Motilal Oswal has started coverage on Oberoi Realty with a target price of Rs 2,145, following a strong second quarter in fiscal year 2027. The brokerage points to a 6x jump in pre-sales, largely driven by the company's successful entry into the Gurugram market. Investors are watching how the company manages growth as it expands beyond its traditional Mumbai stronghold.
Motilal Oswal has initiated coverage on Oberoi Realty with a "Buy" rating and a target price of Rs 2,145. This move follows the company’s recent financial results for the second quarter of the 2027 financial year, where it reported pre-sales of Rs 91.5 billion. This figure represents a six-fold increase compared to the same period in the previous year, highlighting a significant growth phase for the developer.
Impact of Gurugram Expansion
The primary driver behind this jump in sales is the company's entry into the National Capital Region (NCR) market through the "Three Sixty North" project in Gurugram. This single project accounted for 86% of the company's total bookings during the quarter. The success of this launch indicates that the company's strategy to expand beyond its core Mumbai portfolio is gaining traction with homebuyers. While other developments, such as Three Sixty West in Worli and the Jardin and Forestville projects in Thane, contributed to the overall numbers, the Gurugram asset was the clear standout.
Future Sales and Valuation Outlook
Looking ahead, analysts have adjusted their sales estimates for the current 2027 financial year to Rs 135 billion, representing a 149% year-on-year increase. The company has a robust pipeline to support this, with upcoming projects including the Aurelius development at Pedder Road, new ventures in Alibaug, and additional inventory at its existing Thane locations.
However, investors should be aware of the outlook for the next financial year. While growth is strong now, sales estimates for the 2028 financial year are currently set at around Rs 112 billion. This expectation of a decline relative to the current year is largely due to the "high base effect," where the massive booking numbers achieved in 2027 create a challenging comparison for the following year.
To arrive at its valuation, the brokerage updated its financial models. This included increasing the weighted average cost of capital—a measure used to estimate the cost of funding projects—to 10.6% and adjusting the cap rate for the Railway Land Development Authority assets to 8.0%. By rolling its valuation model forward to the 2028 financial year, the firm reached its target price of Rs 2,145. Moving forward, market participants will likely monitor the company’s ability to execute its expansion plans in new cities and maintain its sales momentum against the backdrop of changing macroeconomic conditions.