ICRA expects the area sold in the top seven cities in India to grow by 13-15% in FY2024 and by 10-11% in FY2025, driven by the continued strong end-user demand and healthy albeit moderating affordability. The launches are at a decadal high in FY2024 (higher 15% YOY) and are likely to increase by 9-10% in FY2025.
Consequently, the replacement ratio is estimated to inch to slightly above one time in FY2024 & FY2025. The increased preference from home buyers for larger spaces is expected to continue. This has resulted in a change in the overall segment-wise composition with rising share of the mid and luxury segments to the overall sales across the top seven cities.
The collections of ICRA’s sample set companies are likely to increase by 19-21% in both FY2024 and FY2025, supported by an expected increase in unit sales, hike in average selling prices and a ramp-up in project execution, thus resulting in an improvement in the cash flow from operations.
The gross debt levels may increase by around 17-19% in FY2024 and are expected to remain at similar levels in FY2025, given the increased land acquisition for new business development by developers in addition to the increase in construction finance debt, due to a ramp-up in project execution.
Nonetheless, the leverage, as measured by gross debt/cash flow from operations, is expected to remain comfortable between 1.7-1.75 times in FY2024 and 1.55-1.60 times in FY2025, supported by healthy cash flows.
