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Motilal Oswal Report
Oberoi Realty Ltd.'s completed projects such as Sky City Phase 1, 360-West and Eternia Enigma have the potential to cumulatively generate Rs 15 billion plus of surplus cash annually. This, coupled with the scale-up in rental income, provides enough firepower to capture the business development opportunity.
However, with seven new projects (two projects in Thane, GSK-Worli, Peddar Road, Tardeo redevelopment, potential MHADA redevelopment in Andheri and Gurugram) already tied up, the management is unlikely to be aggressive on new project acquisitions in the near term.
At current valuations, Oberoi Realty's residential business implies a value of Rs 360- 370 billion. The estimated value of the existing pipeline, including the Gurugram project, is Rs 230 billion, implying 50-60% of going concern premium, which already accounts for near-term growth visibility.
We incorporate contribution from new hotel assets at Borivali and Thane and maintain our Neutral rating with an increased target price of Rs 1,390 indicating fair valuation.
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