Prerna Infrabuild Ltd Management Discussions

Management Discussion and Analysis is given in a separate section forming part of the Directors Report in this Annual Report.

The global economy in CY 2025 saw a year defined by the recalibration of trade relationships, persistent geopolitical uncertainty, and a gradual normalization of monetary policy. World output is estimated to have expanded at around 3.4%, broadly in line with CY 2024 stabilization efforts, but the underlying texture of growth was distinctly uneven. Economic activity remained resilient, supported by easing inflation, gradual normalization of monetary policy, steady domestic demand across several large economies, and sustained investment in technology, particularly in Artificial Intelligence (AI) and digital infrastructure. These structural factors helped offset persistent challenges arising from trade fragmentation, elevated tariffs, and ongoing geopolitical uncertainty.

Global Economic Outlook

Global growth is expected to remain at 3.1% in CY 2026, below the IMFs pre-pandemic long-term average of 3.7%, declining from last year amidst prolonged geopolitical tensions and trade-related uncertainties. AI-related investments and still accommodative financial conditions are supporting economic activity, even as bouts of heightened asset price volatility reflect shifting market sentiment.

Recent energy price increases due to the West Asia conflict have heightened upside inflation risks and clouded the global growth outlook. The outlook is highly contingent on the evolving situation in West Asia: an early resolution would likely limit the damage, whereas further escalation and a protracted conflict could have a more severe impact on the global economy. At the same time, the ongoing trade and policy uncertainty is reinforcing concerns about the outlook. Advanced economies are forecast to grow by 1.8% during the year, marginally less than last year, while Emerging Markets and Developing Economies (EMDEs) are expected to grow at 3.9% over the same period, 50 bps lower than last year. The strengthening of the US dollar after the outbreak of the West Asia conflict on safe-haven demand has had a direct impact on emerging economies. Global headline inflation, after moderating steadily in recent years, is projected to tick up to 4.4% in CY 2026, reflecting the impact of the Middle East conflict, which has pushed up energy commodity prices and disrupted global supply chains. However, assuming the conflict remains limited in duration and scope, inflation is expected to resume its downward trajectory in CY 2027, easing to 3.7%, led by the expectation that energy prices will normalize as hostilities subside and the lagged effects of prior monetary policy tightening continue to anchor inflation expectations.

Indian Economic Overview

Indias economic fundamentals enter FY 2026-27 in a position of notable strength. The RBI projects Indias GDP growth for FY 2026-27 at 6.6%. Indias domestic growth is on an upward trajectory owing to multiple factors such as robust domestic demand, income tax and goods and services tax (GST) rationalization, front-loading of government capital expenditure (CAPEX), along with facilitative monetary and financial conditions and benign inflation. The IMF, in its April 2026 World Economic Outlook, has affirmed Indias status as the worlds fastest-growing major economy for the near future. However, risks remain due to uncertainties from the ongoing West Asia conflict, potential supply disruptions and global financial volatility. Volatility in global crude oil prices remained a key macroeconomic factor influencing the Indian economy during the year. Elevated and fluctuating oil prices impacted import costs, inflation levels, transportation expenses, and overall input costs across industries, given Indias dependence on energy imports. Higher crude prices also exerted pressure on the trade deficit and currency movement, while affecting consumer spending and corporate profitability in energy intensive sectors. The weakening of the Indian Rupee during the year, while supporting export competitiveness 2026

Residential Outlook: Stable, Quality-Led Growth

The RBIs repo rate cut to 5.25% provides a significant demand catalyst, particularly for first-time buyers and the premium segment.

Simplified transactions for homebuyers

Tax compliance was eased for resident buyers purchasing immovable property from non-residents, with the removal of the requirement to obtain a TAN, allowing TDS deposits through the buyers PAN, streamlining cross-border transactions and reducing administrative friction. This is expected to particularly benefit NRI participation in Indian real estate.

Union Budget 2026-27 takeaways

The Union Budget 2026-27, presented on February 01, 2026, continued the governments capital expenditure-driven growth model, reinforcing infrastructure as the backbone of Indias economic and urban expansion. While the budget did not introduce direct demand-side incentives for housing, its sharp focus on infrastructure, urbanization, and institutional capital is expected to create strong indirect momentum across residential and commercial real estate segments, setting a constructive backdrop for long-term sector growth.

Challenges Regulatory and Approval Delays

Despite significant improvements post-RERA, regulatory complexity remains a persistent challenge. Delays in land use approvals, construction permits, and retrospective policy changes continue to introduce cost and timeline risks into project execution. As the market shifts towards larger-scale, premium developments, the stakes associated with approval delays have risen commensurately, making regulatory navigation a critical competency for developers.

Financing Costs and Developer Leverage

While the RBIs rate cut trajectory is broadly supportive, smaller and mid-sized developers continue to face challenges in accessing competitively priced capital. The divergence between large, well-capitalized developers, who benefit from strong brand equity and diversified funding sources, and more leveraged regional players remain pronounced. Rising construction material costs, higher land acquisition prices, and the continued shift towards premium products have collectively increased capital requirements for competitive development, creating structural barriers for smaller participants.

Human Resources and Technology Transition

Indias real estate sector continues to grapple with skilled Labour shortages that disrupt construction timelines and inflate project costs. The imperative to reduce dependence on manual Labour through the adoption of modern construction methods, including pre-fabrication, modular construction, and digital project management tools, is pressing. At the same time, the rapid integration of AI, data analytics, and PropTech into sales, asset management, and facility operations requires developers to invest in technology capabilities, with those who fail to adapt at risk of losing competitive ground to digitally native platforms and tech-forward developers.

Opportunities

Premium and Luxury Housing Demand

The structural shift towards premium and luxury housing represents one of the most durable opportunities in the Indian residential market. With homes above ?1 crore now accounting for 50% of total annual sales, up from a negligible share just five years ago, and high-net-worth individuals, dual-income households, and returning NRIs driving demand, developers with strong brand equity and the ability to deliver quality products in prime locations are well positioned to capture sustained value creation. The RBIs rate cut to 5.25% further enhances the economics of premium homeownership.

Health and Safety Management Systems

Safety is our foremost priority and a cornerstone of our operational excellence. We are committed to the health and safety of every employee and stakeholder, as outlined in our Health & Safety Policy. A robust Health and Safety Management System is certified to the ISO 45001:2018 international standard and follows a proactive Plan-Do- Check-Act (PDCA) cycle with leadership commitment, active consultation, and participation at all levels as its foundation in pursuit of a Score Zero safety record.