Residential real estate: The Q4 story | Is Faster Internet Fair? | The Daily Brief #475

Added: 2026-05-31

[00:00:00]In today's episode, we'll break down two important stories. First, we'll talk about Q4 at India's residential developers, and then we'll talk about Jio and Vodafone not liking Airel's new post-paid plan. Welcome back to the daily brief by Zerodha, where we cut through the noise to help you understand what's actually happening in the most important stories from business and markets. I am your host, Axara, and today is Friday, 29th May.

[00:00:30]Coming to the first story, on April 27th, Abhishek Lodha, the MD and CEO of Loa Developers, told investors to stop looking at his company's pre-sales numbers. That was odd. Pre-sales, which is the value of homes a developer agrees to sell in a period, is a number real estate companies live and die by. Loa had just reported its strongest ever quarter on this front, having sold rups 5,890 cr worth of homes between January and March. And yet, Abishek wanted investors to focus on his company's actual profit. Instead, pre-sales, he said, isn't a great measure of the underlying health of a real estate business. A week later though, on Godidge properties investor call, chairman Perrochia Godidge invited investors to focus on, well, pre-sales.

[00:01:16]Goodridge had just announced the largest annual booking value ever published by a listed Indian developer having sold approximately rupees 34,171 cr worth of homes through the year. Then a few weeks hence prestige estates Irvan Razak told investors to look at something else entirely revenue. The company's revenue had grown 71% over the previous year while profits had more than doubled and Rosak pointed to an additional rupees 65,935 cr of sales that hadn't shown up as revenue yet. Three of India's largest residential developers in the same quarter were looking at different metrics. Little of that was management spin. In the business of residential real estate, pre-sales, revenue, and profit mean three very different things.

[00:02:03]The number a developer chooses to emphasize tells you something about what their business focuses on.

[00:02:10]So God properties is the largest company we're looking at today. For the third year running, it was India's biggest residential developer by booking value.

[00:02:19]The roughly rupees 34,000 cr worth of homes it sold last year was well above its own guidance. Almost a third of that came from the March quarter alone, one of the best the company has ever reported. But those were bookings. The cash actually coming in from those buyers was a slightly different story.

[00:02:36]So the year's collections fell just short of rupes 20,000 cr 17% higher than last year but still short of the rs 21,000 cr management had promised. It's a minor miss but it points to something.

[00:02:49]Goodridge bookings are running faster than the cash arriving from buyers. Now this is the sort of thing that happens when a developer pushes new launches over older projects further along in construction. And Godidge was doing just that. For instance, it ran a pan India 1% campaign during the quarter where buyers put down 20 to 30% upfront and then pay just 1% of the price every month until they take possession. A softer payment plan than the industry standard. Now the company is loading its pipeline further still. Across FY26, it added rupees 42,100 cr worth of future sales potential, enough to keep its pipeline overflowing for years. But for now that future pipeline probably looks like hard cash and capital commitments in buying land. Prestige meanwhile is the fastest growing company in the set.

[00:03:36]Its pre-sales through FY2026 at rupes 30,025 cr were up 76% from the previous year. The Bengaluru based company has been rushing to capture new markets and the plan seems to work. The company's first major foray into the NCR market.

[00:03:50]Prestige City Indra Puram booked nearly rupes 9,500 cr in sales by itself. A number that major players struggled to meet across an entire portfolio. More interestingly, its revenue grew by a staggering 71% year-on-year while profits more than doubled. And yet, the company's margins had fallen to 27% well below the 30% often quoted as an industry baseline. As its management noted, the company's overhead costs, salaries, advertising, marketing had ballooned to about rupees 1,000 cr.

[00:04:23]That's a pittance compared to its rups 30,000 cr pre-sales. But compared to the revenue actually showing up in its books of roughly rs 10,000 cr, it looked much bigger. In other words, Prestige's expenses are growing today at the pace of its sales. But the revenue will only show up after years of construction.

