Indian Real Estate Sector Set for Sustained Growth, Says JM Financial
JM Financial predicts a seamless continuation of FY24's stellar performance into FY25, with an anticipated 18% market growth driven by 12% volume expansion and 6% price appreciation.
Indian Real EstateJm FinancialDlfMacrotech DevelopersKeystone RealtorsOberoi RealtySobhaReal Estate MumbaiAug 28, 2024
Defying expectations, the demand juggernaut has continued unabated, with luxury projects selling out within days of pre-launch. This phenomenal success has triggered a bull run in real estate stocks, which is expected to sustain, according to JM Financial projections.
JM Financial predicts a seamless continuation of FY24's stellar performance into FY25, with an anticipated 18% market growth driven by 12% volume expansion and 6% price appreciation. Supply is expected to increase moderately, aligning with annual absorption rates.
The brokerage favors developers with a proven track record of timely project launches and strategic business development. Against this backdrop, it has initiated coverage on five real estate companies, including DLF, Macrotech Developers, Keystone Realtors, Oberoi Realty, and Sobha.
The brokerage has assigned a 'buy' rating to DLF, Macrotech Developers, and Keystone Realtors. It has set a target price of ₹1,000 for DLF, indicating a 20% upside, ₹1,480 for Macrotech Developers, suggesting a 16% upside, and ₹895 for Keystone Realtors, signaling an upside potential of 16.5%.
Meanwhile, Oberoi Realty and Sobha have been assigned a 'hold' rating, with target prices of ₹1,820 and ₹1,755, respectively.
Diversification out of core markets is the key to sustained growth. The brokerage noted that real estate companies are expanding into new micro-markets to reduce their reliance on core regions and capitalize on growth opportunities.
Two major themes consolidation and premiumisation. According to JM Financial, the top 10 listed developers have made significant inroads into the market, steadily chipping away at the informal segment's share.
Rapid sales of high-quality launches have created a shortage of such inventory, pushing prices higher. Developers are also launching new phases of existing projects at increased price levels.
About JM Financial
JM Financial is a leading financial services company in India, providing a range of services including investment banking, equity research, and asset management.
About the Companies Mentioned
DLF is a leading real estate developer in India, with a presence in various cities across the country. Macrotech Developers is a Mumbai-based real estate developer, known for its luxury projects. Keystone Realtors is a Mumbai-based real estate developer, with a focus on affordable housing. Oberoi Realty is a Mumbai-based real estate developer, with a presence in various cities across the country. Sobha is a Bangalore-based real estate developer, with a presence in various cities across the country.
Frequently Asked Questions
What is the expected growth rate of the Indian real estate sector in FY25?
18% market growth driven by 12% volume expansion and 6% price appreciation.
Which real estate companies have been assigned a 'buy' rating by JM Financial?
DLF, Macrotech Developers, and Keystone Realtors.
What is the target price set by JM Financial for DLF?
₹1,000, indicating a 20% upside.
What is the key to sustained growth for real estate companies, according to JM Financial?
Diversification out of core markets.
What are the two major themes in the Indian real estate sector, according to JM Financial?
Consolidation and premiumisation.
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