Buy Oberoi Realty; target of Rs 283: ICICIdirect

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26 Aug, 2025 12:21

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ICICIdirect.com`s research report on Oberoi Realty“Oberoi Realty (ORL)’s Q2FY15 results were largely in line with our expectations. It reported consolidated net sales of Rs 185.5 crore (decline of 1.8% YoY) against our expectation of Rs 186.0 crore. The EBITDA margin at 60.3% was much higher than our estimate of 55.5% mainly due to product mix and higher realisation seen in Exquisite project in Goregaon. The PAT at Rs 70.5 crore (decline of 10.0% YoY) was a tad higher than our estimate of Rs 68.2 crore. Sales volumes came in at 41,155 square feet (sq ft) led mainly by sales volume of 34,570 sq ft from the Oberoi Exquisite project and the remaining from Oberoi Esquire project.” “We anticipate ORL’s sales volume will pick up significantly on the back of a slew of launches in H2FY15. ORL is finally looking to launch its big size projects such as Mulund project (3.2 mn sq ft), Worli project (1.7 mn sq ft) and Borivali project (~4.5 mn sq ft). Furthermore, unlike its other projects, the ticket size for Mulund & Borivali projects is also going to be targeted at less than Rs 2 crore. Moreover, ORL is in the process of converting its commercial projects like Prisma, Maxima (aggregating 0.6 mn sq ft) in Andheri to residential projects. Out of these Prisma with ~0.3 mn sq ft is also expected to be launched in Q4FY15. With these slew of launches, we anticipate ORL’s sales volume will jump from 0.3 mn sq ft in FY14 to 1.9 mn sq ft in FY16E. Consequently, we anticipate topline and PAT will grow at a CAGR of 58.5% and 50.5%, respectively, over FY14-16E. Unlike its peers, ORL has been prudent in its land acquisition. In the last decade, it has done only seven or eight acquisitions (including JVs) that has kept its balance sheet healthy, a key differentiator vis-à-vis its competitors. Currently, the real estate industry is witnessing a tough phase due to subdued sales volume particularly in NCR, Mumbai markets. On the other hand, majority of the players’ balance sheet is at stretched levels of 0.6-1.0x. In such a scenario, ORL’s healthy balance sheet (net debt-equity: 0.2x) not only provides comfort over timely execution but also scope for land acquisition at better terms, going ahead.”“ORL is our top pick in the sector given the quality of land bank, healthy balance sheet, management bandwidth to execute the projects and anticipated pick up in the sales volume with new launches such as Mulund, Borivali and Worli along with attractive valuation. Key risk: Further delay in launches. We maintain our BUY recommendation with a revised price target of Rs 283/share,” says ICICIdirect.com research report.  

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