BQ Prime's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer BQ Prime's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Motilal Oswal Report
Q4 FY23 turned out to be the best quarter for most of the top-12 listed companies as they delivered 44% YoY growth in pre-sales. In FY23, our coverage companies posted 43% YoY growth in pre-sales. Excluding DLF Ltd., which doubled its pre-sales in FY23, cumulative growth for other coverage stocks was still healthy at 32%.
Growth was driven by an improved churn rate (bookings divided by inventory plus launches), which increased to 48% in FY23 from 43% in FY22 despite a ~200 basis points increase in the interest rate during the year. If companies could sustain the churn rate, they would deliver 32% growth and surpass the FY24 pre-sales guidance by 15%.
Our coverage companies are planning to launch ~100 million square feet of projects in FY24 (versus 66 msf in FY23), driven by an improved churn rate. Blended realisation improved by 17% in FY23 due to a favorable mix and price hikes of 6-7%. Commentaries indicate gradual below-wage-growth price hikes will continue.
With the interest rate hike cycle topping out, we believe the residential real estate cycle is unlikely to face any material headwinds and expect demand to remain healthy for at least next two-three years.
We prefer companies with strong growth visibility through focused business development.
Macrotech Developers Ltd and Prestige Estates Ltd. are our top picks.
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