Neutral Oberoi Realty Ltd for the Target Rs.1,850 by Motilal Oswal Financial Services Ltd
Valuation in-line with visible growth outlook
Oberoi Realty (OBER), a leader in the luxury segment, recently launched Elysian Tower D in 1QFY26 following the launch of its highly anticipated Thane project in FY25, which received a strong response. The company has a robust launch pipeline for the next 12-24 months, positioning it to achieve a 46% CAGR in pre-sales over FY25-27E. Collections are also expected to follow a strong growth trajectory, with a projected CAGR of 30% during the same period. In addition, OBER is set to start accruing rentals from its Borivali Mall in FY26, while a strong ramp-up in Commerz III is expected to drive a 39% CAGR in lease rentals through FY27. However, the current valuation already factors in all the upside, and a re-rating could be possible depending on the acquisition of new projects/land. We reiterate our Neutral rating on the stock with TP of INR1,850/share.
Pre-sales to post 46% CAGR, guided by healthy launch pipeline
* OBER’s pre-sales for FY24 stood at INR39.4b, driven primarily by key projects such as 360 West, Eternia, Enigma, Sky City, and Elysian. In 3QFY25, the company launched a new project—OGC Jardin in Pokhran Thane—and its sustenance sales contributed to pre-sales of INR53b in FY25. Supported by the ongoing and new phase launches across existing projects, pre-sales are expected to clock a 46% CAGR, reaching INR112b by FY27.
* Upcoming launches are expected to play a pivotal role in driving overall growth, contributing approximately 25-30% to total pre-sales. OBER launched Elysian Tower D in 1QFY26, recording bookings worth INR9.7b. The remaining bookings are expected to be sustained through ongoing sales efforts, supported by the brand's strong market presence and continued demand for premium residential offerings.
* The current residential inventory stands at ~3.6msf, with contributions from key projects as follows: Jardin 15%, Forestville 24%, Elysian 21% (including remaining inventory from the recently launched Tower D), Sky City 9%, Enigma 8%, Eternia 13%, and 360 West 10%. Inventory levels are expected to rise further as additional launches are planned for FY26.
* Planned launches over the next 12-15 months include one tower in Borivali, one tower in Goregaon, and two towers in Forestville Thane. FY26 will also see the company launch projects in Gurugram, Adarsh Nagar, Glaxo Worli, and Tardeo, once the required approvals are in place. These new launches, along with the recently acquired Alibaug land (currently in the design phase and likely to be launched in FY27), are expected to drive pre-sales growth in the near future. In FY27, new projects are expected to contribute ~INR70b in pre-sales, while the remaining INR40b is expected to come from sustenance sales.
* OBER’s robust balance sheet, supported by recent capital infusion through nonconvertible debentures (NCDs), positions the company well to accelerate its business development initiatives, and this momentum is already evident. In FY25, OBER secured four new strategic projects: Adarsh Nagar (0.6 msf), Carter Road Bandra (0.04 msf), Bandra Reclamation (0.3 msf), and a significant land parcel in Alibaug (3.5 msf). These projects are expected to launch in/post FY27 and meaningfully expand OBER’s development pipeline, enhancing its mediumterm launch visibility and revenue potential.
* Additionally, the company successfully concluded the resolution of Nirmal Lifestyle’s stalled project through the NCLT process, adding a valuable asset in Mulund to its portfolio.
* This steady addition of prime land parcels across core Mumbai micro-markets and high-potential leisure destinations like Alibaug reflects OBER’s disciplined capital deployment and strategic diversification. We believe management will remain focused on converting these acquisitions into timely launches, driving sustained growth while maintaining financial strength. With an improved launch pipeline and balanced portfolio mix, the company is well-positioned to benefit from healthy demand across both residential and mixed-use segments in the coming years.
Valuation and view
* While OBER's current valuation does not suggest significant near-term gains, we expect a robust 46% CAGR in pre-sales over FY25-27. A potential re-rating will hinge on the company's ability to reinvest the substantial cash flows generated from its completed and near-completion projects.
* OBER's residential segment is currently valued at INR290b. This valuation accounts for recent business development activities and INR30b for future land acquisitions. We reiterate a Neutral rating with a revised NAV of INR673b or INR1,850 per share (earlier INR627b or INR1,726 per share).
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