[00:04:41]Until then, its reported margins will remain compressed. In the interim, the company is buying land aggressively, often on debt with net debt rising 41% through the year to almost rupees 11,000 cr. To its management, all that debt will over time pay for itself. But for now, that's only an assumption. Finally, there's Loa, the smallest of the three by pre-sales. But it's carved out a corner for itself with a portfolio concentrated almost entirely in Mumbai.

[00:05:10]Loa's pre-sales at just under rupes 20,500 cr were well below its peers even if they were up 16% from last year. This was a little short of what the company itself expected and that to the management was partly because of all the volatility the Iran war had created. By other metrics though the company looked rather clean. It had the lowest debt to equity figures of the three at just 23.

[00:05:33]Its net profit grew 24% over the year, well ahead of its peers with a beta margins of 33%. Perhaps this is why the company was asking investors to look at profits rather than pre-sales. Profits, it maintained, was the end goal.

[00:05:48]Pre-sales was simply a means to an end.

[00:05:52]So why is it that three companies in the same industry for the same time period are pointing investors to different metrics as measures of their performance? The answer lies in the sheer weirdness of the real estate industry. So, in real estate, a single purchase can play out over the course of years. When you buy a home from a major developer, chances are you aren't buying a finished home. You're just buying a promise. And that promise will only come through over 2 to 4 years of construction. Of course, you don't pay the entire amount for your house either.

[00:06:23]At first, you pay a small fraction when you book a house, 10 to 20% perhaps, and then pay the rest in installments as the building goes up milestone by milestone.

[00:06:32]So, in other words, from the point a sale is first booked, it's years before all that money actually shows up in the developer's accounts. As money trickles in, it creates another mismatch. Until a building finally comes up, a customer has paid the developer a lot of cash for what it is to that point, a paper agreement. They don't yet have an actual house to their name. The sale has begun, but it isn't yet complete. The developer hasn't yet earned that cash. And if, for whatever reason, a property can't come through, they would rightfully have to return it. So, think of what that means.

[00:07:06]For years on end, a developer has a large amount of cash in its coffers, which it is still in the process of earning. That is money. Yes, but it isn't revenue. When the company prepests books, it has to account for that money without claiming it's theirs. Now, developers get around this weirdness with a clever bit of accounting. The actual cash in their accounts sits on their balance sheet as an asset, but they pair it with a liability, accounting for it as an advance that might have to be repaid. It's only once a project is complete and ready to be handed over or sometimes earlier when specific accounting milestones are met, that it turns into revenue. This moment is in some senses also a verdict. It's when you get a sense of how profitable a project was, how disciplined the developer ultimately was on pricing, project selection, and costs. A real estate developer therefore runs on three timelines at once. First, there's a sales timeline. This is the value of all homes a developer has promised to sell, which it shows as its pre-sales or bookings number. This measures all the demand the developer has locked in for its upcoming projects. And then there's a cash timeline. Every pre-sale sets up a trickle of cash which arrives in parts over years. The amount of cash the company has received makes for its collections. That's the actual money the company is generating today. And finally, there's an accounting timeline.

[00:08:29]This counts how much revenue a developer can finally book as its own. And this is also when you learn how much profit all those years of development have actually yielded. So if real estate was a stable, slow growing business, these three timelines would march together. As companies closed old projects, they would begin new ones with a steady pipeline that turned sales into cash and then into revenue. But Indian real estate isn't a stable, slow growing business. Companies have been launching, selling and building at a pace far ahead of what revenues they recognize. And this opens the door to very different strategies. One, a developer can chase scale. they can launch as much as possible, buying a large amount of land, turning it into a stream of new projects and accepting that cash and revenue will follow years later. Two, it can chase profitability, building a small number of higher margin projects where each home brings in more profit per square foot and discipline matters more than volume. Finally, it can chase completion, focusing on finishing what it's already sold, so that revenue and profit quickly follow bookings. Or more simply, it can chase pre-sales, profit margins, or revenue. Each creates a completely different financial profile.

[00:09:40]And we saw a demonstration of just that in this quarter's results.

[00:09:46]Meanwhile, the wider market is becoming harder to operate in. So, a year ago, India's residential market was a relatively easy space to operate in.

