Oberoi Realty Stock Has Potential To Grow 43%, Strong Residential Sales Booking Up 52% QoQ: Sharekhan

A strong franchise, high residential inventory, increasing rental portfolio, unleveraged balance sheet, and strong housing market tailwinds provide high growth opportunities for Oberoi Realty. Leading brokerage firm Sharekhan recommends investors to buy the stock of Oberoi Realty Ltd.

Stock To Buy: Target Price

The Current Market Price (CMP) of Oberoi Realty Ltd. is around Rs. 858. Sharekhan has estimated a Target Price for the stock at Rs. 1226.94. This stock has the potential to give a 41-43% return, in the upcoming 1 year. It is a large-cap stock with a market capitalization of around Rs. 31,502 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 858
Target Price	Rs. 1226.94
Potential Upside	43.00%
52-week high share price	Rs. 1,088.95
52-week low share price	Rs. 725.95

Sales growth

Oberoi Realty reported strong residential sales bookings of Rs. 1156 crore (up 28% y-o-y, up 52% q-o-q) led by strong sales booking in Three sixty west project (53% sales share). Excluding Three sixty west, the sales booking stood at Rs. 546 crore (down 37%/28% y-o-y/q-o-q) as projects in Borivali and Goregaon were affected by SC's order banning construction within 1km of eco-sensitive zones (now the issue stands resolved) and the absence of new launches.

Stock Upside

According to Sharekhan, "The consolidated revenue and operating profit declined by 8.7% y-o-y and 16.8% y-o-y affected by lower revenue booking and lower OPM in the residential segment. However, consolidated net profit at Rs. 319 crores (up 19.5% y-o-y) was boosted by Rs. 101 crore income from the JV project (three sixty west project). In the current quarter, the company targets to launch its Thane project and expects strong performance from three sixty west projects continuing going ahead. It has also decided on increasing prices across projects on October 10-12, 2022 led by a rise in input costs."

Stock valuation

Oberoi Realty is slated to benefit from strong traction in the residential realty segment, especially in the lucrative MMR region, which is expected to sustain going ahead. We introduce our FY2025E estimates in this note. The stock is currently trading at a P/BV of 2.3x/1.9x on FY2024/FY2025 earnings and premium to the NAV. However, we see significant value in unlocking emerging from planned projects and its rental portfolio over the next two years. Hence, we retain our Positive view on the stock and expect an upside of 41-43%, the brokerage firm said in the report.

Company Portfolio

Mumbai-based Oberoi Realty focuses on premium developments in the residential, office space, retail, hospitality, and social infrastructure verticals. In the real estate space, Oberoi Realty is an established brand with an impeccable track record. The company has developed over 42 projects at strategic locations across the Mumbai skyline aggregating to ~11.89 million sq. ft. of spaces (group entity including promoter group). With another 45.31 million sq. ft. in the making, it has aggressive plans for upcoming projects in various parts of Mumbai and other regions.

Disclaimer

The above stock was picked from the brokerage report of Sharekhan. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. 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.