Strong buying in real estate counters lifts Nifty Realty over 2%; brokerage sees attractive valuations and sustained growth potential in leading developers

India's real estate sector witnessed strong investor interest on Monday as the Nifty Realty Index emerged as the top-performing sectoral index, gaining more than 2% during intraday trade. The rally was supported by broad-based buying across listed property developers after Motilal Oswal Financial Services (MOFSL) reiterated its bullish stance on the sector and highlighted several leading developers as its preferred investment picks.

The positive momentum comes amid growing confidence that India's organized real estate companies are continuing to strengthen their market position despite moderation in residential demand across major cities. Healthy cash flows, stronger balance sheets, and attractive valuations have encouraged investors to accumulate quality real estate stocks.

Nifty Realty Outperforms Broader Markets

The Nifty Realty Index climbed as much as 2.14% during Monday's trading session to touch 909.90, significantly outperforming the broader benchmark indices. Around midday, the index was trading near 904, up over 1.5%, while the Nifty 50 gained less than 1%.

The sector's outperformance reflects renewed optimism in India's property market after several months of valuation correction. Market participants believe that leading developers are likely to continue benefiting from strong brand recognition, better execution capabilities, and increasing market consolidation.

The rally was broad-based, with almost every constituent of the index trading in positive territory.

Lodha Leads Gains; Most Realty Stocks Trade Higher

Among the top gainers, Macrotech Developers (Lodha) emerged as the biggest performer, rising nearly 3% during intraday trade after being named MOFSL's preferred large-cap real estate stock.

Other major gainers included:

• Godrej Properties, which advanced more than 2%

• Prestige Estates Projects

• Oberoi Realty

• Phoenix Mills

• Brigade Enterprises

• Aditya Birla Real Estate

Each of these companies gained over 1%, reflecting strong investor participation across the sector.

Meanwhile, DLF and Sobha also traded in positive territory, while Anant Raj remained the only stock in the index trading marginally lower.

Realty Sector Continues to Deliver Superior Returns

The real estate sector has been one of the strongest-performing themes over the past year. According to NSE data, the Nifty Realty Index has consistently outperformed broader equity benchmarks across multiple timeframes.

Performance Snapshot

• 1 Week: +10.45%

• 1 Month: +17.62%

• 1 Year: +31.63%

• Year-to-Date: +2.20%

In contrast, the Nifty 50 has delivered comparatively modest returns over similar periods, highlighting the resilience of the real estate sector even amid market volatility.

The index currently trades at a Price-to-Earnings (P/E) ratio of around 39, reflecting investors' confidence in long-term earnings growth.

MOFSL Turns Constructive on India's Realty Sector

Motilal Oswal Financial Services believes India's organized real estate developers are entering a favorable phase driven by industry consolidation and stronger financial performance.

According to analysts Harsh Pathak, Yohan Batliwala, and Guru Charan, large branded developers have continued to gain market share as smaller regional players struggle with funding constraints, rising compliance costs, and slower project execution.

The brokerage expects this consolidation trend to continue, allowing financially strong companies to increase sales, improve profitability, and generate healthy cash flows.

Top Stock Picks from MOFSL

The brokerage has identified several developers that offer attractive investment opportunities.

Preferred Large-Cap Picks

• Macrotech Developers (Lodha) – Top preferred pick

• DLF – Buy

• Godrej Properties – Buy

Preferred Mid & Small-Cap Pick

• Aditya Birla Real Estate – Buy

Neutral Rating

• Oberoi Realty, owing to its premium valuation relative to residential Net Asset Value (NAV).

MOFSL believes these companies possess strong project pipelines, healthy balance sheets, and the ability to generate sustainable earnings over the coming years.

Valuation Correction Creates Attractive Entry Point

One of the key reasons behind MOFSL's positive outlook is the sharp correction in sector valuations over recent months.

Investor concerns regarding the sustainability of residential demand have compressed valuation multiples across the sector. Most listed developers are currently trading at 10–35% discounts to their Net Asset Values (NAVs), compared with the significant premiums witnessed during the previous property upcycle.

The brokerage believes these lower valuations provide long-term investors with an attractive opportunity to accumulate fundamentally strong real estate companies.

Demand Moderation but Market Share Gains Continue

While residential sales in India's top eight cities have moderated from exceptionally high levels seen in recent years, MOFSL believes the slowdown has not affected all developers equally.

Instead, larger branded companies continue to gain market share as homebuyers increasingly prefer established developers with proven execution records, transparent governance, and timely project delivery.

This structural shift is expected to accelerate industry consolidation, benefiting listed developers with stronger financial resources and nationwide brands.

Healthy Cash Flows Support Long-Term Growth

Another positive factor highlighted by MOFSL is the strong operating cash flow generated by leading developers.

Improved collections, disciplined capital allocation, and steady project launches have strengthened balance sheets across major real estate companies.

The brokerage expects listed developers to continue generating robust Free Cash Flow (FCF) over the medium term, providing flexibility for land acquisitions, new project launches, debt reduction, and shareholder value creation.

Industry Outlook Remains Positive

India's real estate sector continues to benefit from several structural tailwinds, including rising urbanisation, growing demand for premium housing, infrastructure development, improving affordability, and increasing consolidation among organized developers.

Although short-term demand fluctuations remain a key monitorable, industry experts believe financially strong developers are well positioned to deliver consistent growth over the next few years.

With valuations becoming more attractive following recent corrections and cash flow visibility improving, brokerages remain optimistic that quality real estate stocks could continue to outperform broader markets.

What Investors Should Watch

Investors should monitor upcoming quarterly sales numbers, pre-sales growth, new project launches, residential demand trends across key metropolitan markets, interest rate movements, and government policy announcements related to housing and infrastructure.

Companies with strong balance sheets, diversified project portfolios, and proven execution capabilities are expected to remain the primary beneficiaries of the ongoing consolidation in India's real estate sector, making stocks such as Macrotech Developers (Lodha), DLF, Godrej Properties, and Aditya Birla Real Estate key names to watch in the coming quarters.