IGI Logo

* Stable Presales; Upcoming Festive Demand is Lucrative

* Decent Pre-sales in a Relatively Slow Quarter: In Q2FY26, our coverage universe reported pre-sales growth of ~14% YoY, amounting to ~Rs 10,100 Cr. This growth was primarily supported by healthy launches and sustenance sales traction in Prestige and Signature, which performed in line with expectations. Arvind and MICL delivered decent performance despite limited launches and slower sustenance sales during the quarter. Oberoi posted flattish growth, aided by annuity build-up. Launch activity remained subdued, but the overall financial year outlook remained positive for all players.

* Growth Guidance Remains Intact: Despite several companies falling short of their launch schedules in H1FY26, management commentary remains confident on achieving yearly guidance. Arvind, Signature, and MICL expect to meet their annual booking targets, supported by festive demand and an anticipated uptick in H2FY26. Prestige has already achieved ~67% of its full-year target and is on track to surpass its guidance by the end of the year. Business development remained robust for Prestige and Signature, supported by a healthy launch pipeline that aligns with their growth strategies.

* Healthy Balance Sheet: Most companies from our coverage universe have maintained a net debt/equity ratio of less than 0.5x. Companies have a healthy cash flow generation along with access to funds at a decent rate for further business development. This will lead to a robust pipeline for these companies for the upcoming H2FY26, and they are geared up for launches in the festive season.               

 * Outlook & Guidance: The overall performance of the coverage universe was largely in line with expectations. For FY26, estimates are retained across the portfolio. The outlook for premium and luxury residential remains cautiously positive, with new launches accompanied by sustained sales continuing to be the key driver of growth for the sector.

* Arvind Smartspaces Ltd: Arvind’s bookings stood at Rs 432 Cr, reflecting a 147% QoQ growth and 7% YoY decline. Collections for the quarter were at Rs 236 Cr, down 5% YoY. Revenue for the quarter was Rs 141 Cr, down 47% YoY, EBITDA at Rs 30 Cr, down 55% YoY, and PAT stood at Rs 18 Cr, down 58% YoY. This is mainly due to no new projects near completion or revenue recognition threshold. The company reported operating cash flows of Rs 125 Cr for the quarter, and net debt stood at Rs 32 Cr.

* Embassy Office Parks REIT Ltd: The company reported revenue of Rs 1,124 Cr in Q2FY26, up 19% YoY. EBITDA stood at Rs 868 Cr, with margins at 77.2%. PAT came in at Rs 232 Cr, up 49% YoY. Distribution stood at Rs 617 Cr, translating to a DPU of Rs 6.5/unit. Leasing activity remained strong, with 1.5 Mn sq. ft. leased across 20 deals to leading GCCs and corporates. Portfolio occupancy increased to 93% by value, with a development pipeline of 7.2 Mn sq. ft. in Bengaluru and Chennai at attractive yield costs.

* Man Infraconstructions Ltd: The company reported revenue of Rs 183 Cr, down 47% YoY. Its EBITDA stood at Rs 41 Cr, down 51% YoY, with margins of 22% vs the previous year's 24.4%. The net profit for the quarter stood at Rs 58 Cr, down 25% YoY. For the quarter, pre-sales stood at Rs 492 Cr, covering 0.15 Mn sq. ft., with collections amounting to Rs 234 Cr.

* Oberoi Realty Ltd: The company reported Q2FY26 revenue of Rs 1,779 Cr, up 80% QoQ and 35% YoY, mainly due to Elysian crossing the revenue recognition threshold. It posted EBITDA of Rs 1,020 Cr with EBITDA margins of 57.4%, against Rs 520 Cr and margins of 52.7%. It reported PAT of Rs 749 Cr, up 28% YoY. Pre-sales stood at Rs 1,299 Cr, largely driven by the Elysian and 360 West collections, which together contributed Rs 1,353 Cr.

* Prestige Estates Projects Ltd: The company reported revenue of Rs 2,432 Cr for the quarter, up 5.5% YoY. EBITDA and PAT stood at Rs 910 Cr and Rs 457 Cr, respectively, reflecting growth of 45%/95% YoY. This was mainly driven by expansion in margins. EBITDA margin was at 37%, witnessing a 1,002 bps increase YoY. Bookings for the quarter stood at Rs 5,082 Cr (PG’s share), broadly in line with estimates and the company’s guidance.

* SignatureGlobal India Ltd: The company reported revenue of Rs 338 Cr for Q2FY26, down 55% YoY, with EBITDA at Rs (74) Cr (margins: -21%) and PAT at Rs (47) Cr, compared to Rs 4 Cr in the previous year. Pre-sales stood at Rs 2,020 Cr, and collections at Rs 920 Cr, with around 9 Mn sq ft of projects nearing completion during the period.

* Growth Levers Intact; Robust Demand

Subdued Quarter with Mixed Performance; Strong Upcoming Festive Outlook

* Real Estate: Despite the challenging environment, several companies recorded strong project launches. Demand in the premium and luxury segments continues to drive growth momentum. Rising disposable incomes and the increasing prevalence of double-income households have sustained demand for mid-income housing and nuclear homes. A rate cut environment remains favourable for the sector, with another cut anticipated. The government’s proposed reduction in GST 2.0 is expected to support consumption expenditure, while the spillover of government spending into FY26 could indirectly benefit real estate demand. Urbanisation is also likely to accelerate in the coming years, creating incremental demand in Tier 2 and Tier 3 cities.

* Annuity: The annuity business reported healthy growth across companies. Oberoi and Prestige recorded occupancy levels of nearly 90% in their commercial offices and 99% in retail outlets. Demand for commercial spaces is rising, supported by a) Strong demand from GCCs/ITs and BFSI, b) Long-term cashflow with 3-5 year escalation clauses, c) Favourable REIT ecosystems such as Embassy, Brookfield, and Mindspace, d) Limited availability of grade ‘A’ office spaces, and e) Rentals offering a hedge against inflation.

For More Axis Securities Disclaimer https://simplehai.axisdirect.in/disclaimer-home

SEBI Registration number is INZ000161633