Nifty Realty marks all-time high today; Morgan Stanley says relative outperformance due to pre-sales momentum

Even as the headline indices are trading lower after record high levels scaled yesterday (April 1, 2024), Nifty Realty marked its all-time high today of 950.85. On a year-to-date basis, the index has risen by a sharp over 21 per cent, while over one year, the index zoomed 143 per cent.

Of the 10 stocks constituting the index, 8 shares traded with gains, while two blinked in the red. Prestige Estates Projects was up over 5 per cent at Rs 1,330.7, while other stocks, including the likes of Godrej Properties, Oberoi Realty, and The Phoenix Mills, traded with gains between 1-3 per cent.

Meanwhile, global brokerage Morgan Stanley is of the view that relative outperformance in real estate companies can be attributed to pre-sales momentum. Accordingly, the brokerage has raised the target price for real estate companies considering revised pre-sales. 

Also, the brokerage has slashed the sector’s FY25 guidance to 10-20 per cent year-on-year (YoY) as against the actual growth of 30-40 per cent logged in the previous fiscal year. Besides, the foreign brokerage maintains that as pre-sales momentum slows, the market will likely focus on RoE, i.e. return on equity. 

In terms of pre-sales on a year-over-year basis, the brokerage sees Prestige Estates and Godrej Properties as having faster growth. Conversely, on the RoE front, Macrotech Developers and Oberoi Realty rank better. 

Also, on the sidelines a report by