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UBS has initiated coverage on DLF and Prestige Estates with 'Buy' ratings, forecasting potential upsides of 18% and 27%, respectively, over the next year. While acknowledging possible near-term softness due to macroeconomic factors, UBS views any dips as buying opportunities, citing multiple tailwinds for growth in the real estate sector. Oberoi Realty received a 'Neutral' rating with a target price of ₹2,230.
UBS has initiated coverage on the real estate sector, recommending 'Buy' for DLF and Prestige Estates, citing the lowest inventory overhang in 15 years and strong affordability. The firm forecasts a 26% annual topline growth from FY24-29, driven by favorable market conditions and reduced leverage among top developers. While acknowledging potential near-term softness, UBS views any dips as buying opportunities, highlighting the sector's resilience and ongoing consolidation.
UBS has initiated coverage of India's property market, projecting a robust growth trajectory driven by strong execution capabilities and healthy balance sheets of key players like DLF Ltd. and Prestige Estates Projects Ltd. The Indian residential market is expected to experience a 15% compound annual growth rate in pre-sales from fiscal years 2024 to 2029, supported by multiple favorable factors.
India's economy grew by just 5.4% in the second fiscal quarter, falling short of expectations and marking a near two-year low. Despite this, the Reserve Bank of India remains optimistic about the agriculture sector and consumer spending, projecting a 7.2% growth for the 2024 fiscal year. Economists predict a slowdown but not a collapse, with growth forecasts for 2025 ranging from 6% to 6.4%.
Home prices in major Indian cities, including NCR and Mumbai, surged by 23% year-on-year, reaching an average of Rs 1.23 crore ($145,707) during the first half of the fiscal year. Despite a 3% decline in unit sales, the total sales value increased by 18%, driven by strong demand for luxury homes. Developers are rapidly expanding to meet this demand, with DLF Ltd. reporting a significant rise in new sales bookings.
DLF Limited's CEO, Ashok Tyagi, expressed confidence in achieving the company's sales guidance for the fiscal year, despite a decline in sales bookings to Rs 692 crore in Q2FY25 due to delays in approvals for new launches. He highlighted a robust pipeline and ongoing activity in the rental business, aiming for a target of Rs 17,000 crore this fiscal year. Approvals for the super luxury project, The Dahlias, have been received early in the quarter, further supporting their optimistic outlook.
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