Real Estate Sector Outlook - Scale-Up In Launches To Exit FY23 On A High Note: Motilal Oswal

Motilal Oswal Report

Inventories across most of the companies under our coverage universe have declined to below 12 months as absorptions have exceeded launches over the last six quarters.

We thus expect launches for our coverage universe to pick-up in Q4 FY23 to a multi-quarter high leading to 42% YoY growth in pre-sales. Operational update reported by a few companies indicates a pre-sales growth of 12%/11% YoY in Q4 FY23/FY23.

According to Knight Frank, demand in top-eight cities has sustained at ~80,000 units in Q4 FY23. Further, with a surprise pause by the Reserve Bank of India, interest rate will unlikely be a dampener on demand from hereon and we expect the industry to grow at 5-10%.

While Mumbai Metropolitan Region, Pune and Hyderabad have posted an increase in inventories, overhang continues to remain under control at 18 months for top eight cities. Hence, the industry will continue to witness gradual price hikes.

We reiterate our constructive outlook on the industry and prefer players with high pre-sales growth potential.

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