Strong demand outlook to benefit Mumbai-based real estate players

The outlook for Mumbai-based real estate players remains strong given the launch pipeline and demand outlook reflected in the registration data for December. The city recorded its highest-ever registrations for December at 12,418 units which was 1 per cent higher year-on-year (Y-o-Y).

 

For the nine-month period (April to December 2024), 1.04 lakh units were registered. This was 9 per cent more on a Y-o-Y basis and was valued at Rs 1.56 trillion. Larger-listed players such as Macrotech Developers (Lodha), Oberoi Realty, and Godrej Properties, among others, are expected to gain market share and improve realisations, given the launch portfolio, superior execution, and premiumisation.

 

For CY24, the registrations hit a 13-year high at 1.4 lakh units on strong housing demand, according to real estate consultancy, Knight Frank India. About 80 per cent of the registrations in December were in the residential segment. The ongoing demand for high-valued properties too should benefit the real estate majors as properties priced at over Rs 2 crore now account for nearly a quarter of registrations as compared with sub-20 per cent levels a year ago.

 

Among the listed players, brokerages are bullish on the prospects of Oberoi Realty. Sharekhan Research believes that the company is slated to benefit from traction in the residential realty segment, especially in the lucrative MMR or Mumbai Metropolitan Region, led by key project launches in Thane, sustained momentum in the Borivali project, expected traction in Mulund projects and contribution from its high-value Three Sixty West project.

 

The company’s healthy balance sheet and strong cash flow generation will help it to improve its land bank and cash in on business development opportunities. Though the stock is trading at a premium to its net asset value, Sharekhan Research expects a 16 per cent upside, considering the strong regional growth tailwinds in the MMR.

 

Macrotech Developers (Lodha), too, would be a major beneficiary of the demand surge in the Mumbai market. The real estate major had reported a 20 per cent increase in sales bookings for FY24 to Rs 14,520 crore. The company hit bookings of Rs 8,300 crore in the first half of FY25 and this was up 21 per cent Y-o-Y and is 49 per cent of its annual guidance. JM Financial Research believes that with a strong pipeline of Rs 10,000 crore across its focused markets, the company remains on track to exceed its FY25 bookings guidance of Rs 17,000 crore.

 

Antique Stock Broking has a ‘buy’ rating on Macrotech Developers with a price target of Rs 1,851, which is 35 per cent higher than the current market price. The brokerage believes that with a robust launch pipeline, large land bank and aggressive business development velocity, the company is expected to achieve sales bookings of Rs 17,500 crore for FY25, Rs 21,000 crore in FY26, and Rs 25,200 crore in FY27.

 

Godrej Properties is another beneficiary of the demand momentum in the Mumbai market. It has achieved 51 per cent of its FY25 pre-sales guidance of Rs 27,000 crore. The company believes that it will surpass both its FY25 launch guidance of Rs 30,000 crore as well as its pre-sales target on the back of strong inherent demand on the ground. Motilal Oswal Research expects the company to surprise on growth, cash flows, and margins, given its strong pipeline and healthy realisations.