Realtors may post mixed Q4 results as residential demand moderates

According to Anarock, housing sales across the top seven Indian cities declined by 28 per cent in Q4 FY25, driven by soaring residential prices and geopolitical headwinds

India’s top listed real estate developers may report a mixed quarterly performance in terms of sales and revenues in the fourth quarter of 2024-25 (Q4FY25) because some of them missed their pre-sales guidance due to launch delays and moderate residential demand across major cities.

 

“Pre-sales and price growth seen in the past 3 years have strong embedded profits. As such, accounting profits are likely to improve on a year-on-year (Y-o-Y) basis. But collections and operating cash flows are likely to remain tepid at 0-5 per cent due to slower sales velocity while fixed costs and business development commitments remain elevated,” said Mahaveer Jain, director, India Ratings & Research.

 

The January-March period is typically considered a strong quarter for real estate. Until FY24, buyers were incentivised to accelerate home purchases in March to claim an additional year of indexation benefit.

 

But with this year’s tax policy change removing indexation from real estate, there wasn’t a rush to buy in March. Buying decisions could take their own course, according to analysts at HSBC Research.

 

They added that the wealth effect from a weak equity market deferred purchase decisions of homebuyers in Q4, they added.

 

According to property consultant Anarock, housing sales in top seven Indian cities dipped 28 per cent in Q4FY25 as residential prices skyrocketed coupled with geopolitical headwinds.

 

“A slowdown in the real estate sector would directly hit booking volumes. Many developers rely heavily on pre-sales to generate cash flow, so a dip here could hurt top line growth. Developers may delay launches of slow execution to conserve cash, affecting revenue recognition under the project-completion method,” said Anuj Puri, chairman, Anarock group. 

 

Despite the moderation in demand, Macrotech Developers (Lodha) and Godrej Properties reported increases of 32 per cent and 7 per cent in pre-sales for Q4FY25, respectively. Both developers comfortably attained their annual pre-sales guidances.

 

According to Jain of India Ratings, the growth was due to a higher mix of premium (priced over ₹2 crore) units and price growth. “Also, our peer set is dominated by Tier-I players, who are benefitting from consolidation and pricing power.”

 

Godrej Properties successfully launched projects in Noida, Gurugram, and Hyderabad, navigating approval challenges. Meanwhile, Lodha, DLF, and Oberoi Realty played on their sustenance sales and are estimated to report “steady numbers”, according to analysts at Antique Stock Broking.

 

DLF and Oberoi may report a decline or flat sales growth due to high bases and no new launches in Q4FY25. “The net asset value growth will be lower, and we are reducing the embedded earnings before interest, taxes, depreciation, and amortisation multiple for all companies,” they noted.

 

Bengaluru-based developer Sobha missed its annual sales guidance, but its sales for Q4FY25 grew by 22.1 per cent Y-o-Y, driven by the launch of Sobha Madison Heights and Sobha Hamptons in Bengaluru.

 

Sobha’s Bengaluru-based peer, Prestige Estates, also missed its annual guidance due to a delay in planned launches in Q4FY25. It managed to launch four projects: Suncrest, Nautilus, Southern Star, and Spring Heights. 

 

The developers, particularly the Bengaluru-based ones, faced approval challenges early in FY25, which seemed to have eased in Q4.

 

Both firms are likely to see a healthy topline growth, according to Bloomberg estimates. Overall, analysts estimated a “healthy” quarter for real estate players despite the moderation in growth. 

 

“Supply challenges have eased in Q4FY25 with broad-based recovery seen in new launches from listed developers across all key markets — especially Bengaluru and the National Capital Region (NCR),” analysts at JM Financial noted.

 

However, according to Jain, the base effect has started impacting Y-o-Y growth, as FY24 was a year of strong growth. “Since FY22, most grade-A listed developers either achieved or exceeded their stated guidance but the impact of a sharp base effect and a moderation in pricing growth can impact future prospects of the sector,” a report by JM Financial stated.

 

Company	Q4 FY24 Revenue (Adjusted) INR	Q4 FY25 Estimated Revenue (Adjusted) INR	Change
Macrotech Developers (Lodha)	4,018.5 crore	4,414.1 crore	9.90%
Prestige Estates Projects	2,164 crore	3,540.7 crore	63.62%
DLF	2,134.84 crore	2,252.62 crore	5.52%
Brigade Enterprises	1,702.4 crore	1,748.3 crore	2.70%
Oberoi Realty	1,314.77 crore	1,592.53 crore	21.13%
Godrej Properties	1,426.1 crore	1,318.72 crore	-7.53%
Sobha	762.9 crore	1,205.2 crore	57.98%

 

Source: Bloomberg Estimates