Best Real Estate Stocks In India – Top 5 Developers & Builders!

Best Real Estate Stocks In India: Real estate is one of the oldest yet most stable investments that people trust. Land has always been an important asset in Indian culture and owning property is a sign of prosperity. 

When the coronavirus pandemic hit the world, every market crumbled. Real estate shares tanked and sales also hit record lows. At a time of crisis, people were more concerned about life itself than buying property.

But now as the pandemic has eased living for everyone, the sector is expected to boom in the near future.

List Of Best Real Estate Stocks In India

We’ve compiled a list of the biggest and best real estate stocks in India for you, with important ratios. So read ahead to learn more about India’s largest land developers. 

1. DLF

By market cap, Delhi Land & Finance is the biggest real estate company in India. It is as old as Independent India, being founded in 1946 by Chaudhary Raghvendra Singh. 

DLF is the primary real estate developer in Delhi, although the company is headquartered in Gurugram, Haryana. Besides this, they have also developed several tech parks. DLF is the first title sponsor of IPL, in 2008. The sponsorship lasted for 5 years until it was taken over by PepsiCo in 2013. 

With a market capitalization of ₹88,739 crores, it is the largest real estate company in India. Taking a look at their financials, the company has a strong promoter holding at 75% in the past 3 years. 

However, their 5-year revenue growth shows a declining pattern from FY 2018 (₹6,706 Crores) to FY 2022 (₹5,717 Crores). The company has almost no debt, with a D/E ratio of 0.12, making it the real estate company with the least amount of debt on our list. 

FY 2022 showed a profit of ₹843 crores, which is double that of FY 2021 (₹477 Crores). However, it is still a huge downfall compared to its 2018 profit of ₹4,292 crores. At 54.32, the Price to Earnings ratio is much higher than the industry PE of 35.20. 

And finally, the dividend yield stands at 0.82%, which is the highest on our list of best real estate stocks in India. Year to Date, DLF shares have given a return of -9.23%.

2. Macrotech Developers

Macrotech Developers, formerly known as the Lodha Group, is headquartered in Mumbai, India. It was founded by Mangal Lodha in 1980. They primarily operate in Mumbai, Thane, Hyderabad, and London. They are credited with the development of Palava, a smart city near Mumbai. 

The company is also responsible for the development of Trump Tower Mumbai, a 77-story tower in Mumbai. It went public in April 2021.

Now let’s look at the financial performance of the company. By market cap, Marcotech Developers is the 2nd largest real estate company, at ₹47,246 crores.

Promoters hold a majority stake in the company, at 82.2%, but they have trimmed their stake from 88.5% as of September 2021. This is a -6% decline in promoter holding in the past year. Still, Marcotech Developers has the highest promoter holding on this list of real estate stocks. 

ROE stands at an impressive 14.4%, which is the highest among all listed large-cap real estate stocks. ROCE is 10.3%, which is again quite high compared to other players in the industry. 

Revenues have fallen significantly, from ₹13,527 crores in 2018 to ₹9,233 crores in 2022. 

Profit after tax for the year ending FY 2022 stands at ₹1,207 crores, a slight fall from ₹1,789 crores in 2018. The company does not pay out dividends, and it has a PE ratio of 36.04, which is well above the industry’s PE. The stock has declined by -21% year to date.

3. Godrej Properties

Part of the Godrej Group conglomerate, Godrej Properties is one of the largest landowners in Mumbai. A majority of its revenues are from four key cities – Pune (26%), Mumbai(22%), Bengaluru (17%), and Delhi NCR(15%). 

While the Godrej Group is well over 120 years old (founded in 1897), Godrej Properties is relatively new. It was established in 1990 by Adi Godrej. 

Coming to the financials, first, let’s look at promoter holding. At 58.43%, promoter holding has been steady throughout the year. ROE stands at a low 3.85%, making it the lowest return on equity among the top 5 real estate companies. Even ROCE is the lowest among all 5, at 4.83%. 

5-year revenue shows almost no difference, with 2018 revenues equaling ₹1889 crore and 2022 revenues at ₹1824 crore. However, net profits have doubled in the past 5 years, from ₹228 crore to ₹539 crore (2022). 

The company PE (85.87) is well over 2 times the industry PE of 35.20. Year to date, Godrej properties’ share price has declined by -38%.

4. Oberoi Realty

Oberoi Realty is a Mumbai-based real estate company. It is part of the larger Oberoi Realty Group. They have developed well over 42 projects throughout Mumbai, equivalent to 11.8 million square feet, and are adding more projects amounting to 45 million square feet in the future.

81% of its revenue is through residential properties. They are also involved in the hospitality sector, owning and operating premium hotels. Promoter holding is steady in the past year at 67.7%. 

5-year revenues show above 100% increase, from ₹1,265 crores (2018) to ₹2,693 crores (2022). We can see a similar trend in net profits as well, standing at ₹807 crores compared to ₹455 crores in 2018. ROE is 10.05 and debt to equity is 0.27, a rise in debt compared to 0.16 in 2018. 

Price to earnings of 23.75 puts it well below the industry PE of 35.20. Year to date, Oberoi Realty has moved up +0.7%. 

5. Prestige Estates Projects

The Prestige Group is one of the leading real estate developers in Bengaluru. They have expanded to other major cities such as Hyderabad, Chennai, Mysore, Pune, Mumbai, and NCR.

Over 3/4th of the company’s revenue (76%) is through the sale of residential and commercial real estate development. The rest comes from services such as leasing, rent, and maintenance. 

Besides residential and commercial properties, the company has also ventured into building shopping malls in tier-II cities. 

A promoter holding pattern is steady at 65.48% for the past year. 

5-year revenues have slightly increased from ₹5,498 crores (2018) to ₹6389 crores (2022).

Profits have tripled in the same period, from ₹411 crores (2018) to ₹1231 crores (2022).

ROE has increased substantially from 7.84 to 12.64 in 5 years. The company has also halved debt over time, with a DE ratio of 0.78 in 2022. 

5 years ago, the DE ratio of Prestige Estates stood at 1.46. 

PE ratio is one-third of the industry PE of 35.20, at 13.39. Year to date, the stock has given a negative return of -6.8%. 

Is Indian Real Estate Profitable?

The Indian Real Estate market is largely untapped and shows a huge potential for growth. While India is a developing economy, there is ample opportunity to exploit resources for growth. The real estate sector is expected to reach a valuation of $1 Trillion dollars by 2030, as compared to its 2021 market size of $200 billion dollars.

In Closing

Now we have reached the end of this blog on the Best Real Estate Stocks in India. Alternatively, you can also invest in another asset known as Real Estate Investment Trust or REITs.

They are funds that invest in real estate companies and are relatively quite affordable compared to buying real estate properties themself. You can read more about REITs here.

Which would you prefer? Stock Market or Real Estate? This blog helps you know the difference between both and which suits you best.

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