Ahead of Q4 results, HDFC Securities picks Oberoi Realty, Sobha, Mahindra Lifespaces as top real estate picks

The residential segment continued to witness stable demand, particularly in the mid-income and luxury housing categories.

HDFC Securities picked Oberoi Realty, Sobha, Prestige Estates Projects Limited and Mahindra Lifespaces in its latest research report, saying it preferred mixed use developers with high FY26 growth potential and a large presence in end user driven market.

The analysts at the domestic brokerage in its Q4FY25 results preview, meanwhile, noted the retail consumption is seeing slowdown. "Growth has slowed down due to shift in consumption trends towards travel and high inflation in mid-segment," the report said.

"ESG-compliant assets and hybrid office formats are gaining acceptance, and developers with large annuity portfolios are well-positioned to benefit from the consumption-led revival," it added.

In the report, the analysts highlighted the global macro challenges, adding that the approval challenges are largely solved.

The domestic demand remains intact, however, rising input costs due to potential global tariff wars - especially in steel, cement, etc. could pressure developer margins, it said. Moreover, macro volatility globally may impact MNC-driven leasing in the commercial segment.

Real estate sector is entering a phase of strategic consolidation post a blockbuster FY24. Q4FY25 is expected to reflect a moderation in momentum, driven by delayed approvals, slower conversion of Expressions of Interest (EOIs) to sales and a high base effect.

The Indian real estate sector continues to exhibit robust structural demand, although Q4FY25 may reflect moderation due to certain approval challenges, the report said.

"Pre-sales conversion cycles are elongating owing to delayed decision-making in some markets like NCR whilst demand in other micromarkets like Bengaluru, MMR, and Pune remains stable. We see growth slowing down for NCR as prices are at peak, ticket sizes are at peak and investors to end-user ratio is at peak. Other Southern and MMR markets are driven by higher share of enduser demand in mid-to upper luxury segment, which we expect will grow at 2x of NCR at 15-20% in FY26, aided by stable pricing and recent 50bps interest rate cuts," the report said.

"We expect the aggregate revenue/EBITDA/PAT for the coverage universe to report YoY growth by 5.5/7.5/-3.3%. On an aggregate level, we are expecting EBITDA margin to improve by 57bps YoY," it added.

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