. Further, the company expects to launch Exquisite phase III & Maxima project in H1CY17. For both, Esquire and SkyCity, show apartments are ready and the company is seeing a good response with more inquiries Execution update: For the Mulund project, the company has finished the foundation work while for SkyCity project, excavation work is complete Commerz II new deal: The company managed to lease four additional floors with gross leasable area of ~1 lakh sq ft to Teva Pharmaceuticals resulting in occupancy of 27.1% in Q2FY17 (vs. 13% in Q1FY17) at ~ 130-135/ sq ft per month ICICI Securities Ltd Retail Equity Research Page 3

Company Analysis Worli project boosts sales volume ORL s sales volume in this quarter was flat QoQ at 1.47 lakh sq ft. It was led by sales of 55,320 sq ft in Three Sixty West project and 26974 sq ft in its SkyCity projects. Going forward, the launch of subsequent phases of Goregaon, Borivali and Mulund projects are expected to keep sales volumes ticking. Hence, we expect the sales volume to pick up to 1.4 mn sq ft in FY18E from 0.8 mn sq ft in FY17E. Exhibit 1: Sales volume picking up Exhibit 2: Anticipate it to pick up sharply with new launches (lakh sq ft) 12.0 1 8.0 6.0 4.0 2.0 0.4 Q2FY15 0.8 Q3FY15 7.5 Q4FY15 0.8 Q1FY16 0.6 Q2FY16 10.2 Q3FY16 1.4 Q4FY16 1.5 Q1FY17 1.77 Q2FY17 (mn sq ft) 1.5 1.2 0.9 0.6 0.3 1.3 1.4 1.0 0.2 0.3 0.8 0.7 1.1 0.2 0.2 0.5 0.2 0.4 0.1 0.3 0.2 0.5 0.4 0.2 0.2 0.2 0.2 0.1 0.4 FY12 FY13 FY14 FY15 FY16 FY17E FY18E Andheri/Borivali Worli Mulund Pune Pune Source: Company, ICICIdirect.com, Research Source: Company, ICICIdirect.com, Research Launches in Borivali, Mulund to impact overall realisation ORL s average realisation has been at a higher level mainly due to higher proportion of Oberoi Exquisite and Oberoi Esquire projects. However, going ahead, with higher proportion of sales volume to be derived from its Mulund and Borivali projects, we expect average realisation to come down from current levels. Exhibit 3: Quarterly average realisation trend 30,000 Exhibit 4: Annual realisation trend across projects 30,000 ( per sq ft) 25,000 20,000 15,000 10,000 23,644 23,541 19,973 21,891 Goregaon (Exquisite) 27,305 20,967 21,305 Goregaon (Escquire) 20,535 23,776 23,776 21,512 21,512 Andheri 17,438 18,766 16,715 16,856 Overall ( per sq ft) 25,000 20,000 15,000 10,000 Goregaon (Exquisite) Goregaon (Escquire) Mulund Borivali Overall Q3FY16 Q4FY16 Q1FY17 Q2FY17 FY14 FY15 FY16 FY17E FY18E Source: Company, ICICIdirect.com, Research Source: Company, ICICIdirect.com, Research ICICI Securities Ltd Retail Equity Research Page 4

Exhibit 5: Ongoing residential projects operational metrics Particulars Q2FY17 Q1FY17 Q4FY16 Q3FY16 Q2FY16 Q1FY16 Area Booked (sq ft) Splendor 987 - - - - Oberoi Esquire 16920 8008 22610 28,035 4,390 8,865 Oberoi Exquisite 25102 18220 14430 13,475 38,630 49,075 Three Sixty West 68288 55320-9,562 9,562 - Priviera - - 2350 4,700 - - Prisma 11395 20188 5204 12,151 9,171 8,595 Eternia 15380 5010 6680 1,890 7,030 11,030 Enigma 10720 13477 7476 6,140 (6,140) 3,070 Sky City 28514 26974 83257 947,037 - - Total 177,306 147,197 142,007 1,023,977 62,643 80,635 Sales Value ( crore) Splendor 2.7 - - - - Oberoi Esquire 53.5 16.79 46.43 64.3 8.4 16.8 Oberoi Exquisite 40.7 49 37.67 31.9 89.8 117.3 Three Sixty West 300.6 237.41-40 25 - Priviera - - 15.26 33.6 - - Prisma 19.5 34.8 8.76 22.0 16.4 15 Eternia 23.7 8.3 10.84 3.2 10.6 17 Enigma 17.8 22.58 11.98 9.3 (9.3) 5 Sky City 45.8 46.32 133.61 1567.15 - - Average Realization for the quarter ( /sq ft) Splendor 27,761 - - - - Oberoi Esquire 31,608 20,967 20,535 22,925 19,096 18,906 Oberoi Exquisite 16,230 22,003 26,105 23,644 23,256 23,899 Three Sixty West 44,024 42,916-41,832 43,027 - Priviera** - - 64,936 71,532 - - Prisma 17,139 17,238 16,833 18,106 17,830 17,708 Eternia 15,403 16,567 16,228 16,825 15,035 15,043 Enigma 16,576 16,754 16,025 15,098 NA 16,039 Sky City 16,048 17,172 16,048 16,548 Project Completion (%) Splendor 100 - - - - Oberoi Esquire 57.3 52.86 43.3 39.5 * * Oberoi Exquisite 100 100 100 10 10 10 Three Sixty West * * * * * * Priviera 100 100 100 10 10 10 Prisma 53.9 50.48 44.4 42.3 41.0 37 Eternia * * * * * * Enigma * * * * * * Sky City * * * * * * Inventory as on Date (sq ft) Splendor - - - - - Oberoi Exquisite 194575 211495 229715 244,145 257,620 296,250 Three Sixty West 1516890 1585178 1640498 1,640,498 1,650,060 1,659,622 Priviera ** 2350 2350 2350 4,700 9,400 9,400 Prisma 104214 115609 135797 141,001 153,152 162,323 Eternia# 331260 346640 351650 358,330 180,220 187,250 Enigma 468611 479331 492808 201,625 207,765 201,625 Sky City 942163 970677 1030295 947037 - - Note : * Yet to reach threshold # Basis area opened for booking ** Calculated on carpet area ICICI Securities Ltd Retail Equity Research Page 5

Exhibit 6: Leasing trend Rental, hospitality portfolio Icing on the cake ORL also enjoys a strong leasing and profitable hospitality portfolio wherein it has Commerz I & II (Commercial Space), Oberoi Mall (Retail Property) and The Westin Mumbai Garden City (Hospitality). In the leasing portfolio, ORL has leased out ~0.9 mn sq feet (~94% of the total available area) in Commerz I and Oberoi Mall. Beside this, ORL has also completed Commerz-II Phase I (0.7 mn sq ft). Recently, it concluded a deal with Teva Pharmaceuticals to lease out ~1 lakh sq ft. Overall, the lease revenue is expected to grow to 195.0 crore in FY18E vs. 15 crore in FY16 driven by the incremental leasing in Commerz II phase I. Exhibit 7: Leasing revenue trend (mn sq ft) 2.1 1.8 1.5 1.2 0.9 0.6 0.3 0.8 0.8 0.8 0.9 0.9 0.9 1.0 1.1 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.1 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E ( crore) 300 225 150 75 0 195 165 113 122 126 135 147 150 111 67 78 79 87 94 94 99 21 41 46 44 46 48 47 47 45 43 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E Commerz I Commerz II Phase I Oberoi Mall Source: Company, ICICIdirect.com, Research Commerz I Commerz II Phase I Oberoi Mall Source: Company, ICICIdirect.com, Research ORL also has The Westin Mumbai Garden City Hotel in Goregaon, which is part of the mixed development in Oberoi Garden City. It is a five star hotel with 269 rooms and is managed by the Westin Group. In FY16, it reported a revenue and EBITDA of 127.9 crore and 31.9 crore, respectively. In