The momentum in the first half of the fiscal year remained equally strong, with pre-sales rising 44% year-on-year in the first half of the year, already achieving 53% of the annual target of around Rs 1.4 lakh crore, which itself represents a healthy annual growth outlook of 20%.Kumar notes that this strong performance was led by major developers such as DLF, Godrej Properties, Sobha and Prestige Estates, all of which continue to see solid demand in key markets.
This is in stark contrast to the broader sector, which posted a more modest 11% year-on-year revenue increase in Q2FY26.
Importantly, he highlights that the growth of this sector was entirely price-driven as volumes remained stable at 23.6 crore sq. ft. Among major real estate markets, Bengaluru and Hyderabad bucked the trend with volume growth of 24% and 11% year-on-year respectively, while MMR and NCR saw a 10% decline in volume. Stock conditions remain healthy. As Kumar notes, the national inventory is at just 1.6 years of lagging sales, indicating comfortable supply levels and disciplined new launches by developers. This discipline has contributed significantly to the price stability of the sector and increasing pre-sales.
Looking ahead, Kumar says demand in the higher-end residential segment will see a moderate cooldown, largely due to sharp price increases in recent quarters and softer sentiment among buyers linked to the IT sector.
However, he reiterates that the medium-term outlook for the housing cycle remains strong, supported by favorable demographic developments, rising incomes and a structural shift towards organized brand developers.
The valuations of leading players also remain attractive. According to Kumar’s analysis, developer stocks trade at an adjusted EV/EBITDA (2027E) of 7 to 11x, which he considers reasonable given the industry’s earnings trajectory, the continued market share gains of listed players and their expansion into newer micro markets.
In terms of stock preferences, Kotak Securities remains constructive on the sector. Kumar highlights DLF (BUY, Fair Value Rs 1,020) and Lodha (BUY, Fair Value Rs 1,455) as top picks, while also maintaining a positive view on Prestige Estates (ADD, Fair Value Rs 1,900).
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With fundamentals strengthening and leading developers consistently outperforming the broader market, the residential real estate segment continues to offer investors attractive medium-term opportunities.
(Disclaimer: Recommendations, suggestions, views and opinions expressed by experts are their own. These do not represent the views of the Economic Times)
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