Top picks: HDFC Securities recommends these 8 realty stocks to buy

Domestic brokerage house HDFC Securities expects Q4FY22 presales of real estate company to largely remain in line with Q3FY22 sales, some developers may see decline, depending on miss of new launch timelines due to Covid third wave.

DLF (target price of ₹486), Oberoi Realty (TP: ₹1,142), Phoenix Mills (TP: ₹1,364), Brigade Enterprises (TP: ₹619), Prestige Estates (TP: ₹633), and Mahindra Lifespaces (TP: ₹473) are the brokerage's top stock picks in the realty space.

HDFC Securities said it continues to believe that tier-1 real estate developers will gain market share and remains positively biased towards the sector.

“Whilst Q4FY22 was a muted launch quarter, we expect launch momentum to pick up from Q1FY23, with some of the major launches from Prestige (MMR, most awaited), Oberoi (Thane, long due) and Mahindra Life (Bengaluru, Chennai). We expect launches to result in a strong Q1FY23 in the absence of any covid fourth wave,” the note stated.

HDFC Securities also has Buy ratings on Sobha Developers (target price: ₹1,000), Kolte-Patil Developers (TP: ₹381) and Add tag on Godrej Properties shares (TP: ₹1,804).

On the back of all-time high affordability (note), demand remains robust and tier-1 developers continue to gain market share. Rising income levels, near-low mortgage rates, and stable property prices are some factors contributing to the strong demand.

“Whilst globally interest rates are expected to harden, the same is reflected in the around 50bps increase in India 10-yrs Gsec yield over the last month. We believe that this may not result in demand destruction as affordability remains high. Whilst we expect property prices to rerate, it may be on the back of a more sustained economic recovery and positive sentiment on consumption,” HDFC Securities' note added.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.