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ICICI Securities Report
The S&P BSE Realty Index has risen sharply by ~39% over the last six months as concerns over rising mortgage rates impacting demand have been addressed by all companies in our coverage universe clocking record residential sales bookings in FY23 (up 43% YoY in value terms).
While H1 FY24 is expected to be muted in terms of launches, all companies in our coverage universe have a large launch pipeline for the festive season and H2 FY24 (September 2023-March 2024).
Hence, we estimate the pan-Indian residential market share for our coverage universe to grow from 24% in FY23 to 27% in FY25E driven by a sales booking compound annual growth rate of 11.5% over FY23-25E.
With developers continuing to follow pricing discipline and aligning price increases in line with inflation/salary hikes (5-7%) while reining in debt levels, any downward revision in mortgage rates going ahead may boost demand further.
Notwithstanding the sharp rally in stocks, we remain constructive on the residential space over FY23-25E.
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