Oberoi Realty Q2 FY26: Profitability Declines Amid Revenue Contraction
Oberoi Realty Ltd, a leading premium real estate developer in Mumbai, reported a challenging Q2 FY26 with a decline in net profit and revenue, raising concerns about the company's near-term momentum in the premium property market.
Real EstateOberoi RealtyFinancial PerformanceProfitabilityRevenue ContractionReal Estate MumbaiOct 15, 2025
The quarter revealed concerning trends across multiple dimensions: revenue contracted 14.14% sequentially to ₹987.55 crores, while year-on-year sales declined 29.72% from ₹1,405.16 crores in Q2 FY25. Despite maintaining relatively healthy operating margins at 52.69%, the company's profitability came under pressure from rising interest costs and a sharp sequential decline in topline growth, raising questions about near-term momentum in Mumbai's premium property market.
Net Profit (Q2 FY26)
₹414.49 Cr
▼ 4.28% QoQ | ▼ 28.81% YoY
Revenue (Q2 FY26)
₹987.55 Cr
▼ 14.14% QoQ | ▼ 29.72% YoY
Operating Margin
52.69%
▼ 105 bps QoQ
Return on Equity
14.17%
Quarterly Basis
Oberoi Realty's Q2 FY26 results highlighted significant sequential and year-on-year revenue pressures. Net sales of ₹987.55 crores marked a 14.14% decline from Q1 FY26's ₹1,150.14 crores and a sharper 29.72% drop compared to Q2 FY25's ₹1,405.16 crores. This revenue contraction reflects the lumpy nature of real estate revenue recognition, where project completion and handover timing significantly impacts quarterly topline figures.
Operating profit before depreciation, interest, and tax (excluding other income) stood at ₹520.34 crores, translating to an operating margin of 52.69%. Whilst this margin remains robust in absolute terms, it represents a 105 basis point sequential decline from 53.74% in Q1 FY26 and a 529 basis point contraction from 58.00% in Q2 FY25. The margin compression suggests rising input costs or project mix pressures impacting profitability.
Metric
Q2 FY26
Q1 FY26
Q2 FY25
QoQ Change
YoY Change
Revenue (₹ Cr)
987.55
1,150.14
1,405.16
▼ 14.14%
▼ 29.72%
Operating Profit (₹ Cr)
520.34
618.07
815.05
▼ 15.81%
▼ 36.16%
Operating Margin (%)
52.69%
53.74%
58.00%
▼ 105 bps
▼ 531 bps
Net Profit (₹ Cr)
414.49
433.01
582.25
▼ 4.28%
▼ 28.81%
PAT Margin (%)
41.97%
37.65%
41.44%
▲ 432 bps
▲ 53 bps
Net profit of ₹414.49 crores declined 4.28% quarter-on-quarter and 28.81% year-on-year, though the PAT margin improved to 41.97% from 37.65% in Q1 FY26, partially offsetting revenue weakness. Interest costs rose to ₹74.95 crores in Q2 FY26 from ₹58.89 crores in Q2 FY25, reflecting increased borrowing costs as the company funds ongoing development projects. The effective tax rate of 16.91% in Q2 FY26 was notably lower than the 24.58% rate in Q2 FY25, providing some support to bottomline performance.
Interest Cost Pressure Building
Interest expenses have climbed 27.32% year-on-year to ₹74.95 crores in Q2 FY26, reflecting the company's increased debt burden. With long-term debt standing at ₹2,894.85 crores as of March 2025 (up from ₹2,192.04 crores in March 2024), financing costs are becoming a more significant drag on profitability. The interest coverage ratio, whilst still healthy at 12.20x on average, warrants monitoring as debt levels continue rising to fund the company's development pipeline.
Operational Dynamics: Lumpy Revenue Recognition Challenges Quarterly Consistency
Real estate companies like Oberoi Realty typically experience significant quarterly volatility due to the lumpy nature of revenue recognition. Project completions and handovers can vary significantly from quarter to quarter, leading to revenue fluctuations that can impact financial metrics. This volatility underscores the need for investors and analysts to focus on long-term trends and the company's overall development pipeline when assessing performance.
Frequently Asked Questions
What was Oberoi Realty's net profit in Q2 FY26?
Oberoi Realty's net profit in Q2 FY26 was ₹414.49 crores, representing a 4.28% decline quarter-on-quarter and a 28.81% decline year-on-year.
How did Oberoi Realty's revenue perform in Q2 FY26?
Oberoi Realty's revenue in Q2 FY26 contracted 14.14% sequentially to ₹987.55 crores and declined 29.72% year-on-year from ₹1,405.16 crores in Q2 FY25.
What was the operating margin for Oberoi Realty in Q2 FY26?
Oberoi Realty's operating margin in Q2 FY26 was 52.69%, a 105 basis point sequential decline from 53.74% in Q1 FY26 and a 529 basis point contraction from 58.00% in Q2 FY25.
Why did Oberoi Realty's profitability come under pressure in Q2 FY26?
Oberoi Realty's profitability came under pressure due to rising interest costs and a sharp sequential decline in topline growth, despite maintaining relatively healthy operating margins.
What is the current long-term debt of Oberoi Realty and how has it changed?
Oberoi Realty's long-term debt as of March 2025 was ₹2,894.85 crores, up from ₹2,192.04 crores in March 2024, reflecting an increase in the company's debt burden to fund ongoing development projects.
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