Broker’s call: Oberoi Realty (Add)

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Target: ₹1,6,76

CMP: ₹1,393.95

Oberoi Realty (OBER) in Q3-FY24 launched its most-awaited project in Kolshet-Thane (2.5msf) and plans to launch the Pokrhan-2 (about 15msf) project in the next 1-2 quarters. Additionally, the company plans to launch another tower in Goregaon in Q4-FY24.

Borivali Mall & Commerz-III is near completion and is expected to be given for fit-outs by the end of Q4-FY24, which will add significant rental income of ₹860 crore to the portfolio from FY25. With the OC in hand for its 3 projects, the company is expected to generate significant pre-tax cashflow (₹9,100 crore), which will help smooth execution of under-construction projects as well as allow the company to utilise it for business development. We have rationalised the average price realisation for all the projects and push some projects (annuity and resi.) to FY25 (earlier assumed H2-FY24)

Confirmed entry into Gurugram by acquiring land with a saleable potential of about 2.6 msf. We believe that with the sustenance of strong demand for larger houses, new launches will do well on the back of quality products and delivery track records.

We maintain a premium of 25 per cent on the current portfolio and arrived at a SoTP-based one-year forward NAV of ₹1,676/share with an ‘Add’ rating.