[00:09:55]Interest rates were down, inflation was benign, premium and luxury buyers were lining up behind new properties. It was the ideal market for a large branded developer. But the picture has changed since. According to NightFrank, home sales across India's top eight cities last quarter fell about 4% from last year. Launches, meanwhile, was still climbing, outpacing sales for the 14th quarter in a row. In the March quarter, they outstripped sales by over 10,000 units. Increasingly, developers are sitting on ever larger amounts of unsold inventory. For now, prices have held up across major cities and developers are sustaining this to some extent through schemes and incentive programs. Perhaps that is where God's 1% campaign comes from. At the other end, meanwhile, funding is becoming more expensive to arrange. Bond yields are rising with the 10-year government yield crossing 7% to the highest it's been in 20 months. The Iran war has made commodities more expensive and that in turn has made it more expensive to build a house with costs rising by around 5%. These developers may have sold thousands of crows worth of houses last quarter, but those houses will be built over years.

[00:11:04]The costs involved of raising money, buying material, and more aren't yet clear. So, we are years away from finding out how profitable they'll be.

[00:11:14]So, what does that mean for these companies? Can Godidge convert its enormous pipeline into hard assets for cheap enough? Will Prestige be able to fund its massive expansion as margins flitter and debts rise? Will Loa struggle to draw new buyers in a market where sentiment might be turning? None of these answers will be clear for a while. That's simply the nature of the real estate cycle, but we'll stay tuned in. We listened to a lot of con calls while researching our stories. So, we started a newsletter called the chatter.

[00:11:43]It's a curated collection of the sharpest management quotes for that week in a neat and readable format published every Friday. Link is in the description. Coming to the second story, on May 19th, Party Airtel launched something it called priority postpaid.

[00:11:59]The pitch was that compared to others, post-paid customers would get a faster, more stable connection, especially in crowded places like concerts, markets, and at pears. 3 days later, Gio and Vodafone idea told a parliamentary committee the service should be paused.

[00:12:14]Their complaint in essence was that this might violate India's net neutrality rules. We'll explain what this means eventually. The reaction was instant.

[00:12:22]The government's communication committee opened a probe. The department of telecom or DOT is reviewing and try also started asking questions. But this isn't the first time this is happening. In 2020, we launched a plan called Red X premium speeds for premium customers while Airel launched platinum. Both promised faster 4G to anyone paying above a threshold. 3 days afterlio complained to try who within a week froze new signups. Both plans were dead in months. Six years later, the same three companies are in a similar fight, but with different context.

[00:13:00]So, let's start with how a plan like priority postpaid works. Priority postpaid is structured across five plans with OTT bundles stacked on top.

[00:13:09]Existing postpaid users get the upgrade automatically. Prepaid users have to migrate to post-paid to access it. Now, the technology under this is called network slicing. Every signal between your phone and the nearest cell tower travels on a chunk of radio spectrum that Telos bid for in government auctions. Until 5G, that spectrum was one shared pool. Every user drew from the same well of their telco provider.

[00:13:33]Now, what slicing does is partition that pool into separate reserved lanes, each with its own guaranteed bandwidth, latency, and reliability. For instance, say one slice is for a hospital that needs ultra low latency. Another for a stadium where 80,000 phones are uploading at once, another for connected cars, another inel's case is for post-paid retail users. So in 4G lanes were shared. Prioritizing one class of customers meant directly slowing down everyone else. And that's what made Red X and platinum offerings in 2020 impossible to defend. But in 5G, the network can hold a fixed chair of capacity aside for the post-paid slice, even when the prepaid lane fills up. A traffic jam in one lane doesn't slow the other down. Now, slicing only works on 5G standalone, meaning the full 5G stack built end to end on a brand new 5G Infra. The alternative, non-standalone, is just 5G radios bolted onto the old 4G Infra, which is also why Airel can do this right now. Go has run standalone since launch in late 2022, but hasn't ventured into consumer slicing. Airel only finished its standalone transition in early 2026, and Priority Postpaid is its first commercial use. V runs mostly non-standalone with limited standalone rollout.

