Motilal Oswal Has Given A Buy Call To This Real Estate For 37% Potential Gains

Motilal Oswal Financial Services, a brokerage firm, in ots recent report published on 30th May 2022 has given 'buy' call to Oberoi Realty Ltd for a target price of Rs 1,100. Oberoi Realty Ltd is a real estate development company, headquartered in Mumbai. It is the part of Oberoi Realty Group, focused on developments in the residential, office space, retail, hospitality, and social infrastructure verticals.

Stock Overview : Target Price, CMP, 52 Week Low & High

Today, Oberoi Realty's stock opened at Rs 795 and the Current Market Price (CMP) is Rs 803.55, after gaining 1.02%. Looking at the Rs 1,100 target price and CMP, the stocks have the potential to gain 37%. The stock's 52-week low is Rs 583 touched on 31st May 2021, and its 52-week high is Rs 1,051.90 year on 3rd November 2021.

Steady performance in the rental business

Motilal Oswal in its report said, "Oberoi Realty reported its best-ever year of bookings that increased 19% YoY to Rs 39b driven by the launch of Elysian Phase-II and record bookings in a non-launch quarter for Sky City, Borivali and Mulund projects. That said, its 4QFY22 pre-sales declined 53% YoY/QoQ each to Rs 9.3b led by the strong response to the launch of Elysian, Goregaon in both the base quarters. Collections improved 48% YoY/ flattish QoQ at Rs 9.5b in 4QFY22. Oberoi Realty's rental business remained steady with INR2.6b of rental income in FY22, flat YoY. The company settled its accounts with its mall tenants in 4QFY22 that resulted in an increase in mall rentals to Rs 0.8b (up 73% YoY). For FY22, its mall income was at 70% of the FY20 run-rate."

Strong launch pipeline in FY23E; two new projects added in 4QFY22

According to the brokerage, "After a long wait, Oberoi Realty's Pokhran Road-II, Thane project will be ready to launch in 2QFY23E. It is also planning to launch another tower/phase in Sky City/Elysian in FY23E. During 4QFY22, the company added two new projects into the pipeline including its second project at Thane (first ever JDA), where Oberoi Realty is looking to develop an 18 acre land parcel for a revenue potential of Rs 33b. Management expects business development to continue as it is looking at a few large redevelopment projects and land parcels outside Mumbai, where the company has entered into MoU and will be confirmed once closed."

Buy for a target price of Rs 1,100

"As launches and deliveries largely remain on track we keep our pre-sales and revenue estimates unchanged. While the company is optimistic on launching the recently added projects in FY23E, we have not built them into our estimates yet. However, renewed focus on business development is a positive sign and it will continue to provide further growth visibility for Oberoi Realty. We raise our WACC to incorporate higher risk-free rate, leading to a decline in our Target Price to Rs 1,100, implying 38% upside potential," brokerage has given.

Disclaimer

The stock has been picked from the brokerage report of Motilal Oswal. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decisions.