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* 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.

* Gradual Growth; Setting Stage for Robust FY26

* Subdued Growth for Polymers: In our coverage universe, gradual growth was observed for this quarter. This was driven by improved product mix and volume growth in pipes and plumbing, especially for Astral and Prince. The delay in ADD for PVC Resin in the month of November, with a rescinded BIS mandate on several polymers, suggests that the government is not favouring ADD. This, combined with subdued demand and lack of channel inventory confidence, may limit growth. An uptick in H2FY26 will be a key monitorable for further growth in these companies.

* MDF & Sanitaryware: MDF benefited from BIS implementation. MDF reported good volumes, though sustained demand is yet to be confirmed. Management is focused on improving costs at higher utilisation levels to improve overall profitability. Volumes for plywood grew, but saw a downward price revision.

* Retail Demand: Faucetware and sanitaryware saw YoY growth in volumes, although the retail channel saw a slow pickup. Project business witnessed decent growth while end-user demand remains in a gradual recovery phase, with the festive season likely to act as a catalyst for real demand growth. Margin improvement is likely once retail demand sees growth.

* Outlook & Guidance: The overall performance of our coverage universe was largely in line with expectations, with Astral showing outperformance. A demand pickup is anticipated post-festivities, a period traditionally strong for home renovations. Government expenditure is expected to rise gradually, and catalysts such as the 8th pay commission and potential rate cuts should unlock further value for the sector. Rising disposable incomes and the recovery of real estate project completions remain key monitorables. We retain our estimates for the companies under coverage as their long-term outlook continues to remain positive.

* Financial Performance: Building Materials

* Astral Ltd: Astral’s performance for the quarter was a beat on all fronts, driven by strong volume growth. It reported revenue of Rs 1,577 Cr, up 15% YoY, beating our estimates. Gross margins went up 72 bps YoY at 39.6%. Reported EBITDA stood at Rs 257 Cr, reflecting a 22% YoY growth, with EBITDA margins at 16.3%, up 95 bps YoY. PAT came in at Rs 135 Cr, up 24% YoY. Plumbing revenues grew 16%, with volume growth of 21% YoY, a 4% drop in realisations, and EBITDA margins at 19% versus 18.4% YoY. The Paints and Adhesives business posted a 14% YoY revenue increase, with EBITDA margins at 12% compared to 10.3% in the previous year.

* Cera Sanitaryware Ltd: Cera has divested from 2 of its subsidiaries and now acts as a standalone company; hence, all its figures, current and forward-looking, have been revised to standalone numbers. Cera reported Revenue of Rs 488 Cr, flat YoY. Gross margins were down 172 bps YoY, due to an increase in input costs. The reported EBITDA stood at Rs 67 Cr, declined by 4% YoY, with a marginally lower YoY EBITDA margin of 13.8% vs 14.2% in the previous year. The company reported PAT of Rs 57 Cr, down 17% YoY. This decline in PAT was driven by a one-time deferred tax income being recognised in Q2FY25. Furthermore, increasing COGS and the absence of price revision impacted the bottom line. For segment revenue, Sanitaryware/Faucetware/Tiles/Other contributed 47%/40%/11%/2%, respectively. Sanitaryware showed flat growth, while faucets showed a declining growth as a function of a high base for the previous year (price increase), but saw strong volume trends. Wellness reported 10% growth, while tiles declined by 34% YoY.

* Greenply Industries Ltd: Greenply reported revenue of Rs 689 Cr, up 7.5% YoY, which is in line with our estimates. The overall demand scenario in the industry saw recovery for the first two months of the quarter. Gross margins were down by 525 bps YoY. The reported EBITDA stood at Rs 57 Cr, showing a de-growth of 1.5% YoY, with a lower EBITDA margin of 8%. The company reported PAT of Rs 16 Cr, down 9% YoY. During the year, its MDF volumes saw growth of 16% YoY, whereas the plywood business saw a 7% YoY growth. Segment revenue for the Plywood business stood at Rs 542 Cr, up 5%YoY, and for the MDF business stood at Rs 147 Cr, which was flat YoY.

* Prince Pipes & Fittings: Prince reported revenue of Rs 595 Cr, down 4.4% YoY, missing estimates. The overall industry demand saw a slow recovery amid volatile polymer prices. Gross margins expanded by 127 bps YoY. Reported EBITDA stood at Rs 52 Cr, up 20.6% YoY, with an EBITDA margin of 9.3%, a 192 bps YoY improvement. The company reported PAT of Rs 15 Cr, flat YoY. During the quarter, volumes remained flat YoY at 42,761 MT, reflecting a higher contribution from value-added products.

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