Real Estate Stocks Beat Their FY24 Annual Guidance

Most Indian realty companies has outperformed their annual guidance on key operational metrics such as pre-sales growth in fiscal 2024.

Eight real estate firms' business updates revealed that six exceeded their annual guidance in key operational metrics such as pre-sales growth in FY24. Signature Global (India) Ltd. led the way, surpassing its annual guidance by 61.5%, thanks to the successful launch of its first-ever premium housing project in Gurugram.

Ajmera Realty & Infra India Ltd. reported in-line sales value viz-a-viz the guidance.

The company's pre-sales grew 11.2% year-on-year to Rs 7,270 crore in the full year ended March 2024, driven by pre-formal launch sales of Rs 3,600 crore in the fourth quarter for its latest premium housing residential development project, 'DE LUXE-DXP,' in Sector 37D, Gurugram.

The company intends to come out with launches worth Rs 15,000 crore in the coming period, Chief Executive Officer Rajat Kathuria told NDTV Profit in an interview. The company expects to clock pre-sales of Rs 9,500 crore in the current fiscal, implying a growth potential of 25–30%, he said.

The company reported a stellar performance in fiscal 2024, backed by 112% growth in pre-sales, followed by 62% growth in collections. On this higher base, the company expects to continue with these growth numbers, Abhishek Kapoor, group chief executive at Puravankara Ltd., told NDTV Profit.

However, compared to the other real estate firms, the average realisation showed a modest growth of 2% year-on-year to Rs 7,916 per square feet during the year. The growth in realisation remained on the lower side as the Chennai project clocked an average realisation of Rs 3,000 per square feet, Kapoor said.

Godrej Properties Ltd.'s sales booking rose 84% year-on-year to a record of Rs 22,500 crore in the last financial year, compared to its revised guidance of Rs 20,000 crore for FY24, according to an exchange filing.

This was led by four key project launches, including Godrej Zenith in the National Capital Region, Godrej Reserve in the Mumbai Metropolitan Region, Godrej Aristocrat launched in the third quarter, and Godrej Tropical Isle in the second quarter, achieving a booking value of over Rs 2,000 crore during the year.

The company's pre-sales stood at Rs 22,500 crore in FY24, about 26% higher than Ambit estimates and 61% above management’s annual guidance, said Karan Khanna, research analyst at Ambit Capital. The brokerage expects this momentum to continue with build in pre-sales of Rs 23,300 crore and Rs 27,400 crore in FY25 and FY26, respectively.

However, the brokerage maintains a 'sell' rating due to an unfavourable valuation. The target price has been set at Rs 1,820 per share, implying 6 times one-year forward P/B and a downside of 29.6% to Monday's closing price.

In contrast, Jefferies India maintains a 'buy' rating on the company with a target price of Rs 3,175 apiece, implying an upside of 17.3% to yesterday's closing price.

The timely land acquisition and entry into Hyderabad suggest FY25 growth can get over the high base and exceed the FY24 pre-sale run rate.