Stocks To Buy: Aditya Birla Group stock can rise up to 60%, projects Motilal Oswal's bull case

Shares of Aditya Birla Real Estate Ltd. have a potential upside of 33% from their previous closing, as per brokerage firm Motilal Oswal Financial Services' latest initiation note on December 19.

Motilal Oswal has initiated coverage on the stock with a "buy" rating and a price target of ₹2,275 apiece.

The brokerage said the company is leveraging its brand legacy to drive a 26% pre-sales compound annual growth rate (CAGR), over financial year 2025-2028.

From its inception, Aditya Birla Real Estate has positioned itself in the premium, luxury and ultra-luxury housing segments, with selective forays into the commercial and retail spaces. Its business model is built on redevelopment opportunities, joint development agreements and asset-light partnerships, complemented by selective outright acquisitions, Motilal Oswal said.

The note went on to state further that this capital-efficient approach has enabled the company to scale rapidly, delivering ₹8,100 crore pre-sales in financial year 2025, reflecting a Compounded Annual Growth Rate (CAGR) of 90% since financial year 2021.

Aditya Birla Real Estate has a pipeline totaling nearly ₹70,000 crore in Gross Development Value (GDV) over the next two to four years. This includes ₹5,100 crore in unsold inventory from ongoing projects, ₹46,200 crore from upcoming launches and ₹18,600 from sold inventories, according to Motilal Oswal.

The 26% pre-sales CAGR will also be enabled via design-led offerings and strong positioning in core markets such as the Mumbai Metropolitan Region (MMR), Bengaluru, Pune and the Capital Region (NCR), the brokerage said.

Strong pre-sales growth will drive rapid scaling of operations across key parameters such as cash flows, revenue and profitability, boosting confidence in the company's execution capabilities and future growth prospects.

Based on the downward cash flow (DCF) method, Motilal Oswal has valued the company's residential project pipeline at ₹18,400 crore. Its existing commercial projects are valued at ₹1,500 crore, while the 157-acre land bank is valued at ₹3,900 crore.

Strong Cash Flow Visibility

Motilal Oswal expects Aditya Birla Real Estate's collections to reach ₹9,400 crore by financial year 2028, reflecting a 52% CAGR from financial year 2025 levels. It also expects collection efficiency to improve from 33% to 60% in the next three years, thereby providing  a significant boost to operating cash flows.

This enhanced cash conversion will allow the firm to fund growth and working capital needs without depending heavily on external debt, it added. Cash flow visibility also increases due to the unsold inventory and pending collections worth over ₹12,000 crore from sold inventory.

After accounting for ₹9,690 crore in project completion costs, Aditya Birla Real Estates anticipates a surplus of ₹7,420 crore, the analyst said. This surplus provides flexibility to reduce debt, accelerate execution and fund new projects, enhancing overall financial stability, as per Motilal Oswal.

All eight analysts who have coverage on the stock have "buy" ratings.

Shares of Aditya Birla Real Estate are off the highs of the day, currently trading 0.3% higher at ₹1,723.6. The stock is down 32% so far in 2025.

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