Buy Oberoi Realty Ltd for the Target Rs. 2,500 By Elara Capital
Blip in launches, demand trends strong
Oberoi Realty reported Q 3FY26 presales of INR 8.4bn (estimate: INR 10bn) that saw quarterly run -rate sustaining for most micro markets. Residential collections at INR 9.7bn were 17% above presales. Profitability metrics continue to ride high , with residential EBITDA margin at 55% (9MFY26: 53%). Also, improving trends in profitability and operational parameters were evident in both the rental portfolio and the hospitality segment. Guidance for launches suggests a QoQ build -up of presales in Q4FY26 / Q1FY27. Also, the developer is looking to close three large business development s in the near -term, thus, lending support to NAV. Overall, OBER remains a play on superi or profitability and growth , aided by a diversified , high -margin pipeline. The upcoming tower launch at Borivali is a key monitorable and catalyst for the stock. Key positives: 1) sustained momentum at 360 West – three units were sold, 2) pick -up in Thane projects – Jardin presales up 64% QoQ , accounting for ~45% of project sales in 9M FY 26, 3) full OC for the Mulund tower (Eternia) aiding project sales in the micro market sustaining (at >INR 2bn/quarter ; 9MFY26 presales at Mulund stands at > INR 6bn), 4) pricing at SkyCity was INR 55k/sf (up ~10% QoQ) likely implies strong demand at + INR 50k/sf for the upcoming tower launch, 5) addition of a new micro market to the residential pipeline – INR 18-20bn GDV at Nepean Sea Road, 6) improving occupancies in commercial assets – Commerz 2 achiev ed full occupancy (+4ppt QoQ) and Commerz 3 occupancy was 90% (up 3ppt QoQ).
Key negatives: procedural led delays in launches planned for Q4FY26 – Gurugram and Peddar Road projects may spill over to Q1FY27 .
Reiterate Buy with a TP of INR 2,500: We view OBER as a low risk compounder, given: 1) its prudent underwriting through cycles – land cost at <5% of GDV, 2) deep micro market presence – 25% / 15% / 10% volume market share at Goregaon / Borivali / Mulund micro markets ,respectively , in FY21 -25, and 3) convergence to a multi -regional play with its entry into Gurugram. The stock is trading at an attractive 15% discount to March 2026E NAV . Key downside risks include delays in project launches and regulatory set backs.
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SEBI Registration number is INH000000933.
