Buy Macrotech & Sunteck; Hold Oberoi Realty & Godrej Prop, suggests Nuvama

Nuvama on Real Estate players: Domestic brokerage Nuvama maintains a positive outlook on the real estate sector, particularly for Mumbai-based developers. Analysts are recommending a ‘Buy’ on Macrotech Developers and Sunteck Realty, citing their expected benefits from strong housing sales in Mumbai. 

“All in all, we argue Mumbai-based developers such as Macrotech Developers (Buy), Oberoi Realty (Hold), Godrej Properties (Hold), Sunteck Realty (Buy) and Rustomjee (not rated) would benefit from strong housing sales in Mumbai,” Parvez Qazi and Vasudev Ganatra of Nuvama said in a note.

The analysts believe that factors like healthy leverage, an increased focus on business development, and the potential for interest rate cuts will boost sales in the city. They also said that favourable valuations will support these Mumbai-based players.

 

What do numbers suggest?

In August 2024, the Mumbai housing market saw a 7 per cent year-over-year increase in registered units, to 11,631. This was the highest number of registrations for August in the past 12 years, despite a 6 per cent month-over-month decrease. 

The overall value of these units reached approximately Rs 17,700 crore, reflecting a 31 per cent year-over-year increase. The average ticket size also rose 23 per cent year-over-year and 6 per cent quarter-over-quarter to Rs 1.52 crore

Year-to-date, registrations have totaled about 96,496 units, up 15 per cent from the previous year, with a sales value increasing 10 per cent year-over-year to roughly Rs 1.3 trillion. 

Additionally, the majority of properties registered in August were in the western and central suburbs (55 per cent and 28 per cent, respectively), with South Mumbai and Central Mumbai making up the remainder.

Homes between 500 and 1,000 square feet are the most popular, accounting for about 49 per cent of registrations, said Nuvama in a note. Apartments up to 500 square feet represent 33 per cent of the total, while those larger than 1,000 square feet make up 18 per cent, it added.

Outlook

Analysts at Nuvama expect continued buoyancy in the market, supported by robust business development goals, increased launches due to improved cash flows, interest rate stabilisation, diversification, and market share expansion. 

Rising wages, more employment opportunities, and a return-to-office trend, analysts opined, are likely to sustain strong home-buying activity.

Stock performance

On the stock front, Macrotech Developers has seen a 7 per cent rise, while Oberoi Realty and Godrej Properties have gained over 3 per cent and 1.8 per cent, respectively in the past month, as opposed to a nearly 6 per cent gain in Nifty Realty index.

However, on Monday, September 2, Macrotech Developers settled 0.05 per cent lower at Rs 1,253.90, Oberoi Realty at Rs 1,761.15 (down 0.62 per cent), and Sunteck Realty at Rs 561.90 (down 1.30 per cent).