Oberoi Realty shares hit record high after Nomura initiates 'buy' call; predicts 21% upside- Grow Mudra

Oberoi Realty shares hit record high after Nomura initiates 'buy' call; predicts 21% upside

04 Dec , 2024 By : Debdeep Gupta

Shares of Oberoi Realty zoomed 5 percent and hit a record high of Rs 2,164.05 after international brokerage Nomura initiated coverage with a 'buy' rating, forecasting an over 21 percent upside in the stock from Tuesday's closing level.

Nomura's bullishness over Oberoi Realty stems from the company's strong growth visibility. Analysts at the brokerage expect solid pre-sales and cash generation for the real estate major, stating that the company is poised for aggressive business development on the back of its low

net/debt to an equity position.

At 11.01 am, shares of Oberoi Realty were trading at Rs 2,149 on the NSE. The surge in the stock was also triggered by a spike in trading volumes in the counter. As much as 14 lakh shares of RattanIndia Enterprises changed hands on the exchanges so far, significantly higher than the one-week daily traded average of eight lakh shares.

Looking ahead, Nomura anticipates Oberoi Realty's pre-sales to witness a 40 percent CAGR (Compound Annual Growth Rate) over FY24-27 with a 50 percent embedded EBITDA margin as the company as it monetizes its residential portfolio worth around Rs 80,000 crore as of Q2 FY25. Alongside that, cumulative hotel and annuity revenue is expected to record a 35 percent CAGR over the same period as the company's assets-- Commerz III Office, Sky City Mall, and Ritz Carlton Hotel (Worli) become largely leased out or operational.

Apart from that, Nomura also expects cumulative hotel and annuity revenue to grow from around Rs 750 crore in FY24 to Rs 1,800 crore by FY27.

"Commerz III reached 65 percent occupancy by Q2 with Oberoi Realty targeting full occupancy by the end of FY25, generating Rs 550 crore annually. The Sky City mall received its occupancy certificate in Q2 and is expected to be largely leased out by FY26, contributing Rs 350 crore annually. Meanwhile, interiors for the Ritz Carlton Hotel at 360 West are underway, with the hotel set to become operational by H2 FY26, and we anticipate revenue of around Rs 200 crore from the hotel in FY27," Nomura stated.