Morgan Stanley has turned positive on two major real estate developers, Prestige Estates Projects Ltd and Lodha Developers Ltd, but the brokerage sees stronger upside potential in Prestige.
Based on its latest recommendations, Prestige emerges as the brokerage’s preferred pick, with an upside potential of around 43%, compared with 28% for Lodha.
Prestige Estates Gets a ‘Buy’ Rating
Prestige Estates Projects Ltd, part of the Bengaluru-based Prestige Group, develops residential, commercial, retail and hospitality projects across several Indian cities.
The stock came into focus after Morgan Stanley initiated coverage with a “Buy” rating and a target price of Rs. 1,920. The target implies an upside of about 43% from the previous day’s closing price.
During the session, shares fell as much as 4.5% to Rs. 1,316.65, compared with the previous close of Rs. 1,380.65.
The company had a market capitalization of Rs. 57,147.13 crore.
March quarter performance
Prestige reported sharp growth in both revenue and profit.
Key numbers
- Revenue rose from Rs. 1,528 crore in March 2025 to Rs. 4,074 crore in March 2026.
- Net profit increased from Rs. 43 crore to Rs. 292 crore.
Why Morgan Stanley likes Prestige
The brokerage highlighted several factors supporting its positive view.
Income-producing assets could drive recurring cash flows
Prestige expects net operating income from its income-producing portfolio to rise from around Rs. 9 billion in FY26 to Rs. 45 billion by FY30.
The increase is expected to come from:
- Office assets
- Retail projects
- Hospitality properties
- Rental assets
Debt levels remain manageable
Morgan Stanley noted concerns over the projected FY26 net debt-to-equity ratio of 65%.
However, it said much of the debt is tied to the expansion of income-producing assets that are expected to generate recurring cash flows after completion.
Large capex seen as a long-term investment
The company plans to invest Rs. 72 billion in its income-producing business over the next three to four years.
According to the brokerage, the investment should:
- Expand the rental asset base
- Improve occupancy
- Increase net operating income
- Support valuations
Lower dependence on overseas buyers
Less than 10% of FY26 pre-sales guidance of Rs. 300 billion is expected to come from NRIs.
Only a small portion is linked to the Middle East.
Morgan Stanley believes this limits exposure to geopolitical risks and changes in overseas capital flows.
Residential demand remains healthy
Management expects no significant impact from a broader economic slowdown.
The company cited:
- Strong demand in core markets
- A diversified business model
- Healthy project launches
- Execution capabilities
- Growth in recurring income
Lodha Gets an Equal-Weight Rating
Lodha Developers Ltd, formerly known as Macrotech Developers, is one of India’s largest real estate companies.
The Mumbai-based developer has a strong presence in residential projects and is known for brands such as Lodha Luxury and Palava.
Morgan Stanley has assigned an “Equal-Weight” rating on the stock and fixed a target price of Rs. 1,130.
That implies an upside of around 28% from the previous close.
The company had a market capitalization of Rs. 86,998.10 crore.
During the trading session, shares moved up by as much as 3.2% and touched Rs. 865.40.
March quarter performance
Lodha posted moderate growth in revenue and profit.
Key numbers
- Revenue increased from Rs. 4,224 crore in March 2025 to Rs. 4,714 crore in March 2026.
- Net profit rose from Rs. 923 crore to Rs. 1,008 crore.
What Morgan Stanley said about Lodha
Collections expected to outpace pre-sales
The brokerage expects collections growth in FY27 to exceed pre-sales growth.
That could:
- Improve cash conversion
- Strengthen liquidity
- Reduce balance sheet pressure
- Support future project launches
NRI demand remains an area to watch
About 10-12% of Lodha’s sales come from NRIs.
Historically, nearly one-third of those sales have been linked to the Middle East.
Morgan Stanley said regional headwinds could affect demand in the near term, though domestic demand provides support.
FY27 guidance remains intact
Management has maintained FY27 pre-sales guidance of Rs. 240 billion, implying growth of around 17%.
The brokerage said this reflects confidence in:
- Project launches
- Pricing
- Absorption levels
- Demand across key markets
Risk-reward remains balanced
Morgan Stanley’s “Equal-Weight” rating reflects a more measured outlook.
The brokerage pointed to:
- Interest-rate sensitivity
- Global uncertainties affecting NRI demand
- Execution risks
- Valuations already pricing in much of the near-term growth
Which stock does Morgan Stanley prefer?
Among the two companies, Prestige Estates Projects is the brokerage’s preferred choice.
The company carries a “Buy” rating and offers higher upside potential of around 43%.
Lodha Developers, while supported by strong execution and healthy housing demand, has been assigned an “Equal-Weight” rating with an upside potential of about 28%.
TL;DR
Morgan Stanley prefers Prestige Estates over Lodha Developers. The brokerage has a “Buy” rating and Rs. 1,920 target on Prestige, implying 43% upside, while Lodha carries an “Equal-Weight” rating and a target price of Rs. 1,130, suggesting 28% upside.
AI Summary
- Morgan Stanley prefers Prestige Estates over Lodha Developers.
- Prestige has a “Buy” rating and a target price of Rs. 1,920.
- Lodha has an “Equal-Weight” rating with a target of Rs. 1,130.
- Prestige’s recurring income portfolio is a key growth driver.
- Morgan Stanley sees a more balanced risk-reward profile for Lodha.
