Aditya Birla Real Estate (ABREL), the real estate arm of the Aditya Birla Group, may have had a slow start in the first quarter of fiscal year 2025-26, but market enthusiasm for its prospects remains high. Leading brokerage firms Antique Stock Broking and Emkay Global have given the stock a BUY rating, projecting it to reach ₹3,300 in the next 12 to 18 months. The stock is currently trading around ₹2,030.
Decline in Pre-Sales, but Improvement in Collections
ABREL's pre-sales witnessed a significant drop in the first quarter. The company did not launch any new projects, limiting total bookings to ₹420 crore. This is a decrease of 93 percent from the previous quarter and 61 percent year-on-year. However, the company collected ₹550 crore during the same period, marking a 12 percent annual increase.
The company's flagship project, Birla Niyaara in Worli, generated bookings of ₹60 crore. Management expects sales of this project to increase further with the launch of Tower-3 in the second half of the year.
₹14,000 Crore Project Pipeline a Game Changer
Brokerage houses are confident that the company's performance will improve rapidly in the next few quarters. The main reason for this is ABREL's b project pipeline, with an estimated value of over ₹14,000 crore.
These projects will be launched in major metropolitan cities across the country—Mumbai, Pune, Bangalore, and Delhi-NCR. This includes a new phase of Birla Niyaara, Birla Arika Phase-2, Birla Punya Phase-2, and a new project in Thane. Management aims for the company's annual pre-sales to reach ₹15,000 crore by FY28.
Sale of Paper Division to Provide New Resources
ABREL recently entered into an agreement to sell its paper business to ITC for ₹3,500 crore. This deal is expected to be completed in the second half of FY26. According to Emkay Global, the proceeds from this deal will enable the company to accomplish two major objectives—repay debt of up to ₹2,000 crore and aggressively expand its real estate business.
This deal will alleviate ABREL's cash flow issues and further sharpen the company's focus on its real estate business. This could have a positive impact on both profits and margins in the coming years.
Valuation Model and Target Price of Brokerage Firms
Antique Stock Broking has set a target of ₹3,061 for the company's share. They have used a 10x EV/EBITDA model for this.
Emkay Global, taking an even more bullish stance, has set a target price of ₹3,300 for the share. They have valued residential projects at 11.5x EV/EBITDA and commercial projects at an 8% cap rate.
Emkay believes that strategic partnerships with global players like Mitsubishi are further strengthening the company's credibility and valuation.
Business to Pick Up Pace with New Projects
The company is planning to launch several major projects in the next three quarters. Brokerage houses believe that after these launches, the company's booking revenue will increase, which could lead to a significant jump in the value of the stock.
Change in Company Strategy
By exiting the paper business, ABREL is now fully focused on the real estate business. This will make its business model even clearer and more effective. For investors, this is a sign that the company is recognizing its core strength and moving in that direction.
Confidence Remains in the Market
Although there has been no surge in the share price yet, investor confidence remains high, given the opinions of brokerage houses and the company's aggressive strategy. As new projects are launched and the paper division deal is completed in the coming months, its image in the market could change completely.
