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CLSA upgrades Embassy Office Parks REIT to buy; raises target to Rs 385

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CLSA upgrades Embassy Office Parks REIT to buy; raises target to Rs 385

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Brokerage firm CLSA has upgraded its rating on Embassy Office Parks REIT to Buy from Outperform and increased the target price to Rs 385 from Rs 380 earlier. CLSA believes risk-reward is favourable.

CLSA upgrades Embassy Office Parks REIT to buy; raises target to Rs 385
Brokerage firm CLSA has upgraded its rating on Embassy Office Parks REIT to Buy from Outperform and increased the target price to Rs 385 from Rs 380 earlier. CLSA believes risk-reward is favourable.
"The marginal increase in our target price and EPS for FY22/23 is driven by the collapsing of the two-tier structure in Embassy Manyata, which results in higher income through dividends from Embassy Manyata," CLSA said.
The brokerage house is of the view that Embassy REIT’s current valuation prices in a 10 percent decline in market rent and revision in contractual escalation to 10 percent every three years and sustained vacancies of 10 percent in the near term.
It believes, at the current market price, the downside risk is limited, while the upside potential from our bull-case scenario is 44 percent.
Recently, Embassy REIT had received the National Company Law Tribunal (NCLT) nod regarding its composite scheme of arrangement among its entities that restructures and simplifies the ownership of key portfolio assets.
The company had initiated the scheme to simplify its holding structure by reducing the shareholding tiers and to create value for its unitholders.
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