Core thesis in plain words

We initiate coverage on Oberoi Realty Ltd (ORL) with a HOLD rating and a probability-weighted 12-month target price of ₹1,753, 7.9% above the current ₹1,625.20 (8.4% including the dividend). That is below the template's 15% BUY bar and below the ~13% annual return we require from a stock whose measured beta is 1.2–1.4. A first draft of this report rated the stock BUY · ACCUMULATE at ₹1,869; the LLM Council review found that the draft valued rents before tax but homes after tax, gave no litigation haircut to Gurugram Phase 2 and had no true bear tail. Correcting those moved the call to HOLD (see the Council section).

The business is excellent. ORL builds large, amenity-rich townships on land it bought cheaply years ago (83 acres in Goregaon, 25 in Borivali, ~75 in Thane), sells homes at a 30–35% premium to the surrounding market, and keeps the offices, malls and hotels it builds on the same land. FY26 revenue was ₹6,009 Cr with a 55.9% EBITDA margin; PAT ₹2,507 Cr; ROE 14.9%. Rental income has compounded ~38% a year since FY22 to ₹1,190 Cr (19.8% of revenue) at ~92% EBITDA margins.

2026 was a step-change year. The first project outside Mumbai — Three Sixty North, Sector 58, Gurugram — sold ₹7,891 Cr of homes (614 units, 97% of the launched area, ~₹60,000 per sq ft of carpet) within days of its 29-Jun-2026 launch. H1 FY27 bookings were ₹10,200 Cr vs ₹2,938 Cr a year earlier. Under its accounting policy the Gurugram project books revenue only on completion (~FY30–31), so reported profit will lag the cash — FY27E–FY28E EPS growth is only ~9% and ~1% in our model.

The price is full, not cheap. A sum-of-the-parts (SOTP) valuation adds up the value of each business — homes still to be sold, the rental portfolio, hotels, cash — and divides by the share count. Ours is ₹1,554 per share today (probability-weighted; base case ₹1,529), ~4% below the market. That gap is inside the noise of our model (each 0.1 of beta moves value ~₹100), so the honest reading is no margin of safety, not overvalued. Working backwards (a reverse DCF), ₹1,625 already assumes either ~10% more pre-sales than our base path every year, or a 43.9% long-run pre-tax margin on new projects (we use 40%, and 45% for FY28–31 on legacy land), or a beta of ~1.01. The low trailing P/E (22.5x vs 28.6x five-year median) is partly an accounting effect — Gurugram profit is booked only on completion — and on other yardsticks the stock is not cheap: 3.1x book vs a residential-peer median of 2.7x, and ~9.4% return on equity once the rental portfolio is marked to fair value.

Why the stock fell 12% in a month despite record bookings. Q2 FY27 revenue and EPS missed consensus by ~6%; the RBI raised the repo rate on 7-Oct-2026 and the 10-year G-sec hit a three-year high (7.46%); the High Court extended its restraint on fresh Gurugram allotments; Adarsh Nagar slipped again; Jefferies and CLSA stayed at Hold. FIIs have cut their holding from 20.2% (Dec-24) to 15.3%. H1 FY27 bookings excluding Gurugram were ₹2,309 Cr, 21% below H1 FY26.

Why we are below the Street (consensus ₹2,083–2,100)

Of 26 analysts tracked by INDmoney, 69% rate the stock Buy, 23% Hold and 8% Sell; mean target ₹2,100 (range ₹1,240–2,800). Our ₹1,753 is ~17% lower. Two choices explain almost all of the gap — and we show the Street's answer with our own model:

