Oberoi Realty shares get an upgrade from Avendus Spark; Price target raised by 70% – CNBC TV18

Shares of Oberoi Realty Ltd. are among the top gainers among Real Estate stocks on Monday, December 16 after the Mumbai-based developer was upgraded to “buy” by brokerage firm Avendus Spark.

Avendus Spark upgraded Oberoi Realty from its earlier rating of “sell” and also raised its price target by nearly 70% to ₹2,700 from ₹1,600 earlier.

It likes Oberoi Realty now for offering a strong blend of growth and safety, supported by robust cash flows and a solid balance sheet, factors which are crucial in an uncertain environment.

The brokerage said that Oberoi Realty’s underperformance over the last three years was due to the lack of large-scale launches and consequently steady pre-sales. It said that financial year 2025 is an inflection year for the company, driven by the start of its launch cycle and multple projects lined up over the next two years.
Oberoi Realty’s pre-sales are likely to hit ₹10,000 crore-plus by financial year 2027 from ₹4,000 crore in financial year 2024, according to Avendus Spark, who also added that while the Real Estate cycle is currently in its consolidation phase, and with supply likely to exceed demand in the medium-term, Oberoi’s completed inventory and low unsold inventory overhang in its micro-market inspires confidence in its monetisation.

“In the annuity segment, two of Oberoi’s most awaited assets are likely to commence operations and scale up rentals to ₹1,500 crore within the next two years,” Avendus Spark said.

Historically, the stock has outperformed the Nifty Realty Index during consolidation or a downturn phase of the real estate cycle, which was between financial year 2011 and 2016.

“We expect Oberoi to outperform its top-tier listed peers, with 3x growth in launches and pre-sales over the next two years on a low base and new project contribution to pre-sales settling at 55% by financial year 2027,” the note said further.

Among the 27 analysts that have coverage on Oberoi Realty, 11 of them have a “buy” rating, 12 say “hold”, while four of them have a “sell” rating on the stock.

Shares of Oberoi Realty are trading 7% higher on Monday at ₹2,266.65. The stock is up 57% so far in 2024.