Oberoi Realty gains as brokerage initiates coverage with ‘buy’ rating
Oberoi Realty is a Mumbai-focused premium real estate developer, with presence in the residential, commercial and hospitality segments. The sharp focus on delivery of quality products has helped the company create a strong brand over the past 20 years. Its trusted brand enables its projects to enjoy premium, resulting in superior EBITDA margins of >50%.
Analysts believe Oberoi Realty can trade at a premium to its FY19E NAV due to its strong balance sheet (net-debt-to-equity of 0.1x), with ample room for leveraging to buy new land and strong brand equity, which helps it to command premium pricing and enter into joint development/joint venture contracts. Our optimism is also supported by the superior investment revenue realty (IRR) of its land acquisitions.
“We believe RERA will be instrumental in driving frivolous players out of the market, leading to consolidation. In our view, players like Oberoi Realty are well placed to benefit from any consolidation,” the brokerage firm said in a report and value the company at par to its NAV at Rs 580/share, implying an upside of 28% on Wednesday’s closing price of Rs 452.
Oberoi Realty had corrected 12% from its all-time closing level high of Rs 512 on November 23, 2017, against 1.6% decline in the S&P BSE Sensex till yesterday. It touched a record high of Rs 529 in intra-day trade on same day.
At 10:43 AM; the stock was trading 4.4% higher at Rs 472 against almost unchanged in Sensex at 33,053 points. A combined 526,855 shares changed hands on the counter on the BSE and NSE so far.