Real Estate Sector Update : FY27 growth to normalize; select players to outperform by Emkay Global Financial Services Ltd
Pre-sales growth of 18 listed players moderated from 43% YoY in FY23 to 17% in FY26, reflecting normalization after the strong FY22–25 upcycle. FY27 pre-sales growth for these listed developers is expected to moderate further to 10–15%, with clear divergence across companies. Growth for most listed players will continue to be driven largely by consolidation-led market-share gains. We expect SOBHA, Mahindra Lifespace Developers (MAHLIFE), and Arvind Smartspaces (ARVSMART) to significantly outperform, with >25% pre-sales growth. Prestige Estates (PEPL), Lodha Developers (LODHA), Godrej Properties (GPL), Keystone Realtors (RUSTOMJE), and Brigade Enterprises (BRGD) are expected to deliver moderate pre-sales growth of 15–20%. Overall, both volume and price growth are expected to remain moderate, with growth primarily driven by consolidation effects and company-specific expansion strategies. Regionally, Noida and Bengaluru are expected to see strong absorption, MMR should remain resilient, while Gurugram may witness moderation.
Divergence across developers and regions
Growth outcomes varied meaningfully across developers in FY26, with larger players maintaining steady expansion and mid-to-smaller players outperforming on sharper relative growth. PEPL, Puravankara (PURVA), and SOBHA stood out with higher FY26 pre-sales growth (76%, 48%, and 30% respectively), aided by a weak FY25 base. Regionally, Bengaluru saw heightened absorption, while Noida/Greater Noida also witnessed strong demand. However, listed developers continue to have limited supply exposure in Noida/Greater Noida, resulting in lower contribution despite robust underlying demand. MMR and Pune reflected more balanced absorption trends. Going forward, we expect divergence to persist across developers, with Bengaluru and Noida expected to see strong demand, MMR remaining resilient, and Gurugram likely to stay muted. Performance will continue to be driven by company-specific launch pipelines, scale advantages, and market presence.
Healthy balance sheets
Most developers ended FY26 with strong balance sheets, supported by robust collections, prudent capital allocation, and improving cash flows. Leverage remains comfortable across the sector, despite aggressive business development activity. DLF (DLFU), Oberoi (OBER), SOBHA, RUSTOMJE, KPDL, and MAHLIFE (including JV assets) remain net cash positive. Other developers such as BRGD (residential segment), ARVSMART, and Sunteck (SRIN) have negligible net debt. While LODHA targets its DevCo to be debt free, ABREL is expected to be net debt free once its paper business sale materializes. Only PEPL and KALPATARU have debt levels on the higher side. PEPL’s D/E is at 0.65x and not expected to go up in FY27.
FY27 outlook: Normalization with select outperformance
While we expect the overall market to move into a slower growth phase in FY27, listed developers should continue to outperform the broader market due to consolidation, branded demand shift, and premium segment resilience. However, growth will be more selective and driven by execution strength rather than broad-based demand expansion.
MAHLIFE and SOBHA expected to continue with the momentum
We like MAHLIFE, SOBHA, and LODHA, given their strong growth visibility, robust mediumterm pipeline, and balance sheet strength. MAHLIFE and SOBHA are expected to be key outperformers in FY27, supported by a healthy project pipeline; both offer strong mediumterm visibility, with pre-sales CAGR of ~20–25% over the next 3–4 years. We expect MAHLIFE to achieve ~Rs100bn in annual pre-sales by FY30, while SOBHA is also likely to sustain 20– 25% pre-sales CAGR over the medium term. Among large-scale developers (>Rs150bn pre-sales base), we prefer LODHA for its calibrated growth strategy and execution discipline. We expect it to deliver ~17% pre-sales growth in FY27 and sustain 10–15% CAGR over the next 4–5 years. Overall, we prefer developers with strong balance sheets, diversified geographical presence, visible growth pipelines, and a proven execution track record
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