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ICICI Securities Report
The Embassy Office Parks real estate investment trust delivered stable performance in Q4 FY24 with net operating income of Rs 7.7 billion (up marginally QoQ) and net distributable cash flow of Rs 4.9 billion or Rs 5.2/unit. FY24 gross leasing of 8.1 marginal standing facility has been strong with 2.4 msf of pre-leasing commitments at Manyata and Tech Village, versus. 3.3msf of exits for the year.
Driven by a combination of filling up of special economic zone vacancy and pre-leased assets, we estimate portfolio occupancy of over 90% by FY26E, resulting in FY25E DPU of Rs 22.7/unit versus. Rs 21.3/unit in FY24 with FY26E dependent person's unit of Rs 26.9/unit.
The real estate investment trust manager has given FY25 guidance for 5.4msf of total leasing in FY25 and expects 10% NOI and 7% DPU growth in FY25. We retain 'Add' with a revised target price of Rs 402/unit (earlier Rs 405) based on 1 times March 25E net asset value. Key risks are slower recovery in leasing and higher portfolio vacancy levels.
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