• Discount rate (beta). We use beta 1.10 = 75% weight on the stock's own measured beta (average of 1.20 one-year daily and 1.25 two-year weekly after the standard ‘Blume’ adjustment toward 1.0) and 25% on Damodaran's India real-estate sector beta (0.755 at the sector’s 21% debt/equity; 0.657 with debt removed; 0.68 re-levered to ORL’s 4.5%). That gives a 13.3% cost of equity. At beta 0.9 our SOTP today rises to ₹1,756.
• Tax on rents. We value the rental portfolio on rent after 25.17% corporate tax (₹11,992 Cr), consistent with how we value homes. The common broker shortcut — pre-tax rent ÷ cap rate, which matches the independent valuer's ₹16,182 Cr — adds ~₹98 a share. That higher figure is realisable only if the assets are sold or moved into a REIT.
• Combined: beta 0.9 plus pre-tax rental value gives ₹1,854 today and ₹2,093 in 12 months — the consensus. The Street is not using different facts; it is using a lower hurdle rate and a pre-tax rental value.
• Smaller items: unbuilt annuity assets (Ritz-Carlton, malls, hotel) at cost; a ₹1,427 Cr deduction because Bandra East sales carry a 45% revenue share to the railway authority; 40% margin on new land after FY31; Gurugram Phase 2 at ~70% probability in FY28 because of the litigation.

Key catalysts and triggers

Bull / Base / Bear

How much do the scenario weights matter?

The weights are judgement, not data. Only a 10/60/30 weighting (bull twice as likely as bear) takes the expected 12-month return above the 15% BUY threshold; 20/50/30 gives ~+13%.

White tick = base / weighted value. Broker range = lowest (CLSA Hold ₹1,830) to highest fresh target (HDFC Securities ₹2,490); tick = mean of 11 October-2026 targets. Graham number = √(22.5 × TTM EPS ₹72.36 × BVPS ₹525); Graham formula = EPS × (8.5 + 2 × 10% growth) × 4.4 / 7.46% G-sec yield — shown for reference only (Graham’s formulas ignore land and rental assets), not used in the target.

What has to go right for the Street’s ~₹2,100?

Reverse DCF: what is ₹1,625 already pricing in?

Each row changes only that assumption, holding the rest of our base case. Read: the price is not demanding, but it leaves no room for disappointment on execution or rates.

Financial highlights (consolidated)

FY22A–FY26A: Screener.in consolidated statements reconciled to the annual reports (revenue, PAT, EPS match AR to the rupee crore). PBT = EBITDA + other income − interest − depreciation reconciles within ₹1 Cr every year. FY23 PAT includes a non-recurring ₹220 Cr JV profit share (Three Sixty West exit) and a 14% tax rate. Net debt = borrowings less cash, all bank deposits and liquid mutual funds, from the annual reports (FY26: net cash ₹198 Cr; ~₹47 Cr net debt if lien-marked deposits are excluded); JV stakes are not treated as cash. FY27E–FY29E and pre-sales FY27E onward are our estimates (shaded); FY27E pre-sales include actual H1 of ₹10,200 Cr.

What Oberoi Realty does

Oberoi Realty Ltd (incorporated 1998, listed October 2010, headquartered in Goregaon, Mumbai) is the listed flagship of the Oberoi Realty group led by Chairman & MD Vikas Oberoi (58.55% personal holding; promoter group 67.70%). It is not related to the Oberoi hotels group (EIH Ltd). It has delivered 51 projects (~17.2 mn sq ft) and reports “37.2 mn sq ft in the making” (FY26 annual report). The model is a township developer that keeps the commercial core: homes are sold, while offices, malls and hotels on the same land are retained for rent.

For accounts the company reports only two segments — Real Estate (residential sales, leasing, property management) and Hospitality. The table splits the FY26 revenue note into its parts.

Annuity portfolio — Q2 FY27

Source: Q2 FY27 presentation. Westin ARR ₹15,780, RevPAR ₹11,933. Contracted future lease rentals ₹4,797 Cr (FY26 AR). The rental line also includes ~₹82 Cr a year of school rent from the promoter-linked Oberoi Foundation and a straight-lining (lease-equalisation) asset of ₹403 Cr at Mar-25, so cash rent is somewhat below reported rent.

