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Motilal Oswal Report
Oberoil Realty Ltd.'s residential segment has commanded one-year forward embedded EV/Ebitda of ~17 times (five-year average). Historically, the company has witnessed re-rating of the residential segment during instances of pre-sales growth, according to domestic brokerage firm Motilal Oswal.
Since the residential segment is currently trading at ~9x, there is room for a sharp rerating going forward, given the growth visibility over the next two years, says the brokearge.
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Motilal Oswal has valued the residential business on a net asset value basis and now factor in a couple of commercial assets that would be sold on a strata basis. This has led to 9% increase in the NAV. Further, the brokerage has maintained a 35% premium on NAV to capture the value from forthcoming project acquisitions (Motilal Oswal's calculations suggest that Oberoi Realty can command 60% NAV premium).
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The brokerage values the annuity portfolio at 7.5-8.0% cap rate and the hospitality business at 18x EV/EBITDA on FY28E. Hence, the SoTP-based target price has increased to Rs 2,130, and the Motilal Oswal upgrades the stock to Buy.
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