HSBC sees highest upside in this real estate stock as India awaits mega home launches in Q1 2025 – CNBC TV18
| Company | Value | Change | %Change |
|---|
The brokerage has also retained its hold call on Oberoi Realty as it sees impending interest rate cuts and launches supporting stock performance.
Among its real estate stock picks, HSBC expects the maximum growth in Godrej Properties shares at 30%, followed by Sobha in which it sees a potential upside of 28%.
| Stock | HSBC rating | Target price | Upside |
| DLF | Buy | 1010 | 17% |
| Godrej | Buy | 3700 | 30% |
| Oberoi | Hold | 2050 | -4% |
| Sobha | Buy | 2150 | 28% |
Reflecting on the real estate sector, the HSBC Global Research said the launches in Q1 of 2025 shall come after a strong ‘upgrade’ demand in the premium segment, and developers will need to pivot towards more mid-income housing as luxury housing hits a high base.
The past four years have been dominated by “upgrade” demand, serving developers well to achieve better pricing. “We think another notable preference for high-rises in the Indian economy has increased the addressable market for developers,” said HSBC in the note.
It also explained that weak H1FY25 pre-sales were driven by poor launches, due to approval-related issues. However, it expects some of the issues to be resolved and for developers to attempt major launches in calendar Q1 to meet their FY25 pre-sales guidance.
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While underlying demand driven by end-users and investors remains intact, the high base will start impacting the pace of growth, the brokerage cautioned.
A cause of concern that HSBC has cited is that if the approval cycle remains weak, companies may need to cut growth guidance for FY26 pre-sales to the high-single to low-double digits.
“We feel investors are still focussed on pre-sales and, hence, any slowness could adversely impact stock performance.”
HSBC noted that real estate stocks tend to be more sensitive to interest rates and could benefit from rate cuts in 2025. It expects investors to look for companies’ ability to sustainably scale up their business via new launches and by improving collection run-rates and operating cash flow.
Also Read: Aadhar Housing Finance aims for 22-24% loan growth over three years
