After posting a strong show in the January-March 2023 quarter, the financial performance of the listed Indian real estate companies is likely to moderate in the first quarter of FY24, in line with the seasonal trends.
The new project launches across markets are likely to moderate in Q1FY24 while the companies are expected to focus on churning inventories at existing projects.
According to brokerage firm Motilal Oswal Financial Services, the listed real estate companies are expected to report pre-sales of ₹14,600 crore in Q1FY24, up 9% year-on-year (YoY), with the Bengaluru-focused companies anticipated to outperform others.
Overall, the realty firms under the brokerage’s coverage are expected to see net profit growth of 26.8% YoY. However, sequentially, this is expected to see a drop of nearly 40%.
The total sales of these companies during the quarter under review is expected to increase by 10.3% on-year. But, the sales are likely to be lower by more than 20%, QoQ.
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Let us individually take a look at the likely performance of real estate companies during Q1FY24:
Brigade Enterprises: The brokerage house expects the company’s revenue in to remain flat YoY at ₹950 crore but rise 13% on QoQ basis. New bookings for the quarter are likely to increase 8% YoY to ₹880 crore, while EBITDA is likely to reach ₹270 crore with a margin of 27%.
DLF: The real estate major is expected to see an increase of 11% YoY in its revenue for the April-June 2023 quarter. New bookings are likely to normalize to ₹2,000 crore and the company is expected to report EBITDA of ₹460 crore with steady margin during the quarter.
Godrej Properties: The company is likely to post revenue growth of 40% YoY to ₹340 crore, while due to limited launches, the brokerage expects a steady quarter for the company in terms of bookings. However, aided by higher contributions from JV projects, Godrej Properties’s net profit is likely to jump 50% YoY to ₹60 crore.
Macrotech Developers: Motilal Oswal expects the company’s revenue to decline 6% YoY to ₹2,500 crore. The company is likely to achieve pre-sales of ₹3,200 crore in Q1FY24, while its EBITDA may grow 38% YoY to ₹650 crore driven by 800 bps expansion in EBITDA margin.
Mahindra Lifespace Developers: The real estate developer’s revenue is projected to surge 65% YoY to ₹155.8 crore driven by completion of key premium projects.
Oberoi Realty: Its revenue is expected to remain flat at ₹961.7 crore in Q1FY24. New bookings to remain steady in line with the historical run-rate in a non-launch quarter, while EBITDA may decline 14% YoY to ₹424.5 crore due to margin contraction.
The Phoenix Mills: The company’s revenue is likely to rise 34% YoY and EBITDA margin may expand 270 bps with EBITDA reaching ₹453.5 crore in Q1FY24. Its net profit is expected to rise 22.3% YoY.
Prestige Estates Projects: Motilal Oswal expects the company’s revenue to increase 14% YoY and report an EBITDA of ₹522 crore for the quarter. It is expected to report net profit growth of 29.5% YoY.
Sobha: The developer is expected to see a revenue jump of 45% YoY in Q1FY24. Meanwhile, the company’s EBITDA and profits are not comparable due to restatement.
Overall, with interest rates likely to peak out, a large part of the headwinds are now behind for the sector. Absorption for top-8 cities has sustained at around 80,000 units over the last 4-5 quarters and is now expected to pick-up with renewed interests from first time homebuyers.
“Industry growth is likely to be complemented through continued market share gains by large developers aided by increased penetration into at least a couple of more markets. With most of the companies trading above the value of their existing pipelines, we continue to prefer players with an ability to grow faster than the peers through focused business development strategies,” Motilal Oswal said.
The brokerage’s preferred picks in this space are Macrotech Developers, Prestige Estate Projects and Godrej Properties.
Disclaimer: The views and recommendations given in this article are those of individual analysts and brokerage firms. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
