On Tuesday, Citi updated its financial outlook for Oberoi Realty Ltd (OBER:IN), raising the price target to INR 2,050 from the previous INR 1,840 while maintaining a Neutral rating on the stock. The adjustment follows a robust performance in the company's pre-sales numbers, which showed a significant increase in the second quarter of the fiscal year 2025 (2QFY25).
Oberoi Realty reported pre-sales of INR 14.4 billion in 2QFY25, a notable rise from INR 10.7 billion in the first quarter of the same fiscal year (1QFY25) and INR 9.7 billion during the same period of the previous year (2QFY24). The volume of pre-sales also grew to 0.28 million square feet (msf) in 2QFY25, compared to 0.21 msf in 1QFY25 and 0.22 msf in 2QFY24.
The company's residential operating margin has also seen a notable increase, reaching 58% in 2QFY25, up from 48% in 2QFY24. This performance reflects Oberoi Realty's strong execution capabilities and reaffirms its position as a leading developer. The firm's strong brand and premium placement in the Mumbai market are cited as key factors that will continue to provide momentum.
Citi's revised price target of INR 2,050 takes into account the recent positive operating trends observed in Oberoi Realty's performance. Nonetheless, the firm has expressed that the current premium valuation of Oberoi Realty's stock limits the potential for further upside, leading to the decision to maintain a Neutral stance on the shares.
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