Neutral Oberoi Realty; target of Rs 1390: Motilal Oswal

Motilal Oswal's research report on Oberoi Realty

Despite strong demand tailwinds, OBER’s pre-sales were stagnant over FY21-23 due to the lack of key launches. However, it has launched a new project at Kolshet Road (Thane) and a new tower at Elysian (Goregaon) in 2HFY24, which will drive 23% YoY growth in pre-sales to INR40b in FY24. The company is now gearing up for the launch of the initial phase (2msf) of its flagship project at Pokhran Road (Thane), a luxury project at Peddar Road (South Mumbai) and a new tower at Skycity (Borivali) in 2HFY25.  The management plans to release the higher-floor inventory soon at Mulund and is confident of increasing the sales run rate to INR10b from the twin projects (vs. INR7b in FY23). Additionally, the redevelopment project at Tardeo (South Mumbai) and the recently acquired Gurugram project are slated for launch in FY26. OBER is also planning a mixed-use development at its four-acre land parcel in Worli, which is expected to have a potential of 1-1.2msf (at 6.5 FSI). Overall, given the healthy launch pipeline and the anticipation of improvement in traction at existing projects, we estimate OBER to report a 42% CAGR in bookings over FY24-26E to INR80b.

Outlook

We incorporate contribution from new hotel assets at Borivali and Thane and maintain our Neutral rating with an increased TP of INR1,390 indicating fair valuation.

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Oberoi Realty - 20032024 - moti

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