Q2FY17, it reported revenue of 29.5 crore and EBITDA margin of 28.8% with occupancy rate of 75.0%. Going ahead, we expect it to post a topline and bottomline of 142.6 crore and 42.8 crore, respectively, in FY18E. Exhibit 8: Hotel revenue trend Exhibit 9: Westin s operating profit trend ( crore) 16 14 12 10 8 6 4 2 142.6 122.8 128.0 131.2 112.7 90.6 96.5 FY12 FY13 FY14 FY15 FY16 FY17E FY18E ( crore) 5 4 3 2 1 31.9 30.3 3 29.3 28.9 26.9 25.4 23.0 28.3 34.2 33.0 40.9 37.9 42.8 FY12 FY13 FY14 FY15 FY16 FY17E FY18E EBITDA Margins (RHS) 36 33 30 27 24 (%) ICICI Securities Ltd Retail Equity Research Page 6

Exhibit 10: Operational trend in Oberoi s rental and hospitality portfolio Particulars Q2FY17 Q1FY17 Q4FY16 Q3FY16 Q2FY16 Oberoi Mall (Retail Property) Operating Revenue ( crore) 24.7 24.4 22.8 24.3 23.2 EBITDA margin (%) 93.6 92.6 94.1 94.7 95.6 Occupancy (%) 90.9 90.8 99.5 98.9 99.1 Realisation ( /sqft/month) 164 162 138 148 140 Commerz I (Commercial Space) Operating Revenue ( crore) 11.8 11.9 11.2 11.7 11.7 EBITDA margin(%) 100.3 99.2 99.0 99.8 99.8 Occupancy (%) 88.5 88.5 88.5 96.7 95.2 Realisation ( /sqft/month) 140 141 132 127 128 Commerz II Phase I (Commercial Space) Operating Revenue ( crore) 4.1 3.5 2.7 1.7 1.7 EBITDA margin(%) 49.6 41.6-16.3 38.1 43.1 Occupancy (%) 27.1 13.0 13.0 7.1 7.1 Realisation ( /sqft/month) 125 122 117 110 110 The Westin Mumbai Garden City (Hospitality) Operating Revenue ( crore) 29.5 28.7 32.6 34.0 30.6 EBITDA margin(%) 28.8 29.2 34.1 32.6 31.1 Average Room Rate ( ) 8226 8166 9041 9079 8425 Occupancy (%) 75.0 77.3 77.5 76.2 77.5 RevPAR ( ) 6173 6310 7026 6911 6532 ICICI Securities Ltd Retail Equity Research Page 7

Recognises revenues to grow at 43.4% CAGR in FY16-18E ORL s revenues are expected to grow at a CAGR of 43.4% CAGR in FY16-18E with Sky City and Mulund projects expected to hit revenue recognition threshold by FY18E Revenues grew 55.3% YoY to 1399.7 in FY16. Going forward, we expect ORL s revenues to grow robustly at 43.4% CAGR over FY16-18E with Sky City and Mulund projects expected to hit revenue recognition threshold by FY18E and more revenues expected to get recognised from completed projects such as Exquisite coupled with Worli revenues. Exhibit 11: Revenues to grow at 43.4% CAGR over FY16-18E ( crore) 5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 CAGR - 43.4 2,879.7 1,399.7 784.2 910.9 1,200.2 FY14 FY15 FY16 FY17E FY18E EBITDA margin to rise marginally ORL s EBITDA margin has dropped significantly in FY16 to 47.7% from ~56.5% in FY15. Going ahead, we expect margins to be in the range of 45-50% given the larger share of residential revenues recognition, which is more typical of lower margins than for hospitality and leasing. Exhibit 12: EBITDA margin trend 60 56.5 55 55.4 50 47.7 47.5 49.5 (%) 45 40 35 FY14 FY15 FY16 FY17E FY18E ICICI Securities Ltd Retail Equity Research Page 8

