Neutral on Oberoi Realty, target price Rs 2,056: Motilal Oswal Financial Services

Motilal Oswal Financial Services has a neutral call on Oberoi Realty with a target price of Rs 2,056. The current market price of Oberoi Realty is Rs 1963. Oberoi Realty Ltd., incorporated in 1998, is a largecap company with a market cap of Rs 71869.62 crore, operating in the Real Estate sector.

Oberoi Realty's key products/revenue segments include income from project development, lease rentals, income from hospitality and other operating revenue for the year ending 31-Mar-2023.

Financials

For the quarter ended 30-09-2024, the company has reported a consolidated total income of Rs 1,358.62 crore, down -5.78 % from last quarter's total income of Rs 1441.95 crore and up 9.23 % from last year same quarter Total Income of Rs 1243.80 crore. The company has reported net profit after tax of Rs 586.95 crore in latest quarter.

Investment Rationale
Motilal Oswal Financial Services expects Oberoi realty to post a 41% CAGR in pre-sales over FY24-27. However, a major part of the re-rating depends on re-investment of strong cash flow generation as the company monetizes its completed and near-completion inventories. At current valuations, Oberoi Realty's residential business implies a value of Rs 550-570 billion. The estimated value of the existing pipeline, including the Gurugram project, is Rs 300 billion, implying +100% of the going concern premium, which already accounts for prospective business development in the near term. The brokerage has reiterated a neutral rating with a target price of Rs 2,056, indicating a 3% upside potential.

Promoter/FII Holdings
Promoters held 67.7 per cent stake in the company as of 30-Sep-2024, while FIIs owned 18.4 per cent, DIIs 11.94 per cent.