India’s housing market is thriving due to population growth, economic strength, and demand. Q1 2023 saw a 4.56% rise in house prices, though inflation-adjusted figures showed a 1.42% drop. Bangalore had a 16.3% YoY price increase, while demand stayed strong, with Q2 2023 home sales up 8% compared to last year.
Residential construction increased by 11% YoY, launching 113,770 new units in Q2 2023. RERA regulations boosted market confidence, and the “Housing for All” initiative was extended to tackle affordable housing shortages.
India’s economy grew 6.1% in Q1 2023, fueled by private consumption, exports, and manufacturing. The Asian Development Bank forecasts 6.4% and 6.7% growth in 2023 and 2024. Despite rising interest rates, tax breaks and subsidies support property demand.
In the realm of investment, real estate has traditionally been acknowledged as a dependable avenue for generating substantial profits. In recent times, the Indian real estate market has undergone a remarkable transformation, instigated by a variety of factors.
With this surge in demand, the focus is now sharply directed towards real estate stocks, presenting investors with a captivating chance to engage in this promising sector.
This article spotlights the prime real estate stocks in India that have captured the attention of investors.
Real Estate Stocks Sector: Overview
The real estate equities sector in India is currently undergoing swift expansion, presenting outstanding investment prospects. This expansion is propelled by the forces of urbanisation, escalating incomes, and government initiatives.
Second and third-tier cities have risen as alluring investment hubs, revealing fresh trends and opportunities. The commercial real estate domain has undergone significant growth, encompassing office spaces and collaborative work facilities.
In the majority of markets, the residential sector maintains its stability, while concurrently, there is conspicuous expansion observed in retail, hospitality, and industrial real estate. The interplay between supply and demand dynamics, regulatory structures, and the overarching economic climate collaboratively mold the panorama of the industry.
Monetary policies and budgetary strategies are strategically tailored to secure stability and cultivate a sustainable and economical housing environment. These measures further fortify the growth trajectory and the enduring potential of this sector.
Top Real Estate Stocks to Buy in India
G R Infraprojects Ltd
Established in 1995, G R Infraprojects Ltd operates as a comprehensive road Engineering, Procurement, and Construction company (EPC). It boasts a rich history in designing and executing diverse road and highway ventures across 15 Indian States. The company’s primary focus lies in managing civil construction initiatives through the EPC and BOT (Build Operate Transfer) frameworks, primarily within the road sector.
Presently listed as G R Infraprojects Limited (NSE: Grinfra), we embarked on our journey with a commitment to excel in the realm of infrastructure. Our roots trace back to 1965 when GR Agarwal initiated a modest infrastructure development venture to construct roads connecting villages in Rajasthan. Today, the company boasts a storied legacy of engineering brilliance, encompassing diverse segments such as road EPC projects, HAM projects, BOT projects, Highways, Bridges, Culverts, Flyovers, Airport Runways, Railways, Metros, Tunnels, and Power Transmission.
- Market Cap – ₹ 12,820 Cr.
- Current Price – ₹ 1,326
- High / Low – ₹ 1,446 / 930
- Stock P/E – 8.84
- ROE – 26.3 %
The company has achieved a commendable annual profit growth of 29.2% over the past five years. It maintains a strong track record of Return on Equity (ROE), with a 24.1% ROE over the course of three years. The number of days debtors take to pay has shown improvement, decreasing from 23.1 to 17.8 days. Despite the company consistently reporting profits, it has refrained from distributing dividends.
Oberoi Realty Ltd
Based in Mumbai, Oberoi Realty Ltd operates as a real estate development firm. It constitutes a component of the Oberoi Realty Group, dedicated to advancements in various sectors including residential, office spaces, retail, hospitality, and social infrastructure.
Their brand’s transformation is rooted in innovation in offerings, contemporary architecture, meticulous project execution, and top-tier construction quality. By collaborating with the finest talents in both global and Indian contexts, they stay attuned to evolving global and national trends. Outsourcing work to leading international and domestic consultants in architecture, design, engineering, and construction has enabled them to achieve the scalability required for large-scale developments.
- Market Cap – ₹ 39,613 Cr.
- Current Price – ₹ 1,089
- High / Low – ₹ 1,150 / 790
- Stock P/E – 21.7
- ROE – 16.6 %
The upcoming quarter is anticipated to yield positive results for the company. Over the past five years, the company has achieved an impressive compound annual growth rate (CAGR) of 32.6% in profits. The stock is currently valued at 3.27 times its book value. There seems to be a relatively low tax rate in place. In terms of Return on Equity (ROE), the company has recorded a modest 12.1% over the last three years. There’s a possibility that the company is capitalizing the interest expenses. The duration for which debtors take to settle their payments has seen an increase, rising from 45.1 to 95.6 days.