[00:14:52]Now, Jio, the company that complained in 2020, is currently the most measured. It feels network slicing is a legitimate use of 5G capabilities but says that retail products of this kind should be launched only after regulatory approvals with authorities examining the technical parameters carefully. So if we were to read between the lines they don't want to kill this idea because they'd also want to eventually do this. We the company that violated in 2020 is now the loudest critique. Its submission calls Airel's plan discriminatory and asks for it to be put on hold pending regulatory clarity. And Airel, the company whose platinum plan got killed in 2020, is back doing essentially the same thing in a more sophisticated form. It's also worth considering where in the market each of them stands right now. Jio has the standalone infrastructure ready and wants to monetize it eventually so that it can condemn slicing outright. VA can't match Air's investment and is bleeding post-paid subscribers. This move from AEL may well take away high value customers from them. Now Airel has the infrastructure ready and the highest paying postpaid base in the industry. It has the most to gain from going first.

[00:16:01]But where is this contention even coming from? It's all about net neutrality. The principle that internet service providers or ISPs must treat all internet communications equally. It's a simple idea but open to interpretations.

[00:16:16]Hence the confusion.

[00:16:19]Now, India's net neutrality framework came in stages. The first part came in 2016 when Try banned discriminatory pricing, the rule that killed Facebook's free basics and Airel Zero. Both schemes had let some apps run free for users while every other app ate into their data plan. But with the 2016 rule, Telos could no longer charge different rates for different content. The bigger rule came next. In 2017, TRI issued formal recommendations on net neutrality which the DOT accepted in July 2018 and the government wrote the rule into every telecom license in the country. The rule itself was simple. Internet providers couldn't discriminate against content, no blocking, no slowing things down, no giving certain types of traffic preferential speeds. But there were two exceptions where the rule didn't apply.

[00:17:06]One was reasonable traffic management which included handling congestion, security, and emergencies. And the other was specialized services like remote surgery, critical IoT, and autonomous vehicles, which were things that genuinely couldn't run on the regular network. But that being said, a specialized service couldn't be a substitute for ordinary internet, and ruling one out couldn't make ordinary internet any worse for everyone else.

[00:17:30]The exceptions then were just exceptions. But in 2020, a hole opened up. That year, TRI submitted detailed recommendations on what traffic management looked like and what was allowed. The DOT never adopted them. So today, India has a 2018 framework with no clarity on what counts as reasonable traffic management now that 5G technology actually lets a telco set aside whole network slices for paying customers. This is the gap Airel is operating in. Its argument is simple.

[00:18:01]Net neutrality is about content, not customers. Priority Postpaid doesn't favor Netflix over YouTube. It favors a post-paid user over a prepaid one. But once that post-paid user is on the network, every app they open is treated the same. The strongest counterargument is one made in the US. It says that Telos are stretching the specialized services exception into a loophole it was never designed for. So, the exception was meant for things that physically couldn't work on the regular internet at scale and not ordinary services that ran faster for high-paying customers. Now, in the US, the 2024 net neutrality order was clear. Consumer slicing wasn't what the exception was meant to cover. T-Mobile took the hint and kept its slicing limited to enterprise and emergency services.

[00:18:47]Singapore, meanwhile, went the other way. Singtel openly sells 5G plus priority passes to consumers for a few dollars at a time. no regulator pushing back.

[00:18:59]So the technical fight is interesting but it's downstream of something more basic. Indian Telecom has a revenue problem. Now Airel's ARPU which is the average monthly revenue per user was rupes 257 in the quarter ending March 2026 the highest in India. That's only around $3 a month. For comparison China's ARPU is around rupes 600.

[00:19:21]Europe's is over rupes 1,000. The US is over rupees 4,300.

[00:19:26]All many multiples of our benchmark. And our industry has spent tens of billions of dollars combined on 5G spectrum and capex since 2022 without getting adequate returns to match. So far, ARPU has grown only by raising prepaid prices and the 2024 round of hikes pushed prepaid tariffs up by 17 to 20%. The problem is that this growth has run into a wall which shows up in one number.

