Residential sales in the crucial Mumbai Metropolitan Region (MMR) are booming. But this would come as a boost to only select listed real estate developers.
In January, the number of housing units registered in MMR rose 12% year-on-year to 12,249, clocking the best-ever registrations for the month, showed government data compiled by Nuvama Research. The value of units surged 31% year-on-year to around ₹16,600 crore.
Macrotech Developers Ltd (Lodha) and Godrej Properties Ltd would be among the beneficiaries even as they are expanding into new geographies. Backed by a robust performance in the nine months to December (9MFY25), both companies are confident of meeting and/or surpassing their FY25 pre-sales guidance, largely driven by new launches.
Godrej Properties clocked pre-sales of ₹19,281 crore in 9MFY25, up 48% year-on-year. It achieved 71% of its FY25 guidance of ₹27,000 crore. This is the highest ever nine-month sales for Godrej. Geographically, for Godrej, MMR bookings more than doubled (up 104%) to ₹5,155 crore for 9MFY25. In the December quarter (Q3FY25), Godrej launched seven new projects and phases across four cities. It is looking to launch a few projects in MMR at Vashi, Bhandup, Carmichael Road and a new phase in Godrej Reserve in Q4. The Worli project launch is most likely in FY26. The company’s management is optimistic about building on the current momentum and expects a pre-sales run-rate of ₹7,700 crore in Q4FY25.
Rival Lodha has set FY25 pre-sales target at ₹17,500 crore and has clocked pre-sales of ₹12,820 crore 9MFY25. High-value markets of south & central Mumbai and Western suburbs led pre-sales growth for Lodha in Q3FY25. The company aims to increase its market share in Mumbai to 20% in FY30 from 10% in FY24.
Lodha launched five new projects last quarter, aggregating 2.7 msf with a gross development value (GDV) of ₹4,180 crore. The management is now targeting launches of ₹7,500 crore in Q4FY25, which should take total FY25 launches to ₹18,000 crore, against initial guidance of ₹12,000 crore.
“The management’s guidance implies Macrotech Developers achieving ₹4700 crore of pre-sales in Q4FY25E (+10% year-on-year). As such, the company has to sell about 15% of its pipeline in order to reach its pre-sales target, which we think is comfortable,” said Nomura Global Markets Research report dated 27 January. On the flip side, poor execution of projects related to the Worli Land Parcel and weaker-than-expected expansion in Pune or Delhi could be downside risks.
In the last one year, the Lodha stock has gained around 13%, beating the Nifty Realty index, which has given negative returns. During this time, Godrej’s stock fell by around 12%.
For Godrej, a key monitorable would be its ability to maintain optimal net debt levels as it continues to invest in new land parcels to drive pre-sales. “With Godrej Properties having given guidance for another ₹20,000 crore of new project additions in FY25 and having achieved ₹23,500 crore in 9MFY25, already exceeding its FY25 guidance, we estimate land capex of ₹7,000 crore in FY25 versus estimated gross operating surplus of ₹6,400 crore and QIP proceeds of ₹6,000 crore,” said ICICI Securities report dated 5 February.
Meanwhile, the recent interest rate cut by the Reserve Bank of India is a sentiment positive for the real estate sector. But on a year-to-date basis, realty stocks have corrected, stroking fears of muted incremental pre-sales growth on a high base amid a broader economic slowdown. “While we remain constructive on demand for real estate, particularly for Grade-A developers, we have limited visibility on price growth over the long-term due to increasing supply and a slowing macro,” said Nomura report dated 27 January.
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