Net profit to grow at 49.5% CAGR during FY16-18E We expect ORL s bottomline to grow at a CAGR of 49.5% during FY16-18E to 951.5 crore, with Eternia & Enigma projects hitting revenue recognition during this period Overall, we anticipate ORL s bottomline will grow at a CAGR of 49.5% during FY16-18E to 951.5 crore, with Eternia, Enigma & SkyCity projects hitting revenue recognition during this period. This would aid the bottomline significantly, going forward. Exhibit 13: PAT to grow at 49.5% CAGR during FY16-18E ( crore) 1000 900 800 700 600 500 400 300 200 100 0 951.5 CAGR - 49.5% 425.9 311.1 317.8 393.5 FY14 FY15 FY16 FY17E FY18E Return ratio to bounce back in FY18E Given the lower revenue recognition and profitability in FY15, ORL s return ratio dropped to single digit in FY15. However, with better revenues and profitability coming in FY18E, we expect ORL s return ratio to bounce to levels of 19.3% RoCE and 14.1% RoE in FY18E. Exhibit 14: Return ratio to bounce back 25 20 19.3 15 (%) 10 10.3 8.8 11.0 8.4 14.1 5 7.1 6.9 8.0 6.6 0 FY14 FY15 FY16 FY17E FY18E RoCE RoNW ICICI Securities Ltd Retail Equity Research Page 9

Exhibit 15: Valuation Outlook and Valuation We like ORL given the quality of land bank, its healthy balance sheet and management bandwidth to execute large projects. Though a pick-up in sales volumes was seen in Q2FY17 post a strong performance in a couple of projects, we would like to see a further improvement in sales volumes, going forward. Further, sales momentum has slowed down across ORL s project portfolio with muted bookings in most projects. With the stock running up ~22% in the past six months, we see limited upside at current levels despite rolling over our NAV to FY18E. Hence, we continue to maintain our HOLD rating on the stock with a revised target price of 375. Location Type Status Saleable Area ( in mn sq ft) NAV NAV Multiple Value ( cr) /share Goregaon 10.1 6,011.3 5,551.0 163.6 Oberoi Mall Retail Completed 0.6 907.5 1.0 907.5 26.8 Commerz I Commercial Completed 0.4 472.0 1.0 472.0 13.9 Westin Hotel Completed 0.4 1,076.0 1.0 1,076.0 31.7 Exquisite II Residential Ongoing 1.5 1,114.4 1.0 1,114.4 32.9 Commerz II Phase I Commercial Ongoing 0.7 855.1 0.8 684.1 20.2 Exquisite III Residential Planned 1.9 43.7 1.0 43.7 1.3 Commerz II Phase II Commercial Planned 1.7 1,157.4 0.8 868.1 25.6 Oberoi International school Social Infrastructure Ongoing 0.3 Education complex Planned 0.9 111.9 1.0 111.9 3.3 Hospital Planned 0.4 Andheri/Khar/Borivali 3.1 3,281.9 3,231.7 95.3 Oberoi Maxima Commercial Ongoing 0.3 177.9 0.8 142.3 4.2 Oberoi Prisma Residential Ongoing 0.7 152.0 1.0 152.0 4.5 Oberoi Splendour IT park Commercial Planned 0.1 58.4 0.8 46.7 1.4 Oberoi Splendour school Social Infrastructre Planned 0.4 14.7 0.8 11.7 0.3 Priviera Residential Completed - 1.0 - - Borivali Residential 4.5 2,879.0 1.0 2,879.0 84.9 Worli 2.9 2,093.4 1,80 53.1 Oasis Residential Residential Ongoing 1.8 626.4 1.0 626.4 18.5 Oasis Commercial Commercial Ongoing 0.2 117.0 0.8 93.6 2.8 Oasis Mall Retail Ongoing 0.1 59.2 0.8 47.4 1.4 Oasis Hospitality Hospital Ongoing 0.2 80.1 0.8 64.1 1.9 I-Ventures Residential 0.5 1,210.6 0.8 968.5 28.6 Mulund 3.2 1,458.0 1,458.0 43.0 Eternia Residential Ongoing 1.6 695.5 1.0 695.5 20.5 Enigma Residential Ongoing 1.6 762.5 1.0 762.5 22.5 Pune 1.3 76.9 43.7 1.3 Sangam city - Residential Residential Planned 0.8 43.7 1.0 43.7 1.3 Sangam city - Commercial Commercial Planned 0.3 16.8 - - - Sangam city - Retail Retail Planned 0.3 16.3 - - - Net cash/ (Debt) 629.6 1.0 629.6 18.6 Total 20.7 13,551.1 0.9 12,714.0 375 Rounded off target price 375 Exhibit 16: Valuation Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE ( cr) (%) ( ) (%) (x) (x) (%) (%) FY15 910.9 16.2 9.7 2.1 35.4 23.1 6.9 8.8 FY16 1399.7 53.7 13.0 34.0 26.4 17.2 8.0 11.0 FY17E 1200.2-14.3 12.0-7.6 28.6 19.4 6.6 8.4 FY18E 2879.7 139.9 29.0 141.8 11.8 7.5 14.1 19.3 ICICI Securities Ltd Retail Equity Research Page 10

Recommendation History vs. Consensus ( ) 400 300 200 100 Oct-14 Dec-14 Mar-15 May-15 Aug-15 Oct-15 Dec-15 Mar-16 May-16 Aug-16 Oct-16 10 9 8 7 6 5 4 3 2 1 (%) Price Idirect target Consensus Target Mean % Consensus with BUY Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Jan-15 Jun-15 Jun-15 Aug-15 Oct-15 Mar-16 Mar-16 Apr-16 May-16 Aug-16 Sep-16 Event First time launch of luxury residential projects in Mumbai suburb of Mulund. The two projects are spread across nine acres and would collectively be of 3.3 million square feet in size with ticket size starting from 2 crore (base price 12,250 per sq ft As per media sources, Oberoi Realty to buy Crompton Greaves Worli building spread over ~1 acre for over 200 crore. Oberoi Realty approves raising of 324 crore through preferential issue of shares to Aranda Investments, an indirect subsidiary of Temasek Holdings As per media sources, Oberoi Realty to buy Crompton Greaves Worli building spread over ~1 acre for over 200 crore. Oberoi Realty launches its multi-tower project Sky City at Borivali spread across 25 acres consisting of multiple towers of up to 60 storeys each. The project has a saleable area of ~4.5 million square feet (msf) and the company expects to earn revenues of ~ 6000-7000 crore from the project The Bombay High Court stays new constructions of either residential/commercial buildings or hotels in Mumbai from March 1, 2016 because the state government and Brihanmumbai Municipal Corporation (BMC) have failed to comply with the municipal solid waste (MSW) rules at Deonar and Mulund dumping grounds,due to which Oberoi will be unable to launch projects until the ban is lifted Rajya Sabha passes the real estate regulation bill paving the way for regulation in the real estate sector. The bill would promote timely execution of projects, ensure speedy adjudication of disputes and help promote private participation, positive for Oberoi Swedish furniture retailing giant Ikea in talks with Oberoi Realty to buy a built-to-suit retail space for over 900 crore in Borivali. As per media reports, if the deal happens, this will monetise Oberoi's landbank at better prices of ~ 112.5 crore per acre vs. Oberoi's acquisition price of ~ 46.2 crore per acre Oberoi allots 59,104 equity Shares of 10 each to certain option grantee(s) pursuant to exercise by them of options granted to them under Company s Employee Stock Option Scheme 2009. The exercise price for options is 260/ share. Post allotment, share capital has increased to 339.4 crore. According to media sources, Oberoi Realty is in talks with US-based investor Morgan Stanley and Singapore s sovereign fund, GIC, to set up a joint