Motilal Oswal's Top 9 Real Estate Picks with Up to 40% Upside
Brokers at Motilal Oswal have identified nine real estate stocks with strong fundamentals, cash flows, and growth prospects, giving them a 'Buy' rating. These picks are expected to see significant gains over the next few years.
Real EstateMotilal OswalStock PicksMarket GrowthProperty DevelopmentReal EstateJun 27, 2025
According to the brokerage, while the year started on a positive note, momentum faded towards the end. Launches declined by 5% year-on-year and absorption dipped 10% across India’s top seven cities. The final quarter was even weaker, with launches and absorption falling by 11% and 17%, respectively.
Election-related delays, absence of regulatory committees, and slower approvals were among the reasons behind the sluggish activity, added the brokerage in its report. As a result, inventory levels rose for the first time in five years, touching 14.4 months.
Despite the slowdown, leading developers continue to strengthen their position. According to the brokerage, “consolidation will allow our coverage companies to gain market share and keep growing at a better pace compared to the broader market.”
In FY15, the top 10 developers contributed 22.7% of launches. By FY25, this number had risen to 31.9%. Absorption share also rose from 19% to 23.1%.
Motilal Oswal projects a 12% CAGR in launches by its coverage universe from FY25 to FY27, while presales are expected to grow at a higher 21% CAGR, indicating strong demand for branded homes.
Although there is a slowdown in approvals and launches, the sector still has key tailwinds pushing it forward. Some of these include:
In most major cities, the EMI-to-income ratio is within 20-30%, considered a healthy range. The exception is MMR, where it is 50%, but even that is gradually improving.
Post-Covid, limited housing supply has driven up rents. “Most cities now offer rental yields of 3-6%,” according to the brokerage, making residential real estate attractive to investors once again.
Projects like Trump Tower Gurgaon (Rs 3,250 crore) sold out in just two days. DLF’s Privana North (Rs 11,000 crore) and Birla Silas Tower (Rs 2,500 crore) also saw massive booking volumes within weeks.
Many listed developers are no longer restricting themselves to their home turf. They are entering new markets and scaling quickly. The brokerage in its report mentions:
Godrej Properties has now entered Hyderabad, expanding from MMR, NCR, Pune, and Bengaluru.
Prestige Estates (PEPL) and Sobha are tapping into Pune’s market.
Oberoi Realty is making its way into NCR, while Brigade Enterprises is growing in Hyderabad and Chennai.
Even DLF and PEPL are making moves into the Mumbai market.
Motilal Oswal in its report noted that healthy execution is leading to cash collections, estimated to grow at 36% CAGR to Rs 1.5 trillion by FY27. This, in turn, is expected to generate operating cash flow of Rs 600 billion by FY27 and a cumulative Rs 1.4 trillion over FY25-27.
The brokerage states, “healthy collections should result in strong OCF generation of Rs 1.4 trillion cumulatively over FY25-27E.” These flows will fund business development while keeping net debt-to-equity ratios below 0.5 times, with some companies even holding net cash status.
Motilal Oswal’s coverage universe is projected to clock a 22% CAGR in revenue, reaching Rs 861 billion by FY27. EBITDA is expected to rise at 26% CAGR, with operating margins improving by 168 basis points.
According to the brokerage, a BUY rating is maintained on Brigade (target price: Rs 1,580), DLF (target price: Rs 1,005), Godrej Properties (target price: Rs 2,843), Kolte Patil (target price: Rs 560), Lodha (target price: Rs 1,870), Prestige Estates (target price: Rs 2,000), Signature Global (target price: 1,760), Sobha (Target price: Rs 1,778) and Sunteck (target price: Rs 540).
The brokerage has maintained a neutral on Mahindra Lifespace, Oberoi Realty, and Phoenix Mills.
Among these, the brokerage has given a particular preference for Lodha, Prestige, and Signature Global, citing their “strong growth visibility, geographical diversification, and ability to generate income from multi-assets.”
Frequently Asked Questions
What is the main reason for the slowdown in the real estate sector?
The slowdown in the real estate sector is primarily due to election-related delays, absence of regulatory committees, and slower approvals.
Which cities are seeing healthy rental yields in the real estate market?
Most major cities are offering rental yields of 3-6%, making residential real estate attractive to investors.
What is the projected CAGR in launches by Motilal Oswal's coverage universe from FY25 to FY27?
Motilal Oswal projects a 12% CAGR in launches by its coverage universe from FY25 to FY27.
Which companies has Motilal Oswal given a 'Buy' rating to?
Motilal Oswal has given a 'Buy' rating to Brigade, DLF, Godrej Properties, Kolte Patil, Lodha, Prestige Estates, Signature Global, Sobha, and Sunteck.
What are the key factors driving the growth in the real estate sector?
Key factors driving growth in the real estate sector include healthy EMI-to-income ratios, rising rental yields, and strong demand for branded homes.
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