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Real estate shares at near 15-year high multiples

New Delhi, Nov 27, 2023
The realty index is up 89 per cent since Mar23 bottom, following strong sales and RBI rate hike pause. Sector valuations (PBx) are now near the 2021 peak multiples, reducing rerating headroom, foreign brokerage, Jefferies said in a report.

Enthusiastic customer response means upgrades are still possible to pre-sales estimates in 2H; though at near 15-year high multiples, room for error for property stocks is limited, the report said. Sector valuations shot upto 2021 peak levels following a broad based rally post RBI rate pause in Mar23, it added.

Festive season bounce has driven Oct23 sales to surge 20 per cent YoY to 50,000+ units levels in Top-7 cities. With inventory levels still declining, and pricing strong, developers are pushing for new launches in 3Q to capitalize on the demand.

A strong 2Q performance (pre-sales value +55 per cent YoY) has taken the sales of our 10-listed developer sample +35 per cent in 1H.

With the strong launches coming through in Nov’23, we believe a record 3Q is likely. We had raised the pre-sales est. for our covered developers by ~7 per cent in 2Q, and continued strong offtake could imply more upgrades ahead, the report said.

Our analysis of data from Propequity for Oct’23 shows that the seasonally strong quarter is off to a good start, following a near record 2Q. Presales are trending +25 per cent YoY by vols (area sold) in Top-7 cities; alongside a 10 per cent YoY blended pricing gain.

YTD’23 sales volumes are up by 25 per cent YoY too and good start to 3Q suggests momentum holding till year end, the report said.(Agency)

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