Ongoing residential portfolio (30-Sep-2026)

Source: Q2 FY27 investor presentation. "Sold to date" is gross booking value. The ~₹14,284 Cr gap between sales and recognised revenue (₹7,891 Cr of it Gurugram) is future revenue already contracted. ICICI Securities estimates ~₹14,000 Cr of value in the 29 lakh sq ft unsold. Completed projects such as Exquisite and Esquire (Goregaon) and Splendor, Prisma and Maxima (JVLR) are excluded because they are fully sold and 100% recognised as revenue (Exquisite by FY22, Esquire by FY23 — annual reports).

Development pipeline and land bank

Sources: NSE/BSE disclosures, call transcripts (Q3 FY26–Q1 FY27), PL Capital and ICICI Securities Q2 FY27 notes. The company publishes no project-wise land-bank table; values are disclosed only for some deals. FY26 annual report: capital commitments rose to ₹5,564 Cr (₹315 Cr a year earlier) — the cost side of this pipeline.

Industry structure, competition and macro

Indian residential real estate is fragmented but consolidating toward listed, well-funded developers since RERA (2016) and the post-2019 NBFC crisis. MMR is the country’s largest market by value (~₹2.11 lakh Cr of sales in CY2025, Anarock) and ~32% of top-7-city volumes. ORL competes for the premium buyer with Lodha (Macrotech), Godrej Properties, DLF (entering Mumbai), Prestige, Sunteck, Piramal and Runwal, and in offices/malls with Phoenix Mills, K Raheja/Mindspace REIT and Brookfield. Its edge is integrated townships on owned land in the western and eastern suburbs, where few competitors hold large contiguous parcels.

Sources: RBI policy (SCC Online, 9-Oct-2026); Anarock Q3-2026 and CY2025 reports; Knight Frank India H1-2026; JLL India retail; HVS Anarock Jun-2026 monitor; Economic Times (ready reckoner). Full citations in the Sources list.

Moat scorecard (analyst judgement)

Board and key management

Board of 7: 4 independent (57%), 2 women. Company Secretary: Bhaskar Kshirsagar. Sources: FY26 governance filing (NSE iXBRL), FY25–FY26 annual reports, NSE disclosures.

Related-party items and governance metrics (₹ Cr)

Source: annual reports FY22–FY26 (RPT, CSR and contingent-liability notes). JV loans carry notional interest income under Ind AS (₹84 Cr recognised in FY26).

Source: Screener.in shareholding pattern. Promoters flat at 67.71%. FIIs fell from a 20.24% peak (Dec-24) to 15.25% while domestic institutions rose from 10.05% to 14.83%. Shareholder count 87,245 (Sep-26), down from 1.07 lakh (Mar-25).

Consolidated income statement

Reconciliation (Python): EBITDA + other income − depreciation − finance cost = PBT in every historical year (within ₹1 Cr); PBT − tax = PAT matches the annual reports exactly (e.g. FY26: 3,275.6 − 768.2 = 2,507.4). Revenue split from annual-report revenue notes. "Other income" follows Screener and includes the share of JV profit (FY22 ₹240 Cr and FY23 ₹220 Cr were mainly the Three Sixty West JV, now exited) and FY24’s ₹218 Cr exceptional gain; FY26 includes a ₹23 Cr labour-code charge. FY27E is built on actual H1 (revenue ₹2,972 Cr, PAT ₹1,305 Cr) plus our H2; the implied H2 PAT is ₹1,424 Cr. Gurugram revenue (₹7,891 Cr sold) is not in FY27E–FY29E because it is recognised on completion.

Sources of funds

Application of funds

Sources: Screener.in consolidated balance sheet and schedules, cross-checked to annual reports (FY26 total assets ₹25,327 Cr vs AR ₹25,328.5 Cr). Both sides balance in every column (checked in Python: e.g. Sep-26 ₹28,618 Cr). Sep-26 net cash = borrowings ₹2,630 Cr − cash/bank ₹1,800 Cr − mutual funds ₹1,064 Cr (Q2 FY27 presentation). Historical net debt is from the annual reports: borrowings less cash, all bank deposits and liquid mutual funds (JV stakes excluded); FY26 net cash ₹198 Cr, or ₹47 Cr net debt if ₹244 Cr of lien-marked deposits are excluded. Note that most customer collections sit in RERA project accounts, where 70% of receipts must be used for that project’s land and construction, so “net cash” is not freely distributable. Estimates model only equity, debt and liquid funds; other lines are not forecast.

