Oberoi Realty shares hit record high; three brokerages gave buy call this month, check price targets 

Shares of Mumbai-based developer Oberoi Realty Ltd hit their record high on Tuesday after brokerage Avendus Spark upgraded the realty stock to 'buy' from the earlier 'sell' rating. It also raised its price target by nearly 70% to Rs 2,700 from Rs 1,600 earlier.

The brokerage is bullish on the realty firm 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.

Oberoi Realty stock rose 4% intra day to a high of Rs 2341 on BSE. Market cap of Oberoi Realty rose to Rs 84,864 crore. Total 0.32 lakh shares of the realty firm changed hands amounting to turnover of Rs 7.35 crore on BSE. The stock has gained 58.16% in the last one year and risen 61.31% since the beginning of this year. In two years, the stock has gained 165% and delivered multibagger returns of 354% in five years. 

In terms of technicals, the relative strength index (RSI) of Oberoi Realty stands at 72.4, signaling it's trading in the overbought zone. Oberoi Realty shares are trading higher than the 10 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages.

The brokerage said Oberoi Realty's underperformance over the last three years was due to the lack of large-scale launches and consequently steady pre-sales. Financial year 2025 is an inflection year for the company, led by the start of its launch cycle and multple projects lined up over the next two years.

Avendus Spark projects the realtor's pre-sales to hit Rs 10,000 crore-plus by financial year 2027 from Rs 4,000 crore in financial year 2024. 

While the Real Estate cycle is currently in its consolidation phase, and with supply most 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,said the brokerage. 

"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.

International brokerage Nomura has initiated coverage with a 'buy' rating on the realty stock. 

Nomura is bullish over Oberoi Realty due to the company's strong growth visibility. Analysts projected 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 equity position.

Nomura expects Oberoi Realty's pre-sales to witness a 40 percent CAGR (Compound Annual Growth Rate) over FY24-27 with an 50 percent embedded EBITDA margin as the company as it monetises its residential portfolio worth around Rs 80,000 crore as of Q2 FY25. With this, cumulative hotel and annuity revenue is likely to clock 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.

The global brokerage also expects cumulative hotel and annuity revenue to grow from around Rs 750 crore in FY24 to Rs 1,800 crore by FY27.

Axis Securities has initiated coverage on Oberoi Realty with a buy call and a target price of Rs 2,560/share. 

"Our recommendation is supported by a) Dominant position in MMR, b) Robust Annuity Scaleup, c) Entry into new key markets, and d) Low leverage with strong cashflows. We value the company using the DCF method and arrive at a target price of Rs 2,560/share," said Axis Securities.