Jefferies' Greed & Fear: India's property sector stocks are shinning bright amid broader concerns about equity valuations, Christopher Wood said in the Jefferies' Greed & Fear report.
Property sector is still one place where valuation appears 'positively attractive', Wood said. Many property stocks are trading significantly lower below their long-term average valuation, he said, citing 'India Property - Developer Valuations Near 1sd Low' report.
The residential property cycle has further to run, and the best-placed developers remained remarkably under-leveraged and should continue to benefit from the consolidation triggered by the Real Estate Regulation and Development Act of 2016, the report said.
Pre-sales for seven listed developers, whom Jefferies covers, grew by 17% in financial year 2025 and are on track to grow 22% in value terms in financial year 2026.
The combined net debt has declined from Rs 52,000 crore in financial year 2019 to Rs 7,600 at the end of 2025. Jefferies estimates it to be 2,800 crore by the end of the fiscal year 2026, the report said.
There is an absence of anticipated cyclical pickup in the aggregate valuation of Indian equities. The valuations are likely to be increasingly vulnerable, the report noted.
Indian equities are poised to outperform global emerging markets as its position as a reverse artificial-intelligence trade is becoming stronger. In case the AI-led rally revers, it will be negative for Taiwan, South Korea, and China. These countries are accounting for 61.8% of MSCI Emerging Markets Index, while India is responsible for 15.3%.
However, India's IT sector is vulnerable to risks from AI-trade unwinding. Topline growth of the Indian listed IT companies declined to 4% in the financial year 2025 and 1.6% in the second quarter of financial year 2026, which led to de-rating.
The BSE IT index is trading at 23 times one-year forward PE, down from 31 in mid-December.
Bucking the trend, India-based multinational Global Capability Centres increased their contribution to the service sector's expansion. GCCs are also appear to be insulated from the threat of trade wars as US President Donald Trump does not give much attention to the exports of service. His ignorance prevails despite the US-based companies employing large number of Indians in their own country.
Greed & Fear team of Jefferies have heard that there's a possibility that the tariff rate on India may come down to 15% from 50% as a trade deal between the US and India are likely to be finalised soon.
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