NBCC (India) Ltd
Established in 1960 under the Government of India’s purview, NBCC has its headquarters located in Delhi. Presently holding the prestigious Navratna CPSE status, it has ascended as a preeminent leader within the construction industry. This accomplishment is underpinned by its diverse capabilities, innovative outlook, steadfast dedication to top-tier quality, on-time project execution, and a committed workforce.
The company operates across three principal domains: Project Management Consultancy (PMC), wherein it engages in a variety of projects encompassing government redevelopment efforts and pioneering endeavors across sectors; Engineering Procurement and Construction (EPC), focusing on specialized markets and constructing structures like chimneys and cooling towers for the power sector; and Real Estate Development, involving the creation of comprehensive residential and commercial complexes for both government and public use.
- Market Cap – ₹ 8,581 Cr.
- Current Price – ₹ 47.7
- High / Low – ₹ 49.5 / 29.8
- Stock P/E – 24.0
- ROE – 19.3 %
The company has successfully diminished its debt burden. The company’s debt situation is nearly non-existent. Consistently, the company has sustained a robust dividend payout ratio of 44.4%. The company’s sales growth over the last five years has been lackluster, amounting to only 2.67%. There are contingent liabilities totaling Rs. 2,588 Crores associated with the company.
Prestige Estates Projects Ltd
Prestige Estate Projects initiated its operations as a partnership firm on April 1, 1986, under the name “Prestige Estates and Properties” in accordance with the Indian Partnership Act, 1932. The original partners included Late S Razack, Irfan Razack, Rezwan Razack, and Sameera Noaman. The firm’s name was subsequently changed to “Prestige Estates Projects” on May 12, 1997, and it transitioned to a private limited company under the Companies Act, 1956, on June 4, 1997, becoming “Prestige Estates Projects Private Limited.” With this transformation, all assets and business of the initial partnership were transferred to the company.
On November 10, 2009, the company obtained its public limited company status and adopted the name “Prestige Estates Projects Limited,” which was reflected in a fresh Certificate of Incorporation issued by the RoC. The driving force behind the company’s promotion includes Irfan Razack, Rezwan Razack, and Noaman Razack. With a commendable 23-year track record in real estate development, the company has established itself as a prominent player in south India. Having successfully completed 142 real estate projects spanning approximately 27.09 million sq. ft., Prestige Estates Projects boasts a diverse portfolio that encompasses residential, commercial, hospitality, and retail segments within the real estate industry.
- Market Cap – ₹ 23,258 Cr.
- Current Price – ₹ 580
- High / Low – ₹ 616 / 391
- Stock P/E – 31.6
- ROE – 7.66 %
Prestige Estate Projects is poised to deliver a strong performance in the upcoming quarter. However, it’s worth noting some aspects that warrant attention. Over the past five years, the company’s sales growth has been lackluster, standing at 8.62%. Additionally, the company has demonstrated a relatively low return on equity, with a figure of 6.90% over the last three years. It’s important to consider that the reported earnings include an additional income of Rs. 782 Crores.
Phoenix Mills Ltd
Headquartered in Mumbai, Maharashtra, India, Phoenix Mills Ltd functions as an investment holding enterprise. Their scope of engagement spans diverse real estate pursuits, encompassing the development, implementation, promotion, management, and transaction of assets in the realms of shopping, entertainment, commerce, living spaces, and hospitality.
Serving as an investment holding entity, Phoenix Mills Ltd presents an expansive array of real estate assets tailored to various sectors, including retail, entertainment, commerce, and living spaces. Their projects strategically occupy prime locations, gaining recognition for their exceptional construction and design quality.
- Market Cap – ₹ 30,682 Cr.
- Current Price – ₹ 1,718
- High / Low – ₹ 1,792 / 1,186
- Stock P/E – 35.9
- ROE – 11.4 %
Phoenix Mills Ltd is projected to perform well in the upcoming quarter, reflecting positive expectations. Over the past five years, the company has demonstrated strong profit growth, achieving a compound annual growth rate (CAGR) of 29.8%. This growth has been accompanied by a consistent dividend payout ratio of 18.6%. Impressively, the duration for debtor payments has seen an enhancement, reducing from 72.2 to 33.0 days. Additionally, the company’s stock is currently trading at 3.75 times its book value.
Nevertheless, the company’s sales growth over the last five years has been lackluster, registering only a 10.3% increase.
