The real estate sector has clocked 20% YoY growth in sales at 1.1 billion sq ft in FY24, scaling new peaks, maintained Kotak Institutional Equities while stating that they maintain a constructive stance on DLF, Signature Global and Brigade as these stocks offer attractive entry points.
“All-India residential sales rose to a lifetime high of 1.1 bn sq. ft (20% YoY) in FY2024, with average realisation rising to Rs7,575/sq. ft (11% yoy). 4QFY24 also saw the highest-ever quarterly sales of 295 mn sq. ft (17% yoy, 1% qoq),” says a report by Kotak Institutional Equities.
Commenting on the stock rally, the domestic brokerage said the underlying business performance is reflected in the rally and they remain constructive as the valuations for most residential real estate stocks stand at 7-12X adjusted EV/EBITDA (FY2026E), which is the higher end of their past trading range reflecting a changing investor interest.
Strong sales volume, coupled with healthy price improvement (11% YoY) and aggressive inventory liquidation (82 mn sq. ft in FY2024), has meant that inventory levels are down to just 15 months. “Extant inventory is at multi-year lows and new launches are continuing to garner strong demand; we expect the sales momentum to continue unabated in FY2025E,” said Murtuza Arsiwalla, analyst at Kotak.
FY2024 pre-sales rose to Rs 98,700 crore (41% YoY) wherein Godrej, Prestige, Signature and Brigade had the highest pre-sales growth, followed by Sobha and Lodha. Developers continue to guide for double-digit growth, aided by industry growth and market share gains, said Kotak in its report.
