Buy Embassy Office Parks REIT; target of Rs 425: Geojit Financial Services

Geojit Financial Services research report on Embassy Office Parks REIT

Embassy Office Parks REIT is India’s first and largest publicly listed Real Estate Investment Trust, which owns and operates a 51msf commercial portfolio, apart from its hotels and solar plant. In Q4FY25, Embassy reported 15% YoY revenue growth supported by better occupancies (85% in Q4FY24 v/s 87% in Q4FY25) and strong rental escalations. Distributions for the quarter stood at Rs. 5.68, marking 9% YoY growth. The total leasing for the quarter was ~1.6msf spread across 31 deals, which include 1.3msf new leasing and 0.3msf renewal. The completed commercial portfolio jumped to 40.3msf (36.5 in Q4FY24) with significant improvement in WALE to 8.4 years from 6.8 years, on a YoY basis. The mid-point DPU guidance for FY26 is at Rs. 25.25, implying a growth of 10% YoY. Looking ahead, Embassy’s 6.1msf under construction projects coupled with better outlook occupancies and rental escalations are expected to sustain the distribution growth.

Outlook

Currently, the stock trades at an attractive 7.2% yield to FY27E DPU (the 5-year average is 6.1%). Hence, we upgrade our rating on the stock to BUY with a target price of 425 based on 15.2x FY27E DPU, implying a TER of 15% (~6.5% distribution yield and ~9.3% capital appreciation).

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