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Developers benefiting from consolidation

Over FY23-25, the acceleration in business development (BD) by large developers, especially beyond their core markets, and the consequent uptick in new launches has resulted in the market share of listed developers rising from 18% to 21%. Healthy organic cash flows and a strong balance sheet is enabling developers to expand in new regions. As per PropEquity, absorption in tier 1 cities in Jul’25 increased to 56msf, up 25% YoY on a favourable base and new launches contributed 16% to overall sales. Bengaluru has outperformed other markets, with absorption in the city up 53%/65% MoM/YoY to 10msf. Our interaction with channel partners in Mumbai, NCR and Bengaluru suggests that the quarter would be impacted by seasonality and there is increased consciousness among buyers on ticket size given the sharp increase in prices in recent years. In markets like Thane and Bengaluru, demand remains very strong in the INR 15mn-25mn segment. We expect the demand for residential units to sustain, atleast in the near term; while there could be a minor moderation, the demandsupply scenario is healthy directionally with high absorption and comfortable inventory levels. With a strong project pipeline and increased outflow on BD, we expect listed developers to outperform the industry and continue to gain market share. Godrej Properties, Sobha and Keystone are our preferred picks.

* Rising consolidation: Over FY23-25, the market share of the top 14 listed developers in bookings has gradually risen from 18% to 21% aided by accelerated business debelopment (BD) by large players, especially beyond their core market. In 1QFY26, the market share of top 14 stood at 29% primarily due to the strong performance of DLF and a Bengaluru-based developer. Led by healthy organic cash flows and a strong balance sheet (especially post the fund-raise), companies are expanding in new regions to gain market share. Among our coverage universe, Lodha and GPL have identified Bengaluru and Hyderabad as their additional focused markets while Sobha is making inroads into Noida and Mumbai. With a strong project pipeline and increased outflow on BD, we expect listed developers to outperform the industry and continue to gain market share.

* Absorption increased 25% YoY in Jul’25: As per PropEquity, tier 1 cities absorption in Jul’25 increased to 56msf, up 25% YoY on a favourable base. On MoM basis, demand improved 16% led by MMR and Bengaluru. Launches continue to lag demand as tier 1 cities witnessed supply of 46msf, down 17% MoM. New launches contributed 16% to overall sales during the month. Bengaluru seems to have overcome the approval-related challenges that impacted its performance last year, with absorption in the city up 53%/65% MoM/YoY to 10msf. Average realisation was flat during the month and inventory was stable at c. 550k units with an overhang of 15 months.

* Takeaways from channel checks: Bengaluru: While the city witnessed a sharp uptick in supply in the month of July, our channel checks suggest there hasn’t been much action from listed developers so far. Among the key developers, Lodha is in the process of launching its third project in the city at Sarjapur and the initial response is strong given the attractive ticket size. Our interactions suggest that there is increased consciousness among buyers on ticket size, given the sharp increase in prices in recent years and demand continues to be strong in the INR 15mn-25mn segment. There is significant interest for a plotted product and a few Bengaluru-based developers are expected to launch multiple projects in this segment during the quarter. Over the last couple of years, the city has witnessed the emergence of many new players like Lodha, Mahindra, Birla group, etc., which has resulted in increased competition among Grade A developers.

Mumbai: The overall market activity remain moderate largely due to lack of key launches. From the coverage universe, GPL has launched new projects at Versova and Navi Mumbai (Sanpada). In Thane, the projects with ticket size of INR 15-25mn are performing better than others. Players like Dosti, Lodha (Amara project) and Adani (largely due to location) are doing well. Rustomjee clocking INR 1bn monthly run-rate at Urbania township in Thane.

NCR: Among all cities, NCR has witnessed the least action on new supply which has also impacted absorption. Among key developers, only GPL has come up a new project at Golf Course extension with ticket size of INR 100m+ (its third project in this location) but multiple new projects have received RERA approval in the last 2 weeks. Overall, the demand has moderated especially in the INR 50mn+ ticket size and hence the lack of launches in this segment.

* Godrej, Sobha and Keystone are our preferred picks: We expect the demand for residential units to sustain, atleast in the near term; while there could be a minor moderation, the demand-supply scenario is healthy directionally with high absorption levels and comfortable inventory levels. At current levels, Godrej (Mar’26 TP: INR 2,600), Sobha (Mar’26 TP: INR 1,850) and Keystone (Mar’26 TP: INR 855) are our preferred picks.

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