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The residential real estate sector continues to scale new high in FY24 with all-India residential sales rising to a lifetime high of 1.1 bn sq. ft (up 20% yoy). Strong sales volume along with healthy price rise of 11% yoy and aggressive inventory liquidation led to inventory levels going down to just 1.3 years of annual sales.
We expect the sales momentum to continue in FY25E given inventory levels at multiyear low and new launches are continuing to garner strong demand. Valuations for most of the residential real estate stocks stand at 7-12X adjusted EV/EBITDA (on FY26E pre sales), which is in the higher end of their past trading range, reflecting the strong underlying business performance and changing investor interest.
Developers continue to guide for double-digit growth, aided by industry growth and market share gains. We remain constructive on the sector owing to the strong operational performance by the players.