Similarly, the return on equity for the past three years has been relatively modest at 6.46%. The reported earnings encompass a supplementary income of Rs. 722 Crores. In contrast, the holding of the company’s promoters has experienced a decline of 11.8% over the same three-year period. Furthermore, the company has observed an extension in its working capital days, growing from 117 days to 167 days.
Anant Raj Ltd
Founded in 1985 under the name Anant Raj Clay Products by Ashok Sarin, Anant Raj Ltd main focus lies in the advancement and construction of a diverse range of real estate undertakings. These encompass IT parks, hospitality ventures, Special Economic Zones (SEZs), office complexes, shopping malls, and residential developments across regions such as Delhi, Haryana, Andhra Pradesh, Rajasthan, and the National Capital Region (NCR).
Throughout its trajectory, the company has successfully brought to fruition over 20 million square feet of real estate initiatives spanning various segments, including Housing, Commercial, IT Parks, Shopping Malls, Hospitality, Residential, and Affordable Housing sub-categories.
- Market Cap – ₹ 6,414 Cr.
- Current Price – ₹ 198
- High / Low – ₹ 208 / 64.0
- Stock P/E – 36.2
- ROE – 5.45 %
There are optimistic expectations for the company’s performance in the upcoming quarter. Notably, there has been an improvement in the debtor payment cycle, with the duration decreasing from 33.5 to 19.6 days. However, the company’s return on equity over the past three years has been on the lower side, at 2.70%. It’s worth considering that the company might be employing a strategy of capitalizing interest costs as part of its financial approach.
Sobha Ltd
Sobha Realty is a globally recognized luxury developer with its origins dating back to 1976 when it began as an interior decoration firm in Oman, under the leadership of entrepreneur PNC Menon. Over the years, the company’s influence has expanded to encompass multiple countries, including the UAE, Oman, Bahrain, Brunei, and India, through strategic developments and investments.
In a significant move, the company adopted the name “Sobha Limited” on August 18, 2014. Their success trajectory has been fueled by their unique approach of integrating construction and real estate development, coupled with their in-house production of construction materials and furniture. This strategy has contributed to their sustained growth and performance in the industry. With a wide geographic presence spanning 27 cities across 14 states, Sobha Ltd has firmly established its footprint in India. Moreover, Sobha’s international operations extend to Oman and Dubai, where it operates as Sobha Realty, further solidifying its global presence.
- Market Cap – ₹ 5,452 Cr.
- Current Price – ₹ 575
- High / Low – ₹ 751 / 412
- Stock P/E – 48.8
- ROE – 4.24 %
Sobha Realty is poised to deliver a strong quarter ahead, with positive expectations for its performance. Impressively, the company has consistently upheld a healthy dividend payout of 32.4%. The debtor payment cycle has shown significant improvement, with the duration decreasing from 33.6 to 17.4 days. However, it’s important to note that the company’s interest coverage ratio is relatively low. In terms of sales growth, the company has encountered challenges, achieving only a meager 3.53% over the past five years. Similarly, the return on equity for the last three years has been modest, standing at 4.29%.
DLF Ltd
DLF Ltd (DLF) stands as one of the most prominent real estate developers in the nation, boasting a legacy in the sector dating back to 1963.
Renowned for its expansive assortment of residential, commercial, and retail properties, DLF focuses on crafting top-tier developments that cater to diverse market segments. The company’s offerings span from opulent apartments and villas to office complexes, shopping centers, and hotels. DLF remains proactive in introducing new projects to address the burgeoning housing demand in India.
Among their standout endeavors are DLF Cyber City, DLF Magnolias, DLF Cyber Hub situated in Gurugram, DLF Emporio located in Delhi, and DLF One Midtown situated in Chennai.
Moreover, DLF holds the distinction of being the inaugural Title Sponsor for the Indian Premier League (IPL) from 2008 to 2012.
- Market Cap – ₹ 1,20,176 Cr.
- Current Price – ₹ 486
- High / Low – ₹ 522 / 336
- Stock P/E – 57.5
- ROE – 5.47 %
DLF India has effectively reduced its debt burden, nearing a state of being nearly debt-free. Impressively, the company has achieved substantial profit growth, boasting a robust compound annual growth rate (CAGR) of 44.2% over the last five years. Additionally, the company has consistently maintained a commendable dividend payout ratio of 47.8%. The stock is currently trading at a valuation of 3.20 times its book value. However, there is a concern regarding the company’s sales growth, which has shown a decline of -3.22% over the past five years. Similarly, the company’s return on equity over the last three years has been relatively modest, standing at 4.48%.
