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On Tuesday, Citi analyst Rajiv Berlia changed the rating for Oberoi Realty (NSE:OEBO) Ltd (OBER:IN) from Neutral to Buy, while revising the price target downward to INR1,895.00 from the previous INR2,415.00. Berlia’s decision to upgrade the stock comes despite acknowledging slower pre-sales at the company’s Three Sixty West project in Worli.
Berlia cites several reasons for the positive outlook on Oberoi Realty. The company’s strong execution is highlighted by a significant increase in residential operating margin, which rose to 57% in the third quarter of fiscal year 2025, up from 41% in the same quarter the previous year. This improvement in margins is a key factor behind the upgrade.
The analyst also points to the inventory available for sale as a potential driver for steady pre-sales growth. This availability could provide the company with ongoing opportunities to generate revenue even as it faces challenges in specific projects.
Additionally, Berlia notes Oberoi Realty’s healthy balance sheet, which he believes positions the company well for future growth. The robust financial standing of the firm is a crucial consideration in the upgrade decision.
In his comments, Berlia explains the rationale behind the upgrade, stating, "Upgrade Oberoi Realty to Buy from Neutral as implied pre-sales expectations are more reasonable post the correction, in our view." This suggests that the analyst believes the stock’s recent performance has led to a more attractive valuation and that the current price more accurately reflects the company’s pre-sales prospects.
Investors and market watchers will be monitoring Oberoi Realty’s stock performance following this rating change and price target adjustment by Citi. The company’s ability to maintain its high operating margin and leverage its available inventory will be key factors in achieving the steady growth that Citi anticipates.
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