Oberoi Realty shares rise 2% on company’s foray into NCR

Shares of Oberoi Realty rose over 2 percent on November 20 after the company made its foray into the National Capital Region (NCR). The Mumbai-based real estate developer has acquired 14.8 acres of land in Gurugram for Rs 597 crore, and plans to develop a luxury residential group housing project on the site, marking its first venture outside of Mumbai.

Oberoi Realty will also launch projects in Thane, including the Forestville development in Kolshet and a project on Glaxo pharma land in Vasant Vihar.

At 9:19 am, Oberoi Realty shares were trading 2.45 percent higher at Rs 1,373.80 on the National Stock Exchange. So far in 2023, the stock has risen 57 percent, outperforming benchmark Nifty 50 which has risen around 8 percent during this time.

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The company has executed an agreement for sale with Ireo Residences Company Pvt Ltd and others to acquire the land equivalent to 59,956.20 sq m in the NCR. The land acquisition will yield an estimated 2.6 million sq ft of Floor Area Ratio (FAR), the company said in a statement.

“This transaction marks the Company’s foray into the NCR region. The Company intends to primarily develop a luxury residential group housing project on the said land,” it added.

According to analysts at Motilal Oswal, Oberoi Realty’s much-awaited foray into NCR provides further growth visibility. However, the brokerage retained its pre-sales and cash flow estimate as they await clarity on launch timelines of this project.

“We believe with seven new projects already tied up, the management is unlikely to be aggressive on new project acquisitions in the near term,” it said.

Meanwhile, after launching multiple projects in the western suburbs and Mulund in the eastern suburbs and its premium Three Sixty West in Worli, Oberoi Realty will venture for the first time into Thane with the launch of Forestville in Kolshet in Thane West this month. The bookings are scheduled to open on November 24. The Kolshet project will be followed by the much-awaited project on Glaxo pharma land in Vasant Vihar in Thane.

Motilal Oswal has reiterated its Neutral rating on the stock with an unchanged target price of Rs 1,200.

According to analysts at Sharekhan, Oberoi Realty is slated to benefit from strong traction in the residential realty segment, especially in the lucrative Mumbai Metropolitan Region (MMR) region, led by key project launches in Thane during FY24, sustained momentum in the Borivali project, expected traction in Mulund projects and contribution from its high-value Three Sixty West project.

Also Read | Oberoi Realty forays into NCR with 14.81-acre Gurugram land for luxe housing

“The company maintains a robust and substantial inventory, which would help drive pre-sales over the next 2-3 years. It continues to scout for new business developments in newer micro-markets to achieve scale. We believe its healthy balance sheet and strong cash flow generation would lead to the closure of big-ticket size acquisitions as the opportunity arises,” the brokerage said in its report dated October 30.

Sharekhan has a positive view on the stock and expects further upside to round Rs 1,431 levels, given strong growth levers for its residential and rental project portfolio. However, muted sales of the Elysian, Goregaon project and lumpy sales bookings in the Three Sixty West project might be the key risks for the company, going forward.

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