DLF shares gain as realty stocks stand to benefit from interest rate cut

DLF shares are gaining today. This, after the 25 basis point rate cut announced by RBI today. At 1:30 IST, 5^th December, 2025, DLF shares are up by 1.76%, trading at Rs 721.80. Nifty 50 index is up by 0.60% at this time.

RBI has cut down the repo rate by 25 basis points or 0.25% to 5.25%. This rate cut may result in banks and financial institutions reducing interest rate on home loans too.  EMI on home loans may go down because of this. This may increase demand for new homes. Realty companies like DLF therefore stand to gain.

Lower interest rate lowers cost of capital for realty companies

Lower interest rate also lowers the cost of raising funds for real estate companies. DLF may therefore benefit from this too. Cost of capital can be significant for real estate companies. This interest rate cut may give a boost to the economy by making interest sensitive consumption and investment cheaper. This can increase economic growth. Higher economic growth results in more job creation and higher wages. More people are therefore able to buy homes or invest in real estate.

DLF, Realty stocks have underperformed this year

DLF shares have underperformed this year. Year-to-date (YTD) in 2025, the stock has lost 12.44%. Nifty 50 index has gained 10.32% in this period. The stock has underperformed the Nifty 50 index by around 2% this year.

Nifty Realty Index has lost 14.18% YTD in 2025. DLF, with a 20.91% weight, has the highest weight in the Nifty Realty index. DLF shares have performed better than the Nifty Realty index this year. This implies that shares of some other realty companies have performed worse than DLF shares this year.

Average Price-to-Earnings (P/E) ratio at which shares of companies that make up Nifty Realty index are currently trading is 41.55. DLF shares are also currently trading at around this P/E ratio.

Prevailing high prices is adversely impacting demand for houses. Homes have become less affordable for the middle income and lower income segments. This has negatively impacted the performance of real estate companies like DLF. This interest rate cut may bring further relief for both real estate companies and home buyers.

Disclaimer : This content is only for informational purpose. It does not make any recommendation to act or invest.

Source: NSE