Shares of real estate companies are under pressure, with the Nifty Realty index recording its sharpest intra-day fall in the past seven months on growth concerns and expectations of muted earnings for the quarter ended December 2024 (Q3FY25). The Nifty Realty index has declined 6.2 per cent in intraday trade on the National Stock Exchange (NSE) in Monday’s intraday trade, its sharpest fall since June 4, 2024, when it had tanked 13.8 per cent. On August 5, 2024, the Nifty Realty index had slipped 5.32 per cent.
Shares of Phoenix, Macrotech Developers (Lodha), Sobha and Brigade Enterprises were down between 6 per cent and 9 per cent on the NSE in intra-day trades, while shares of Raymond, DLF, Oberoi Realty, Prestige Estates Projects and Godrej Properties were down in the range of 4 per cent to 5 per cent.
At 02:11 PM, the Nifty Realty index, the top loser among sectoral indices, was down 5.97 per cent, as compared to the 1.4 per cent decline in the Nifty 50. Meanwhile, in one week, the realty index has tanked 11 per cent, as against the 2.5 per cent fall in the benchmark index.
Among individual stocks, Macrotech Developers shares tanked 9 per cent to Rs 1,171.30 on the NSE in intra-day trades. In six trading days, the stock has declined 16 per cent after the company reported a single digit 5 per cent quarter-on-quarter (QoQ) growth in pre-sales at Rs 4,510 crore. Collections grew 40 per cent QoQ to Rs 4,290 crore.
Analysts at Antique Stock Broking expect sales bookings in Q3FY25 to be muted for Aditya Birla Real Estate, Prestige Estates, Sobha, and Kolte-Patil Developers due to limited, or a lack of new launches. In contrast, companies like Godrej Properties, Macrotech Developers, DLF, Oberoi Realty, Sunteck Realty, and Brigade Enterprises, are expected to post good numbers due to new launches and the availability of inventory for sustained sales.
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Q4FY25 is expected to see a surge in launches from Aditya Birla Real Estate, Prestige Estates, Sobha, Godrej Properties, DLF, Brigade Enterprises and Kolte-Patil Developers. With developers raising capital through QIP and focusing on growth, and with the balance sheet continuing to be lean for most developers, business development is expected to be heightened going forward, the brokerage firm said in a sector update note.
The real estate sector is poised for significant growth, with an expected compound annual growth rate (CAGR) of 9 per cent between FY25 and FY30E to $1 trillion. This growth trajectory is anticipated to elevate the sector's contribution to India's GDP from 6 per cent in FY17 to 13 per cent in FY25E, driven by rising urbanisation, increasing disposable incomes, and heightened demand for residential, commercial, and logistics spaces, besides a growing need for data centers fuelled by advances in the space, Nirmal Bang Institutional Equities said in a report.
Meanwhile, Anuj Puri, Chairman, ANAROCK Group, says, "2024 has been a mixed bag for the Indian housing sector. Apart from the dampening effect of general and assembly elections, project approvals slowed down markedly; this inevitably impacted new housing supply".
“Compared to 2023, 2024 saw a 21 per cent rise in the average price in the top 7 cities," says Puri. "2025 is unlikely to match this steep growth, though. Average residential price hikes will stabilise in the coming year, though there will be steady growth amid increased input costs and high demand," Free Press Journal reported.