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Sectoral Overview:

Developers: Shift Towards Premiumisation Continues

* Housing sales in India's top 9 cities fell by 16% YoY in Q3FY26 to 98,019 units, marking the lowest quarterly sales in ~17 quarters. Slowdown was broad-based, with most cities posting declines except Navi Mumbai (up 13% YoY) and Delhi-NCR (up 4% YoY). Traditionally, Q3FY26 records strong sales momentum and new launches driven by the festive season. However, the recent decline reflects a shift towards premiumisation, as proven by value growth despite a contraction in volumes

* At the same time, new housing supply in Q3FY26 also declined by 10% YoY to 88,427 units, except Delhi NCR (up 29% YoY), Navi Mumbai (up 15% YoY) and Chennai (up 9% YoY), with supply contraction observed across cities

* Meanwhile, the average housing prices across India's top seven cities rose by approximately 8% YoY to INR 9,260 per sq. ft., led by Bengaluru, Delhi-NCR and MMR

* SOBHA is our top investment idea, the rationale being robust launches, healthy pre-sales, a strong balance sheet and good execution track record.

Flexible/Manage Office Space: Strong Leasing Environment

* Q3FY26 witnessed an all-time high leasing activity of 20.6 msf, up 20% QoQ. Bengaluru saw its highest-ever quarterly leasing of 8.1 msf, followed by 4.2 msf of Grade A space uptake in Delhi NCR. These two markets accounted for nearly 60% of the leasing activity, highlighting large deal closures and occupier expansion in these cities

* Total office space absorption in 3QFY26 was ~22.2 msf across India’s top markets – Bengaluru, Mumbai and Delhi-NCR led this activity

* Flex office space is evolving beyond start-ups so as to serve enterprise and GCC requirements, increasing average lease sizes and revenue stability. GCCs accounted for ~39% of this absorption; technology, BFSI and flexible space operators were among key demand drivers

* In 2025, office space segment in India leased over 71.5 msf, an increase of 6% YoY. Bengaluru led with 22.1 msf, nearly one-third of demand, while Delhi NCR, Hyderabad, Chennai and Mumbai each recorded about 10 msf or a 13–16% share of the supply.

* Technology companies leased nearly 22 msf of office space in 2025, 37% of the demand, growing their footprint by 32% YoY. Other sectors, such as banking, finance and manufacturing also showed strong interest, that is, over 40% YoY growth. GCCs also played a major role, absorbing nearly 30 msf of office space, accounting for over 40% of the demand.

* SMARTWOR is our top investment idea, the rationale being strong demand, healthy occupancy rate at 90% in mature centres, wellmanaged top line, massive expansion year over year employing the lowest capex cost in the industry.

Q3FY26E Preview: Realty – Developers, Flexible Office Space and Construction

Developers

Q3FY26E Preview: Companies under our coverage (3) are expected to report pre-sales (INR Mn) growth of 2.2/59.2% QoQ/YoY. Collections (INR Mn) are expected to grow by 129.3/86.8% QoQ/YoY.

What to watch out for: Company-specific updates related to progress on launches and business development and absorption of launches.

Stance: We maintain a positive stance on the sector. Within that, growth trends could be different for individual companies depending upon their presence in the market segments (Luxury, Premium and Affordable) with BUY on 3/3 stocks.

Flexible/Manage Office Space

Q3FY26E Preview: Companies under our coverage (3) are expected to report revenue growth of 1.6/30.8% QoQ/YoY, EBITDA margin of 50.8% (vs. 49.1% and 37.8% in 2QFY26 and 3QFY25, respectively) with 5.1/75.6% QoQ/YoY growth, while PAT is anticipated to increase by 23.1/22.4% QoQ/YoY.

What to watch out for: Progress on annual seat addition targets and company-specific updates on order inflow for the D&B segment.

Stance: Supported by strong tailwinds in India’s managed office and flexible workspace market, we remain optimistic about the sector. Our optimism is facilitated by the growth of GCCs, IT services and the expanding domestic start-up ecosystem. We have a buy Rating on 3/3 stocks.

Construction

Q3FY26E Preview: For PSPPL, the quarter is likely to be characterised by stable revenue growth, margin discipline and long-term order book visibility. It is expected to respectively report Revenue/EBITDA growth of 19.1/69.1% YoY. The EBITDA margin is expected to come in at 8.0% (+236 bps YoY).

What to watch out for: Order execution, guidance on EBITDA margin and any possible update on business mix from Adani and non-Adani group companies.

Stance: We have a ‘Reduce’ stance on PSPPL.

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