Keystone Realtors Ltd
Established in 1995, Keystone Realtors Limited holds a notable position among real estate developers. The company’s core engagement revolves around real estate construction, development, and associated activities within India.
On November 6, 1995, Keystone Realtors Limited was officially incorporated as a publicly listed entity. Operating as a Non-government company, it is duly registered with the Registrar of Companies in Mumbai. The company’s authorized share capital stands at Rs. 2,357,199,870, while its paid-up capital amounts to Rs. 1,035,262,210.
- Market Cap – ₹ 7,061 Cr.
- Current Price – ₹ 620
- High / Low – ₹ 661 / 416
- Stock P/E – 58.0
- ROE – 6.11 %
Keystone Realtors Limited has successfully managed to lower its debt load. However, there are certain drawbacks to consider. The stock is currently trading at a valuation of 4.24 times its book value. Despite the company consistently reporting profits, it has refrained from distributing dividends. Additionally, there is a possibility that the company is opting to capitalize interest costs as part of its financial strategy.
Godrej Properties Ltd
Based in Mumbai, India, Godrej Properties Limited operates as a prominent real estate firm. Founded in 1990, it operates as a subsidiary of Godrej Industries Ltd. The company boasts a diverse portfolio comprising residential, commercial, and township ventures spanning various cities across India.
At the core of Godrej Properties lies a strong commitment to sustainability and innovation, both integral aspects of their project development ethos. Their primary objective revolves around delivering properties of superior quality that effectively cater to the evolving preferences of homebuyers and investors alike.
Among their noteworthy achievements are projects such as Godrej Golf Links in Greater Noida, Godrej Platinum in Mumbai, Godrej Eternity and Godrej Air in Bangalore, and Godrej Infinity in Pune.
- Market Cap – ₹ 42,828 Cr.
- Current Price – ₹ 1,540
- High / Low – ₹ 1,769 / 1,005
- Stock P/E – 66.0
- ROE – 5.39 %
Anticipations are positive for a strong performance from the company in the upcoming quarter. Notably, the company has achieved commendable profit growth, boasting an impressive compound annual growth rate (CAGR) of 90.1% over the last five years. However, it’s worth noting that the stock is currently trading at a valuation of 4.66 times its book value. Despite the company consistently reporting profits, it has chosen not to distribute dividends. Regrettably, the company’s sales growth over the past five years has been relatively weak, standing at only 7.03%.
Similarly, the return on equity for the past three years has been modest, at 2.45%. It’s possible that the company is opting to capitalize interest costs as part of its financial approach. The reported earnings encompass an additional income of Rs. 1,075 Crores. Moreover, there has been a decline in promoter holding over the past three years, amounting to -5.96%.
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List of Top Real Estate Stocks to Buy in India
|
Rank |
Brand Name |
Market Cap |
Price to Earning |
|
1 |
G R Infraprojects Ltd |
₹ 12,820 Cr. |
8.84 |
|
2 |
Oberoi Realty Ltd |
₹ 39,613 Cr. |
21.7 |
|
3 |
NBCC (India) Ltd |
₹ 8,581 Cr. |
24.0 |
|
4 |
Prestige Estates |
₹ 23,258 Cr. |
31.6 |
|
5 |
Phoenix Mills Ltd |
₹ 30,682 Cr. |
35.9 |
|
6 |
Anant Raj Ltd |
₹ 6,414 Cr. |
36.2 |
|
7 |
Sobha Ltd |
₹ 5,452 Cr. |
48.8 |
|
8 |
DLF Ltd |
₹ 1,20,176 Cr. |
57.5 |
|
9 |
Keystone |
₹ 7,061 Cr. |
58.0 |
|
10 |
Godrej |
₹ 42,828 Cr. |
66.0 |
Conclusion: Which Real Estate Stock to buy in 2023?
Real Estate market is booming in 2023 and beyond. Salaries of the employees are increasing, profits of self employed are increasing. Businesses are posting better results. India’s per capita income is growing. With all of these, people are looking to stay in a modern houses.
With increasing income, and growing population, real estate sector is a sure shot sector that is all set to boom. Oberoi Relaity, NBCC (India) Ltd are some real estate stocks that can be considered a good buy in 2023. With a current PE score of 8.84, the cheapest real estate company is G R Infraprojects Ltd.
However, you can individually look into the sales and profits of these real estate companies for the past 8 quarters, and see if they are growing. And go with the one, whose PE ratio is comparatively on the lesser side.
Disclaimer: I do not hold any of these real estate stocks in my portfolio as of now.
What did we learn?
