Buy Aditya Birla Real Estate Ltd for Target Rs. 1,880 by Choice Institutional Equities
Key Conference Call Highlights
Macro Environment:
* Residential demand remains stable with luxury and premium segments clearly outperforming its affordable housing segment. No evidence of a slowdown seen in new launches and sustenance sales.
Operations
* First luxury redevelopment project launched in Khar West with potential GDV of INR 16,312 Mn and 0.3 msf of saleable area. The management is evaluating multiple additional opportunities in Mumbai
* Collection to be strong going forward, with strong absorption of four new launches in Q4FY26 to contribute meaningfully to Q1FY7 collection. The management mentioned that collection remained healthy in April 2026
* Collections remain healthy with ~98% efficiency, while most projects continue to follow construction-linked payment plans
* Bengaluru continues to perform strongly, supported by sustained demand in Trimaya and Evana, though focus in FY27E will shift more towards business development
* There is a growing interest in senior living projects, especially at the Talegaon land parcel, citing strong long-term demand potential. Although the Talegaon land parcel is agriculture land, hence it is not ready for any development at this stage
* On Middle East Conflict: Management seeing manageable impact on margins as availability is not an issue but logistic and transportation is the issue
Launches:
* Launch pipeline remains robust, with ~INR 90 Bn of new launches and ~INR 70 Bn of sustenance inventory planned for FY27E, though management refrained from formal guidance due to approval uncertainty
* Niyaara tower C, which is a major GDV contributor is likely to be launched in Q2 or Q3FY27
* Birla Navya and Evam to be launched in Q3FY27 and Q4FY27, respectively
* The Mathura Road project is planned to be launched in New Delhi next year
Guidance and Business Development :
* ABREL has a ~INR-600 Bn bid pipeline under evaluation, with ~INR 350 Bn concentrated in MMR. The management remains selective and disciplined on approvals, due diligence, and IRR thresholds
* The management reiterated focus on premium/luxury housing, where demand remains robust, while mid-income demand has softened? Business development of INR 150 Bn could spill over to FY29E
* Commercial real estate expansion is under way, with planned office developments in Worli (1.3 msf) and a ~0.5 msf commercial opportunity in Thane
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SEBI Registration no.: INZ 000160131
