By Pankaj Kumar, Kotak Securities, VP – Fundamental Research
The residential real estate sector delivered mixed performance in Q4FY26. Listed developers under coverage reported pre-sales growth of 16% yoy in Q4, taking FY26 pre-sales to Rs1.37 lakh crore, up 17% yoy but slightly below the 20% growth guidance. Demand moderated during the second half of the year, with H2FY26 pre-sales lower than H2FY25. Industry sales grew 5% in FY26, driven primarily by an 8% rise in pricing, while volumes declined 3%, highlighting that growth has been largely price-led rather than volume-led. Industry volumes have remained largely range bound for the past three years, although larger developers continue gaining market share and expanding geographically. Inventory levels rose modestly to 21 months due to softer sales but remain well below historical averages. Listed developers maintain strong balance sheets with low or negative leverage, supported by healthy cash generation and equity raises, enabling continued land acquisitions and pricing discipline. Planned FY27 launch pipeline of Rs2 lakh crore support expectations of 17% pre-sales growth for our coverage universe. Despite weak stock performance reflecting demand concerns, valuations remain attractive at 4–7x FY27E adjusted EV/EBITDA. Preferred long-term picks are DLF, Brigade Enterprises, Lodha Developers, and Prestige Estates Projects.