Motilal Oswal initiates coverage on Sri Lotus Developers with Rs 250 target; stock jumps over 5%

Synopsis

Sri Lotus Developers and Realty shares rose 5.5% to ₹195.75 after Motilal Oswal initiated coverage with a ‘Buy’ rating and a ₹250 target price, implying a 28% upside. The brokerage highlighted strong fundamentals, sectoral tailwinds, and a robust project pipeline.

Shares of Sri Lotus Developers and Realty surged as much as 5.5% in intraday trade on Wednesday, hitting a high of Rs 195.75 on the BSE, after domestic brokerage house Motilal Oswal initiated coverage on the stock with a ‘Buy’ rating and a target price of Rs 250. The target implies an upside potential of over 27.7% from the day’s intraday peak.

The sharp uptick in the stock price came after the brokerage’s coverage initiation report was made public, drawing investor attention to the company’s strong fundamentals and sectoral tailwinds.

Motilal Oswal’s note outlined a compelling investment thesis for Sri Lotus Developers and Realty, citing favorable industry dynamics, improving operating metrics, and a robust project pipeline.

According to the brokerage, Sri Lotus Developers and Realty is well-positioned to benefit from the ongoing structural growth in India’s real estate sector, particularly in the mid-income and affordable housing segments. The company’s presence in high-demand micro-markets, along with its execution track record and asset-light development model, were highlighted as key strengths.

The report also pointed to the company’s healthy balance sheet, low leverage, and prudent capital allocation approach as supportive factors for sustained growth. Motilal Oswal expects revenue visibility to improve further on the back of upcoming launches and better monetization of existing land banks.

Additionally, the company’s investments in digitization, customer outreach, and streamlined approval processes are seen as catalysts for margin expansion and faster inventory churn.

Motilal Oswal’s analysts believe that the stock is undervalued relative to its peers when compared on metrics like price-to-book and EV/EBITDA. The target price of Rs 250 reflects a blend of valuation multiples applied to projected earnings and asset base, supported by expected improvements in profitability and scale.

The brokerage also cited regulatory tailwinds, rising urban demand, and government incentives for housing as broader enablers that can benefit players like Sri Lotus Developers and Realty.

This favorable assessment appears to have triggered renewed buying interest in the counter, pushing the stock to its day’s high amid strong trading volumes.

Also read: Who is Shrikant Badve, the newest addition to India’s billionaire club?

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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