Top Real Estate Stocks to Watch: Brigade Enterprises, Prestige Estates, and More
Several top brokerages have maintained a 'Buy' rating on real estate companies such as Brigade Enterprises, DLF, Godrej Properties, Kolte-Patil Developers Ltd, Macrotech Developers Ltd, Prestige Estates Projects Ltd, Signatureglobal (India) Ltd, Sobha, and Sunteck Realty. This positive outlook is driven by robust launch pipelines, effective business development, and timely project execution.
MOFSL (Motherson Financial Services Limited) projects a compounded annual growth rate (CAGR) of 21% and 36% in presales and collections over the fiscal years 2025-2027. Healthy collections are expected to generate operating cash flow of Rs 1.4 lakh crore cumulatively over FY25-27 for its coverage real estate companies. This should help companies maintain a net debt-to-equity ratio below 0.4 times, with many expected to achieve a net cash status.
In its coverage universe, MOFSL maintained a 'Buy' rating on companies such as Brigade Enterprises, DLF, Godrej Properties, Kolte-Patil Developers Ltd, Macrotech Developers Ltd, Prestige Estates Projects Ltd, Signatureglobal (India) Ltd, Sobha, and Sunteck Realty. It has a 'Neutral' stance on Mahindra Lifespace Developers Ltd, Oberoi Realty, and Phoenix Mills Ltd. MOFSL's preference lies with Macrotech, Prestige, and Signature due to their robust growth visibility, geographical diversification, and ability to generate multi-asset income.
Brokerage Nuvama reports a mixed start for the calendar year 2025, with a decline in housing sales by value in March and April before improving by 4% year-on-year (YoY) in May. Launches remained flat YoY but saw a 22% month-on-month (MoM) drop. The unsold inventory is stable at 18 months, with sales volumes decreasing by 7% YoY but increasing by 2% MoM, potentially indicating an end to the downward trend in sales volumes noted after May 2024. Nuvama anticipates healthy sales momentum for organised developers, aided by a strong launch pipeline and RBI rate cuts, although industry-wide soft volumes remain a concern. The brokerage identifies Prestige Estates and Brigade Enterprises as its top picks, both rated 'BUY'.
According to Elara Securities' Biju Samuel, the Indian realty sector has significant potential for outsized returns, stemming from a decadal breakout in late 2023 that promises long-term gains. Samuel highlights the successful test of this breakout at recent lows, rekindling optimism for the sector's secular growth. The historical context shows that the Indian realty boom peaked parabolically in 2007, followed by a market crash in 2008. After 16 years, the Nifty Realty Index returned to mid-2024 highs, with many high beta stocks peaking alongside the election verdict. The subsequent lows retraced half of the previous gains, suggesting a potential for a further sectoral boom.
The recent rally in DLF is seen as a response to an oversold bull market condition. Samuel notes that DLF's retracement of 61.8% of post-COVID gains positions it for a 23% outperformance, with further visibility towards a 45% gain based on channel targets. Prestige Estates Projects also experienced a significant breakout in November 2023, marking the end of a 13-year base and a launchpad for multiple long-term bull market legs. The recent bottom at the decadal breakout point indicates a potential 30% medium-term and 50% long-term outperformance.
Godrej Properties joins DLF and Prestige Estates in the real estate momentum, with an oversold condition suggesting attractiveness at current levels, Samuel said. The relative ratio shows a long-term trendline support, with the next inflection point 12% away, and medium-term outperformance expected to open up to 33%. Overall, brokerages project a promising future for India's real estate sector, supported by strategic developments and market conditions. Companies with strong geographical diversification and balanced residential and commercial portfolios stand to benefit the most from the anticipated growth.
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