PIC RIGHT STOCK : Buy Oberoi Realty

Buy Oberoi Realty – Target Price Rs.268

 Initiated coverage on Oberoi Realty with a target price of Rs.268 over one year. The stock is currently traded in the range of Rs.221.
 The ‘buy’ rating is based on many positives to the company while compared to peers and
looks the top pick in the realty space.
 One major positive for the stock is the healthy cash balance of the company. Its cash balance at Rs.1560 crore is around 20% of its market capitalization.
 Checks suggest that the company’s execution capacity is superior to others and order
cancellation risk is limited.
 The company has the highest RoE in the coverage universe and new land acquisitions at
current prices would help the company to maintain strong RoE, going ahead.
 The company has launched two new projects in Mumbai (one in Mulund and another one in
Worli), together constitute 25% of current land bank.
 It has also leased out almost 80% of its rent generating assets.
 Acquisitions of new land parcels are underway. These three are expected to be the immediate catalysts to the stock price.
 The target price of Rs.268 implies 22% appreciation from the current level and at a price / book value multiple of FY13 expected book value.