Japanese brokerage Nomura initiated coverage on Aditya Birla Real Estate, formerly known as Century Textile and Industries, believing that the firm has all the ingredients in place to rank it among the top 5 real estate players in India.
The brokerage issued a 'buy' rating on the firm, with a target price of Rs 3,700 per share, indicating an upside potential of 30%.
Among the key reasons for bullishness, Nomura said that the firm's long-term visibility is very positive on the development potential of its ~40-acre prime Worli land parcel. This alone could drive cumulative pre-sales of Rs 40,000 crore at 40?ITDA margins over its lifetime on a conservative basis.
The large-scale, disciplined, and quality business development (BD) in Mumbai, the National Capital Region (NCR), Bangalore, and Pune provides visibility on future pre-sales and margins, added Nomura.
At 9.35 am, shares of Aditya Birla Real Estate were quoting Rs 2,903.2 per share, higher by 1.5% compared to the previous session's closing price.
The brokerage added, "As part of the Aditya Birla Group, the company benefits from strong brand equity, and has an experienced senior management team with previous professional tenure at key competitors."
Nomura pegged the gross development value of Aditya Birla Real Estate's project pipeline at Rs 90,000 crore. In comparison, the pre-sales to date have been around Rs 9,000 crore. As a result, the firm has the ingredients to be among the top real estate players in India in terms of pre-sales.
Previously known as Century Textiles and Industries, the firm has officially rebranded to Aditya Birla Real Estate. The firm, earlier dealing in the textile, paper, and pulp segments, made its foray into the realty segment in 2016. "It is a premium player in the residential and commercial real estate segment with a fast-expanding presence in key markets of MMR, NCR, Bengaluru, and Pune," according to the company's website.
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