Oberoi Realty jumps 5%, m-cap hits Rs 50,000 cr as company forays into NCR

Shares of Oberoi Realty hit a new high of Rs 1,407, on rallying 5 per cent on the BSE in Monday’s intra-day trade after the company said it bought near about 15-acre land in Gurugram for Rs 597 crore to develop a luxury housing project. With the acquisition of land the realty firm has now made its foray into the Delhi- National Capital Region (NCR) property market.

In past one month, the stock has outperformed the market by surging 28 per cent, as compared to 0.34 per cent gain in the S&P BSE Sensex and 15 per cent rally in the S&P BSE Realty index.

Meanwhile, a sharp run-up in stock price of the company has seen, the market capitalisation of Oberoi Realty cross Rs 50,000 mark for the first-time ever in intra-day trades today. At 01:01 PM; the stock was trading higher by 1.7 per cent, with a market cap of Rs 49,563 crore. In comparison, the Sensex was down 0.26 per cent at 65,624.

In an exchange filing, Oberoi Realty said it has executed an agreement for sale with Ireo Residences Company and others for acquiring land admeasuring approximately 14.8 acres at Sector 58, Gurugram, Haryana.

The consideration for the transaction is in the form of event/ time linked monetary consideration of upto Rs 597 crore, and upto a certain area in the project for the existing homeowners and others. The company’s entitlement from the project at full potential is presently estimated to be upto ~2.6 million sq ft of floor area ratio (FAR), the company said.

This transaction marks the company's foray into the NCR. It intends to primarily develop a luxury residential group housing project on the said land. Furthermore, with Kolshet launch soon and other Thane launch in Q4, ICICI Securities expect sales momentum to pick up.

Motilal Oswal Financial Services believes Oberoi Realty’s much-awaited foray into NCR provides further growth visibility. However, the brokerage firm retain its pre-sales and cash flow estimate as said it awaits clarity on launch timelines of this project.

At current valuations, Oberoi Realty’s residential business implies a value of Rs 36,000-37,000 crore, while the estimated value of the existing pipeline, including the Gurugram project, is Rs 23,000 crore, implying 50-60 per cent of going concern premium. “We believe 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. Thus, implied going concern premium already accounts for near-term growth visibility,” the brokerage firm said in company update.