Real Estate Sector Check - Third Consecutive Year Of Strong Demand: Motilal Oswal

Motilal Oswal Report

In line with historical trends, Q4 has been the strongest quarter for most of the listed companies among top 14. The cumulative bookings in Q4 FY24 were the highest ever at Rs 344 billion, up 26% YoY/9% QoQ, and likewise, pre-sales reached a new peak in FY24 at Rs 1105 billion, up 41% YoY.

Growth was driven by 35% increase in new launches to Rs 1 trillion of which 53% were absorbed during the year and contributed 60% to pre-sales.

Further, absorption rate (bookings divided by inventory plus launches), improved for third consecutive year and stood at 53% in FY24 versus 48% in FY23 despite a healthy growth of 14% witnessed in blended realization.

The listed universe is set to witness further pick-up in launches in FY25 to Rs 1.4 trillion (up 40% YoY) as most of the players have less than 12 months of inventory now. Hence, despite high base we expect our coverage universe to deliver 26% YoY growth in presales in FY25. If companies sustain the absorption rate clocked in FY24, they would deliver 36% growth and surpass the FY25 pre-sales guidance/estimate by 15%.

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