Global brokerage firm Jefferies, in a note on the real estate sector, said it prefers DLF, Godrej Properties, and Macrotech Developers among listed realty stocks.
“Stocks under our coverage largely trade near their five-year average (upcycle) premium to NAVs and could see a rerating as the rate cut cycle supports valuation expansion and accelerates sales growth,” the brokerage said.
Jefferies mentioned that despite the recent rally, property stocks continue to trade in line with their five-year NAV premiums. It believes that visible sales growth could act as a catalyst for further rerating.
During the 2022-23 rate hike cycle, the worst performers were Godrej Properties (GPL), Macrotech Developers (Lodha), and Prestige Estates (PEPL) — players associated with lower-ticket-size projects, which tend to be more sensitive to interest rates. A reversal of this trend may play out as the year progresses.
Jefferies estimates pre-sales growth will rise by over 5 percentage points year-on-year, crossing 20% in FY26. Large project launches in Q1 lend credibility to these projections, in contrast to the more uneven performance seen in FY25.
The brokerage added that expected rate cuts should benefit the mid- and affordable-housing segments, which are more price-sensitive and positively correlated with developer valuations.
Shares of DLF are trading 0.59% lower, Godrej Properties 0.47%, and Macrotech Developers 0.57% lower on Thursday.