Hidden value: investment property at fair value

Source: annual reports, investment-property note. Valuer’s discount rate 11.88% (FY26), terminal growth cut to 5.25% from 7.68%. Adding the post-tax gain (~₹8,800 Cr at 25.17%) to Sep-26 equity lifts book value per share from ₹525 to ~₹767 — the stock trades at ~2.1x this adjusted book, not 3.1x.

How to read the balance sheet

• Inventory ₹11,801 Cr (Sep-26) is land and construction for homes, recorded at cost; much of it is already sold but not yet recognised as revenue.
• Other liabilities jumped to ₹6,198 Cr (Mar-26: ₹4,068 Cr excluding payables). The CFO attributes this line mainly to "billing in excess of revenue" — cash and invoices from buyers ahead of revenue recognition.
• Debt is small and cheap: ₹2,630 Cr at 7.15–8.40%; gross debt/equity 0.14x; current ratio 3.04x.
• Off-balance-sheet: ₹5,564 Cr capital commitments (FY26) and the Bandra railway land revenue share (₹4,905 Cr NPV payable to 2038) are future calls on cash that do not appear as debt.

Cash flow summary

Source: Screener.in cash-flow statement and schedules (matches annual reports: FY26 CFO ₹1,379.9 Cr, CFI ₹(463.1) Cr, CFF ₹(1,008.8) Cr). Land and development-right payments run through operating cash flow (working capital) in the reported accounts — FY23’s ₹(2,383) Cr CFO reflects the ₹3,405 Cr purchase of Three Sixty West flats from the JV. Estimates are on the same reported basis (land payments inside CFO) and are anchored to H1 FY27 actuals: all-segment collections ₹3,596 Cr, operating surplus ₹2,570 Cr, ₹1,152 Cr paid for upcoming projects, ₹698 Cr capex. FY27E assumes ₹1,800 Cr of land/JDA payments and ₹1,300 Cr capex; CFO/PAT of 81–87% vs a 52% five-year average reflects Gurugram collections arriving years before its revenue.

Funding bridge — can ORL pay for its pipeline without new equity?

Analyst estimates; opening = Mar-26 cash, bank and liquid MF per FY26 annual report (₹3,014 Cr). Not in the bridge: (1) ₹5,564 Cr of capital commitments disclosed at Mar-26 — mostly construction and land obligations that we assume are paid over several years inside the land and capex lines; (2) the Bandra East (RLDA) revenue share, ₹4,905 Cr in present value, which is paid out of that project’s own sales to 2038 (we deduct only the ₹247.5 Cr upfront instalment still due); (3) the ₹6,000 Cr QIP approval, which we do not assume is used.

Cost of capital

Sum-of-the-parts (SOTP) — base case

Residential is 72% of NAV; the terminal value is 51% of the residential DCF (below the 80% danger level in Damodaran’s checklist). Not separately valued (upside): Bandra East railway land, Hotel Horizon, Aram Nagar Versova, Alibaug and Thane commercial — their sales appear only inside the pre-sales path. Not deducted / not added (they partly offset): cash still due on units sold before FY27, construction cost already sunk in inventory, and the ₹5,564 Cr of commitments, which are the cost side of the pipeline already reflected in the 40% margin. Gurugram Phase 1’s ₹7,891 Cr is inside the ‘already sold’ line at a 50% margin; the land was cheap (up to ₹597 Cr plus area to existing homeowners) but total project investment is reported at ₹4,000–6,000 Cr, so we do not assume more.

Residential cash-flow DCF — base case

Discount factor = 1 / (1 + WACC)^(mid-period + 2-year collection lag). Cash profit uses a 45% pre-tax margin for FY28–FY31 and 40% for other years. Pre-sales path is our assumption: H1 FY27 actual ₹10,200 Cr + H2 ₹3,300 Cr = ₹13,500 Cr for FY27; FY28 includes ~70% of Gurugram Phase 2 (~₹7,500 Cr GDV); growth of ~7–8% a year from FY30 (price ~5% + volume). Management gives no numeric guidance.

