ABREL, Godrej Properties, Prestige Estates: Ambit's top real estate stock pick

Ambit Capital in its latest note on real estate reiterated that it prefers real estate players with material commercial real estate exposure. It said that Aditya Birla Real Estate Ltd (ABREL) and Godrej Properties Ltd, both of which are exclusively present in residential real estate, have seen the highest stock price corrections. However, While the brokerage believes ABREL still offered significant upside potential, Prestige Estates is its top real estate pick.

The brokerage said inventory build-up was the highest in luxury housing, defined as units priced above Rs 5 crore, particularly in the Mumbai Metropolitan Region and the National Capital Region. It cautioned that luxury launches by DLF and ABREL could see some delays.

Ambit said commercial leasing grew 25 per cent year on year in Tier I cities in calendar year 2025. It said a material commercial pipeline for Prestige Estates Projects Ltd and Max Estates is expected to result in value unlocking over the next two years.

The brokerage said consolidation in the sector has kept demand momentum healthy, but added that it remained watchful on sales velocity amid rising unaffordability and increasing business development costs as a percentage of gross development value, especially given the high growth guidance provided by companies under coverage. Ambit said it preferred Prestige Estates and ABREL among large and mid-cap real estate players.

Ambit said Prestige Estates' quick turnaround strategy and high exposure to commercial and hotel assets, accounting for 51 per cent and 12 per cent of its sum-of-the-parts valuation respectively, are higher than those of all large-cap peers and helped hedge cyclicality risks in residential real estate.

It said additions to Prestige Estates' commercial portfolio are expected to exceed 15 million square feet over the next three years, compared with an existing portfolio of around 10 million square feet. As these assets became operational, Ambit expected the value attributed to the commercial portfolio to increase. It said exit rentals from office and retail segments combined were estimated at around Rs 1,100 crore by the end of FY26 and is expected to reach around Rs 5,000 crore by the end of FY30.

Ambit said developers could pre-lease commercial pipeline projects, and a leasing visibility of 1.5-2 years would be sufficient to ensure value unlocking. It added that demand led by global capability centres should support leasing momentum.

The brokerage said expansion into non-southern real estate markets had been a key requirement for Prestige Estates to achieve scale. It noted that at the end of FY20, the residential pipeline under construction had no launches in MMR or NCR, while in FY25, around 30 per cent of pre-sales came from MMR. It said the Indirapuram project in NCR, with a launch value of Rs 12,000 crore in the first quarter of FY26, saw over 80 per cent of inventory sold within two quarters. Ambit said meaningful scale in new core markets demonstrated Prestige's execution capability beyond its southern markets.

Ambit said Prestige Estates added projects worth Rs 33,000 crore in the first half of FY26, including joint development projects, compared with FY26 guidance of Rs 30,000 to Rs 40,000 crore. Key additions included Tellapur in Hyderabad worth Rs 8,500 crore, Hosur Road in Bengaluru worth Rs 8,200 crore, and Prestige Business Bay in Mumbai worth Rs 7,000 crore. It said targeted margins on business development additions remained at 28-30 per cent.

The brokerage said Prestige Estates expected to maintain residential segment margins of 28 to 30 per cent, compared with an earlier expectation of around 25 per cent, indicating that scale expansion was not coming at the cost of margins.

Ambit said it expected Prestige Estates to post pre-sales of Rs 30,000 crore in FY26 and Rs 32,300 crore in FY27, driven by new launches and sustained sales momentum in existing inventory. It also expected Ebitda contribution from the annuity portfolio to rise from around Rs 740 crore in FY25 to around Rs 3,600 crore in FY29.

Ambit retained Prestige Estates as a Top buy with an unchanged sum-of-the-parts valuation of Rs 2,125, implying 3.9 times one-year forward price to book value.