NEW DELHI: Even as benchmark equity indices — Nifty50 and Sensex — shed over 1% during the last five trading sessions, BSE Realty Index advanced 6% in the same period. On Monday, when Sensex fell 13 points to 52,372.69, the Reality Index surged 3.6% and touched a fresh 10 year high of 3040.82 points.
Among individual stocks, Indiabulls Real Estate surged over 15% on Monday to close at Rs 138.35, while the Bengaluru-based Puravankara gained 13.96% to close Rs 108.95. Macrotech Developers hit a new high of Rs 814.90, up 6% in the intra-day trade on Monday. Macrotech’s stock has soared over 20% in three trading days after the company reported pre-sales growth of 88% year-on-year at Rs 957 crore in Q1FY22.
DLF, Godrej Properties, Oberoi Realty, Phoenix Mills, Prestige Estate, Sobha, Sunteck Realty and Mahindra Lifespace Developers surged anywhere between 2 to 7% on Monday. Analysts say that the rise in property registrations post the second wave has made this sector a favourite among investors. Also, low-interest rates, reduction in debt, and increased consolidation of organised players have improved the sector’s outlook.
“For real estate companies, overall net debt levels have declined 10% YoY, driven by improving operating cash flows and equity infusion via QIP/asset sales...There still seems to be some more upside in real estate stocks due to latent demand, stable prices, need for bigger/separate houses due to WFH and lack of other lucrative investment opportunities,” said Deepak Jasani, Head of Retail Research, HDFC Securities.
He, however, cautioned investors to check their risk appetite before entering these stocks afresh as “these have moved up quite a bit and can see some correction before they rise again.” At the current prices, Jasani prefers DLF, Kolte Patil, Oberoi Realty, Sobha, Phoenix mills and Mahindra Lifespace. Yash Gupta, Equity Research Associate, Angel Broking, “We expect the real-estate sector to outperform and this may be a start of a new upcycle in the sector after consolidation in the last 10 years.”