Motilal Oswal starts coverage on Aditya Birla Real Estate with 33% upside

Domestic brokerage Motilal Oswal has initiated coverage on Aditya Birla Real Estate (ABREL) with a ‘Buy’ rating and a target price of ₹2,275, implying a 33 per cent upside from current levels. The brokerage sees strong growth potential for ABREL, driven by its premium housing focus, capital-efficient business model, and robust launch pipeline across key Indian markets.

 

On the bourses, ABREL Share price surged up to 3.01 per cent to hit an intraday high of ₹1,770.65 per share. At 9:35 AM, ABREL share price was trading 1.96 per cent higher at ₹1,752.50 per share. By comparison, BSE Sensex was trading 0.57 per cent higher at 84,967.10 levels.

 

 

ABREL, which commenced operations in 2016 under Century Textiles’ ‘Birla Estates’ division, was rebranded in October 2024 following the divestment of non-core businesses such as textiles and pulp & paper. The repositioning has transformed ABREL into a focused real estate platform, primarily catering to the premium, luxury, and ultra-luxury housing segments, while selectively venturing into commercial and retail projects.

 

The company’s business model stresses upon redevelopment opportunities, joint development agreements, and asset-light partnerships, complemented by selective outright acquisitions. This approach, analysts believe, has enabled ABREL to scale rapidly in a capital-efficient manner, delivering presales of ~₹8,100 crore in FY25, reflecting an impressive 90 per cent CAGR since FY21. Motilal Oswal expects the company to maintain a 26 per cent CAGR in presales over FY25-28, supported by strong brand legacy and targeted geographic presence.  ALSO READ | Ola Electric jumps 9% after promoter Bhavish Aggarwal completes stake sale 

ABREL’s development pipeline is solid, totaling 35.1 million square feet (~₹70,000 crore GDV) over the next 2-4 years. This includes ₹5,100 crore in unsold inventory from ongoing projects, ₹46,200 crore from upcoming launches, and ₹18,600 crore from already sold inventory (excluding Birla Pravaah, to be delivered in Q3FY26). Key markets include the Mumbai Metropolitan Region (MMR), Bengaluru, Pune, and the National Capital Region (NCR), where ABREL has built a strong reputation for design-led premium housing.

 

The company’s strong cash flow visibility further underpins its growth prospects. Collections have seen a robust 104 per cent CAGR over FY21-25, outpacing presales by 14 per cent. With about 50-60 per cent of projects expected to be completed by FY28, collections are projected to reach ₹9,400 crore, a 52 per cent CAGR from FY25. Collection efficiency is also set to improve from 33 per cent to 60 per cent by FY28, boosting operating cash flows and reducing reliance on external debt. ABREL’s unsold inventory and pending collections totaling ₹17,600 crore, coupled with a projected surplus of ₹7,420 crore after completion costs, provide a solid financial cushion for new launches and strategic expansions.

 

From a financial performance perspective, ABREL is entering a sharp revenue upswing. With project completions gaining pace, revenues are expected to grow at a CAGR of 69 per cent over FY25-28, reaching ₹5,890 crore, with FY26 revenue projected at ₹1,460 crore, up 20 per cent Y-o-Y. Profitability is also set to strengthen, with Ebitda reaching ₹1,010 crore and PAT at ₹980 crore by FY28, accompanied by Ebitda and PAT margins of 17.2 per cent and 16.7 per cent, respectively. Return ratios are expected to improve, with ROE at 21.9 per cent and ROCE at 10.7 per cent, reflecting enhanced capital efficiency.  ALSO READ | Why Motilal Oswal sees Indus Towers' risk-reward as 'uncompelling' at CMP? 

ABREL’s growth is supported by geographic diversification, a balanced market portfolio, and premium realisations, which mitigate risks while consolidating brand strength. Key ongoing and upcoming projects include Birla Vanya, Birla Niyaara, Birla Alokya, Birla Trimaya, and Birla Navya, which together contribute to the company’s strong presales and cash flow trajectory.

 

Valuation-wise, Motilal Oswal values ABREL’s residential pipeline at ₹18,400 crore, existing commercial projects at ₹1,500 crore, and the 157-acre land bank at ₹3,900 crore, forming the basis for the SoTP-based target price of ₹2,275 per share. With a combination of premium offerings, execution track record, and strong financial visibility, ABREL is positioned to deliver sustained growth and shareholder value in the coming years.

 

Disclaimer: The stock target/outlook has been suggested by Motilal Oswal. Views expressed are their own.