venture (JV) for developing malls. The venture would have a corpus of 1,000 crore. Oberoi is expected to hold about 75%. Further, it could also initiate talks with Canada Pension Plan Investment Board, which has shown an interest in buying in malls Teva Pharmaceuticals buys ~1.0 lakh sq ft space in Oberoi Commerz II in Goregaon Top 10 Shareholders Rank Name Latest Filing Date % O/S Position (m) Change (m) 1 Oberoi (Vikas Ranvir) 30-Jun-16 62.7% 212.9 2 R S Estate Developers Pvt. Ltd. 30-Jun-16 9.8% 33.3 3 Aranda Investments (Mauritius) Pte. Ltd. 30-Jun-16 3.7% 12.4 4 SSIII Indian Investments Two, Ltd. 30-Jun-16 2.9% 9.8-1.2 5 APG Asset Management 30-Jun-16 1.6% 5.4 0.4 6 OppenheimerFunds, Inc. 30-Jun-16 1.4% 4.8 7 BlackRock Asset Management North Asia Limited 30-Jun-16 1.2% 4.1 8 FIL Investment Management (Singapore) Ltd. 31-Aug-16 1.2% 4.0 0.3 9 BlackRock Investment Management (UK) Ltd. 30-Jun-16 1.2% 3.9 3.9 10 The Vanguard Group, Inc. 30-Sep-16 0.7% 2.3 Source: Reuters, ICICIdirect.com Research Recent Activity Buys Shareholding Pattern (in %) Dec-15 Mar-16 Jun-16 Sep-16 Promoter 72.56 72.55 72.54 72.54 FII 21.31 21.30 22.07 24.23 DII 0.83 0.77 0.68 0.51 Others 5.30 5.38 4.71 2.72 Sells Investor name Value (m) Shares (m) Investor name Value (m) Shares (m) BlackRock Investment Management (UK) Ltd. 15.8 3.9 SSIII Indian Investments Two, Ltd. -4.7-1.2 APG Asset Management 1.8 0.4 Third Avenue Management LLC -2.4-0.6 FIL Investment Management (Singapore) Ltd. 1.2 0.3 Templeton Investment Counsel, L.L.C. -0.9-0.2 Wellington International Management Company Pte. Ltd. 1.0 0.2 ICON Advisers, Inc. -0.7-0.2 Northern Trust Global Investments Ltd. 0.4 0.1 Belgrave Capital Management Ltd. -0.6-0.2 Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 11

Financial summary Profit and loss statement ( Crore) (Year-end March) FY15 FY16 FY17E FY18E Net Sales 910.9 1,399.7 1,200.2 2,879.7 Other Operating Income 11.7 8.4 9.2 10.1 Total Operating Income 922.7 1,408.1 1,209.4 2,889.8 Growth (%) 15.6 52.6-14.1 138.9 Operating Costs 314.2 629.7 516.7 1,326.2 Employee Expenses 52.7 57.6 63.4 66.6 Other Expenses 41.4 53.3 58.6 61.6 Total Operating Expenditure 408.2 740.6 638.7 1,454.4 EBITDA 502.7 659.1 561.5 1,425.3 Growth (%) 15.6 28.1-15.9 149.7 Depreciation 40.3 49.0 48.4 37.1 Interest 1.8 0.2 62.9 Other Income 17.5 36.2 36.2 39.8 PBT 489.9 654.5 558.5 1,365.2 Prior Period Adjustments Total Tax 172.1 228.6 189.9 PAT before profit from associates 317.8 425.9 368.6 901.0 Minoriy Interest Profit from associates 24.9 50.5 PAT 317.8 425.9 393.5 951.5 EPS ( ) 9.7 13.0 12.0 29.0 Cash flow statement ( Crore) (Year-end March) FY15 FY16 FY17E FY18E Profit after Tax 317.8 425.9 393.5 951.5 Depreciation 40.4 49.0 48.4 37.1 Interest 87.0 71.7 62.9 Others -5.4-23.8-36.2-39.8 Net Increase in Current Assets -1925.9-428.6 111.2-674.2 Net Increase in Current Liabilities 541.9 329.1 6.1 287.5 Net cf from operating activities -938.2 426.7 523.0 625.1 (Purchase)/Sale of Fixed Assets 29.3-46.5-25.0-25.0 Others -5.4-23.8-36.2-39.8 Net cf from Investing Activities -88.1-243.4 11.2 14.8 Inc / (Dec) in Equity Capital 0.1 325.8 Inc / (Dec) in Loan Funds 825.5-26 35 (Payment) of Dividend & Div. Tax -76.8-160.7-78.7-190.3 Interest paid -55.2-86.2-62.9 Net cf from Financing Activities 693.6-181.2 271.3-253.2 Net Cash flow -332.7 2.1 805.5 386.6 Opening Cash/Cash Equivalent 494.3 293.7 320.9 1,126.3 Closing Cash/ Cash Equivalent 293.7 320.9 1,126.3 1,513.0 Balance sheet ( Crore) (Year-end March) FY15 FY16 FY17E FY18E Equity Capital 328.2 339.3 339.3 339.3 Preference Capital Reserve and Surplus 4,306.1 4,965.0 5,279.7 6,041.0 Total Shareholders funds 4,634.3 5,304.3 5,619.0 6,380.3 Total Debt 901.6 641.5 991.5 991.5 Deferred Tax Liability 24.3 22.9 22.9 22.9 Total Liabilities 5,560.1 5,968.7 6,633.4 7,394.7 Assets Gross Block 1,174.3 1,185.5 1,210.5 1,235.5 Less Accumulated Depreciation 159.5 208.3 256.8 293.8 Net Block 1,014.8 977.1 953.7 941.6 Capital WIP 21.8 53.9 53.9 53.9 Total Fixed Assets 1,036.5 1,031.0 1,007.6 995.6 Goodwill on consolidation 265.4 265.4 265.4 265.4 Investments 74.4 74.4 74.4 Inventory 3,481.8 3,930.6 4,229.9 4,694.6 Debtors 82.8 117.0 14 182.0 Loans and Advances 1,956.2 1,993.7 1,560.3 1,727.8 Cash 293.7 320.9 1,126.3 1,513.0 Other Current Assets 3.6 26.7 26.7 26.7 Total Current Assets 5,818.0 6,388.9 7,083.2 8,144.0 Creditors 1,559.9 1,786.7 1,792.8 2,080.4 Provisions 4.4 4.4 4.4 Net Current Assets 4,258.1 4,597.8 5,286.0 6,059.3 Deferred Tax Assets Total Assets 5,560.1 5,968.7 6,633.4 7,394.6 Key ratios (Year-end March) FY15 FY16E FY17E FY18E Per share data ( ) EPS 9.7 13.0 12.0 29.0 Cash EPS 10.9 14.5 13.5 30.1 BV 141.2 161.6 171.2 194.4 Operating profit per share 15.7 20.3 17.4 43.4 Cash Per Share 8.9 9.8 34.3 46.1 Operating Ratios (%) EBITDA Margin 56.5 47.7 47.5 49.5 PBT / Net Sales 53.8 46.8 46.5 47.4 PAT Margin 34.9 30.4 30.7 31.3 Inventory days 1,395.1 1,025.0 1,286.3 595.0 Debtor days 33.2 30.5 42.6 23.1 Creditor days 625.0 467.1 546.5 264.2 Return Ratios (%) RoE 6.9 8.0 6.6 14.1 RoCE 8.8 11.0 8.4 19.3 RoIC 9.0 11.2 9.7 24.1 Valuation Ratios (x) P/E 35.4 26.4 28.6 11.8 EV / EBITDA 23.1 17.2 19.4 7.5 EV / Net Sales 13.0 8.2 9.2 3.7 Market Cap / Sales 12.4 8.0 9.4 3.9 Price to Book Value 2.4 2.1 2.0 1.8 Solvency Ratios (x) Debt / EBITDA 1.8 1.0 1.7 0.7 Debt / Equity 0.2 0.1 0.2 0.2 Current Ratio 3.5 3.4 3.3 3.2 Quick Ratio 1.3 1.2 1.0 0.9 ICICI Securities Ltd Retail Equity Research Page 12

ICICIdirect.com coverage universe (Real Estate) CMP M Cap EPS ( ) P/E (x) EV/EBITDA (x) P/B (x) RoE (%) Sector / Company ( ) TP( ) Rating ( Cr) FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E Oberoi Realty (OBEREA) 343 375 Hold 11,241 13.0 12.0 29.0 26.4 28.6 11.8 17.2 19.4 7.5 2.1 2.0 1.8 8.0 6.6 14.1 Mahindra Lifespace (GESCOR) 434 550 Buy 1,773 22.7 26.8 44.9 18.8 15.9 9.5 16.5 9.2 6.1 1.1 1.1 1.0 6.0 6.8 10.5 ICICI Securities Ltd Retail Equity Research Page 13

RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction; Buy: >10%/15% for large caps/midcaps, respectively; Hold: Up to +/-10%; Sell: -10% or more; Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai 400 093 research@icicidirect.com ICICI Securities Ltd Retail Equity Research Page 14

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ICICI Securities Ltd Retail Equity Research Page 15