Top Conviction Ideas: Real Estate & Building Materials by Axis Securities Ltd
Q1FY26 Real Estate Review – Steady Demand with Festive Tailwinds Ahead
The Real Estate sector delivered a mixed set of Q1FY26 results, but underlying momentum remains intact. Our coverage universe reported presales of Rs 17,072 Cr, up ~62%, led by Prestige and SignatureGlobal on the back of spillover launches and sustained demand. Oberoi Realty delivered stable performance with annuity build-up, while Arvind and MICL posted subdued pre-sales due to limited launches. Despite delays, management commentary across companies remains confident on meeting annual guidance, with festive demand expected to be a strong catalyst in H2FY26.
Prestige has already achieved ~41% of its full-year booking target, with its robust launch pipeline well aligned to exceed guidance. Collections across the board improved QoQ, signalling healthy cash flows even in a softer quarter. In the annuity business, Oberoi and Prestige maintained high occupancy levels across offices and retail, with rentals continuing to provide long-term stability.
Q1FY26 Building Materials Review
The Building Materials sector, meanwhile, reported gradual growth, setting the stage for a stronger FY26. Pipes and plumbing drove volumes, MDF benefited from BIS implementation, and faucetware outperformed sanitaryware. While subdued demand persisted in Q1, the festive season and anticipated recovery in home renovation activity are expected to drive a sharp pick-up. Astral and Cera are well-placed for margin recovery, aided by stable polymer prices and demand revival. The government’s GST 2.0 framework and expected policy support further reinforce the medium-term outlook.
Outlook – Growth Levers Intact, Demand Drivers Strengthening
We maintain a constructive stance on both Real Estate and Building Materials. In Real Estate, demand in the premium and luxury residential segment continues to show resilience, supported by rising disposable incomes, urbanisation, and preference for nuclear homes. Upcoming rate cuts and government-led consumption measures are expected to provide additional support. Commercial real estate, too, remains buoyant, with REIT ecosystems, GCC/IT demand, and limited Grade A supply offering structural tailwinds.
In Building Materials, the sector is entering a strong demand phase with festive spending, government expenditure, and real estate completions acting as triggers. Margins are expected to improve as raw material costs stabilise. Long-term demand remains supported by higher disposable incomes, renovation-led consumption, and the government’s push for housing and urban development. With balance sheets strengthening and execution capabilities improving, companies across both sectors are positioned to deliver consistent growth.
Key Monitorables – Critical Triggers Ahead
For Real Estate, the key monitorables include the timing and extent of rate cuts, the pace of new launches in H2, absorption patterns in premium and mid-income housing, and the trajectory of price realisations. In Building Materials, GST 2.0 implementation, polymer price movements, festiveled demand recovery, and government expenditure will be pivotal in shaping performance. Both sectors stand to benefit from policy stability and a favourable macro backdrop, creating an opportune environment for investors.
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