Buy Aditya Birla Real Estate Ltd for the Target Rs 1,750 by Emkay Global Financial Services Ltd
We believe ABREL is entering a strong business development phase, although the improvement in pre-sales is likely to be visible only from FY28E. The company has rebuilt its balance sheet capacity, has significant visibility on project-level cash generation, and is now beginning to replenish its development pipeline. The Rs33bn cash proceeds from the paper business sale materially strengthens its ability to pursue large projects. With one Rs26bnGDV project already closed in current year and several larger opportunities at an advanced stage, we expect meaningful additions to the development pipeline through FY27, setting the stage for higher pre-sales from FY28E. We maintain BUY on ABREL and TP of Rs1,750, based on 6x EV/embedded EBITDA, at 26% premium to the NAV (currently, the stock is trading at 1% premium to the NAV).
War chest ready
The paper business sale, signed in Mar-25, was finally consummated in Aug-26. The sale has led to proceeds of Rs33bn; remaining amount will be received later. In addition, ABREL’s ongoing projects have surplus cashflow visibility of ~Rs26bn, along with ~Rs69bn of ongoing unsold inventory. Thus, the company has substantial cashflow visibility (Rs95bn) over the next 3–4 years from ongoing projects. This provides a strong foundation for funding new projects while keeping the balance sheet lean.
Business development (BD) to see uptick going forward
In Aug-26, the company signed a society redevelopment project with GDV of Rs26bn in Navi Mumbai. In addition, the company has large-GDV deals across Mumbai, Noida (GDV: >Rs55bn), Bengaluru (GDV: >Rs35bn), Gurugram, and Pune (GDV: >Rs20bn) at an advanced stage, with Rs600bn of total existing BD pipeline. We expect to see BD GDV of >Rs150bn for the remaining FY27.
Proven ability to sell
ABREL, a relatively new real estate player, has demonstrated a strong ability to sell, with pre-sales growing from Rs19.1bn in FY22 to Rs80.9bn in FY26, at 62% CAGR. Cumulative bookings for ABREL have reached ~Rs257bn since its entering residential development in FY20, with ~76% of launched inventory already sold. This track record demonstrates ABREL’s ability to convert projects into sales, once launched.
ABREL’s FY26 pre-sales were flat at Rs81.4bn and are expected to be flat at ~ Rs80bn for FY27E, due to muted BD and limited inventory available for sale. Non-fructification of the Noida Sector-150 deal, delay in approval for the Delhi project, and delay in the paper business sale constrained inventory availability. With BD now picking up, we expect new projects to enter the launch cycle from FY28E, driving pre-sales beyond the ~Rs80bn run-rate and toward the management’s ambition of achieving Rs150bn by FY29E.
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