Real Estate Sector Delivers Strong Q1

India’s listed real estate developers reported steady growth in the June quarter, with record pre-sales driving revenues and profits. Pre-sales during the quarter touched ₹4.32 lakh crore, up 45% year-on-year, already achieving 31% of the sector’s full-year target.

This robust demand translated into a 30–40% jump in revenues and a 25–35% rise in profits for several companies. High-margin developers like Oberoi Realty and Phoenix Mills sustained operating margins above 60%, while mid-sized players such as Anant Raj and Raymond also posted encouraging results.

Mutual Funds Remain Wary

Despite the strong financial performance, mutual funds have stayed cautious on real estate stocks. Data from Ace MF shows holdings in Lodha, DLF, and Godrej Properties have remained largely unchanged.

At the AMC level, HDFC MF is 1.5% underweight, SBI MF 0.5% underweight, and Nippon India MF 1% underweight on the sector. Only a few asset managers like Axis MF, Mirae MF, Tata MF, and Quant MF maintain overweight positions.

This divergence highlights how mutual funds are wary of valuations, as stocks of companies such as Sobha, Raymond, and Prestige Estates are already trading significantly above their 10-year historical averages.

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Outlook

While developers are enjoying a surge in demand and profitability, mutual fund caution signals concerns over sustainability and valuations. The coming quarters will be key in determining whether the growth momentum can continue and if institutional investors increase their exposure.

✅ Key Highlights:

• Pre-sales hit ₹4.32 lakh crore, up 45% YoY.

• Revenues rose 30–40%, profits up 25–35%.

• Oberoi Realty, Phoenix Mills sustain 60%+ margins.

• Mutual funds remain underweight despite strong sector performance.

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