[00:19:51]According to try data in 2020 the average monthly spend on prepaid was rupees 84 and on postpaid was rupes 244 a gap of rups 160 by 2025 prepaid averaged rups 194 and postpaid rupees 199 a gap of 5 rupees the premium that post-paid users used to pay over prepaid users has for all practical purposes vanished a 97% collapse in 5 years. Now, this was weird because post-paid is supposed to be the high margin segment.

[00:20:24]At Airel, 7 to 8% of customers are on post-paid, but they generate 12 to 13% of mobility revenue. It has lower churn and longer commitments with predictable bills. Every telco wants post-paid users, but why would any prepaid user migrate today? That's the engine driving priority. Post-paid slicing may not entirely be about better network experience for the sake of it. It certainly also provides another reason for the post-paid premium to exist again by giving the post-paid user something a prepaid user will find it hard to have no matter how much they recharge for.

[00:21:00]Then you sell migration from prepaid to postpaid and the numbers work out the way needs them to. The cheapest priority postpaid plan is rupes 4.99 a month. A prepaid user spending around rupes 300 a month who migrates pays roughly 50% more. Multiply that across the conversions AEL projects and you have the next leg of ARPU growth without needing another politically painful prepaid hike. So what makes this an irresistible move commercially is that 5G standalone network is already built.

[00:21:30]The slicing capability is just software running on top of it. Moving a user from the regular slice to the priority slice is essentially going to cost zero.

[00:21:40]Almost the entire monthly uplift from a prepaid to postpaid conversion flows straight through to operating profit.

[00:21:48]Now, Airel's strongest defense is also its weakest. Its submission tells the parliamentary committee that the 5G network is currently running at only 38% of its capacity. Postpaid users account for just 4% of that load. Even after priority postpaid pushes postpaid up to maybe 6% there's still around 60% spare capacity for everyone else. So no one is being slowed down. That's true today.

[00:22:14]But will it be true at scale? We can't say for sure. The 2020 try objection to Red X and Platinum was never about immediate slowdowns. It was about what happens when the network loads up. As more Indians shift to 5G and data usage keeps climbing, that 60% spare capacity shrinks. At some point, keeping a guaranteed lane for post-paid has to come from somewhere. It'll show up as everyone else's spectrum being taken away for priority customers. Another claim from Airel is that since prepaid customers earn them most of their revenue, they have no incentive to harm those customers. The intent of priority postpaid isn't to make prepaid worse, but to make post-paid visibly better so that highv value prepaid users migrate.

[00:22:57]If migration works as designed, average prepaid quality doesn't have to fall for the strategy to pay off. The DOT now has two decisions to make. Is customer tier prioritization like what Airel is doing a net neutrality issue at all or not?

[00:23:12]Does retail customer slicing qualify as a specialized service which is technically allowed under the law or is that stretching the legal limits of the definition? How do lands on these decides more than whether Airel keeps priority postpaid? It decides what kind of internet 95% of Indians get to use for the next decade and more importantly whether telco operators will be able to increase their ARPU or will have to get more creative in trying to achieve that.

[00:23:42]Now coming to the tidbits. A Singapore court has sentenced Baiju's founder Baiju Raindran to 6 months in jail for contempt of court, saying he failed to comply with multiple orders related to his assets. The ruling adds to mounting legal pressure as global investors and lenders pursue recovery claims linked to the EDC firm's collapse. Coming to the next tidbit, Maharashtra's priced Alfonso mango crop has suffered losses of 85 to 90% in key growing regions due to extreme heat and El Nino linked weather disruptions. Export demand has also weakened amid the Iran conflict hurting farmers, traders and businesses linked to the mango supply chain. Coming to the final tidbit, SEBI will launch a pilot project to test tokenization of corporate bonds using distributed ledger technology or DT with rollout expected in 6 to9 months. The regulator believes tokenization could improve liquidity and enable faster, more automated settlements in India's corporate bond market. That's all the news I have for you. Thank you so much for watching and see you in the next one.

[00:24:41]>> Disclaimer, this content is forformational purposes only. None of the stocks, brands or products mentioned are recommendations or endorsements.