Sensitivity analysis

Colours vs CMP ₹1,625: dark green ≥ +15%; light green 0 to +15%; yellow −10% to 0; orange −20% to −10%; red below −20%. Outlined cell = base case. Margin rows show the long-run margin; the FY28–31 margin is 5 pp higher in each row. ±3 pp of margin moves value by ~₹73 a share; ±10% on pre-sales volume by ~₹100; ±0.5 pp on the cap rate by ~₹19–22 (rents after tax). The single biggest input is beta: the sector-to-measured range spans ₹1,321–2,137. The 8% cap rate on after-tax rent equals our 13% WACC less 5% growth, the same growth used for homes.

Relative valuation — peer comparison (22-Oct-2026)

Sources: Screener.in (prices, P/E, P/B, RoE, RoCE, FY26 P&L), company presentations and news for pre-sales and net debt (dates vary Mar-26 to Sep-26). EBITDA = Screener operating profit (ex other income); it is not meaningful for DLF, Godrej and Sobha because joint-venture structures and accounting push profit below EBITDA. Oberoi P/E and P/B use TTM EPS ₹72.36 and Sep-26 BVPS ₹525; EV/EBITDA on TTM EBITDA ₹3,560 Cr. Phoenix Mills is an annuity (mall) comparator, excluded from the residential median.

Graham checklist and classification

Score 4 of 7 tests. Classification: quality compounder at a full price — strong finances and growth, but the price fails Graham’s value tests, as it does for almost every Indian developer. Graham’s formulas ignore the land bank and the annuity portfolio, so we treat them as a floor, not a value.

Brokerage views and rationale

Sources: broker notes and media summaries (PL Capital, ICICI Securities/ICICI Direct, Motilal Oswal via InvestmentGuru, NDTV Profit, Business Upturn, ET Now, BOBCAPS, Sharekhan, Trendlyne). ICICI Direct and ICICI Securities institutional are listed separately because they published different targets. Consensus: INDmoney 26 analysts, 69.2% Buy / 23.1% Hold / 7.7% Sell, mean ₹2,100 (range ₹1,240–2,800); Trendlyne average ₹2,083 (19-Oct). Mean of the 11 fresh October targets above: ₹2,148. Not found for this period: Morgan Stanley, Goldman Sachs, Macquarie, UBS.

Last nine quarters (consolidated)

Revenue, EBITDA (ex other income), PAT and EPS: Screener.in quarterly results (match company presentations within ₹1 Cr; e.g. Q2 FY27 PAT ₹761.65 Cr; the press-release "PAT" of ₹759.01 Cr is total comprehensive income). Pre-sales and residential collections: company presentations. *Q1 FY26 derived as FY26 total minus Q2–Q4. Q3 FY25 pre-sales from the Q3 FY26 call (Jardin launch base). n.a. = not retrieved.

Risk register

Probability and impact are analyst judgements.

Risk heat-map

ESG scorecard

Sources: BRSR FY26 (NSE filing), FY24–FY26 annual reports, CRISIL ESG rating letter (15-Jul-2026), CareEdge-ESG rationale FY27, SES. Pillar-level numeric scores were not available, so the template’s numeric pillar grid is replaced by verified third-party scores plus our qualitative read.

Monitoring tracker

Practical points: ~4.2 lakh shares (~₹68 Cr) trade a day; it is an F&O stock, so expect sharp moves around results. Dividend ₹8/share a year (0.5% yield) — a growth holding, not an income one; next record date 23-Oct-2026 (₹2).

Key ratios and per-share data

Year-end prices: last NSE close of each March (₹940, ₹843, ₹1,476, ₹1,637, ₹1,419). Debtor days: Screener. Inventory days are not meaningful for a developer (inventory is land and multi-year construction), so inventory ÷ revenue is shown instead. FY23 debtor days (96) reflect a one-off receivable from the Three Sixty West JV unwind.

How the report changed through the council