Realty stocks were in focus today, surging up to 10% on expectation of improved outlook for the realty sector.
Shares of Oberoi Realty, Prestige Estates Projects, Indiabulls Real Estate, and Sobha surged up to 10% in intraday trade.
While Brigade Enterprises, Godrej Properties, Sunteck Realty, and DLF among others, gained in the range of 2-4%.
There are many factors at play here.
On account of lower home loan interest rates, fast approaching festival season is expected to fuel demand for real estate properties.
The festival season is considered the best for real estate companies in terms of sales.
Realty major DLF reported sales booking jump of nearly 7-fold year on year (YoY) to Rs 10.1 bn during the April-June quarter, on strong demand for its independent floors and luxury homes in Gurugram.
In its investor's presentation, DLF said it sustained sales momentum during the June quarter despite the resurgence of infections.
Out of the total sales bookings in June quarter of 2021, the launches of new projects contributed Rs 5.4 bn.
The company's management also gave a positive commentary. DLF's net debt reduced by Rs 1.4 bn during the June quarter and came down to Rs 47.5 bn.
Meanwhile, Oberoi Realty reported sales volume of 0.9 lakh sq ft (up 6.5x YoY). The sales value was up 5.9x YoY at Rs 1.7 bn.
Oberoi Realty's management said the real estate sector is undergoing major consolidation as very few developers have the financial stability to undertake large capital-intensive projects.
Macrotech Developers (Lodha) clocked a total sales booking of Rs 9.6 bn, of which Rs 6.5 bn came in June.
Bullish on the outlook for housing demand, the company said,
Last week on Friday, Macrotech Developers reported a consolidated net profit of Rs 1.6 bn for the June quarter. It had posted a net loss of Rs 1.3 bn in the year-ago period.
We reached out to Brijesh Bhatia, Research Analyst at Equitymaster, for his view on the realty sector.
Here's what he had to say:
To learn more about ratio charts, you can watch this video by Brijesh.
Most of the realty stocks ended on a positive note today.
Among the top stocks, Oberoi Realty zoomed over 10% to Rs 755 on the BSE.
Meanwhile, Prestige Estates surged soared 7% to Rs 367.
Sobha, Omaxe, and Puravankara gained 4-5% while Kolte Patil Developers surged 11% to Rs 266.
Both, the BSE Realty Index and the Nifty Realty Index gained 4% as compared to a 0.7% rise in BSE Sensex.
In the past three months, realty indices have outperformed the benchmark indices, surging over 35%.
To know more, check out real estate companies' results here.
You can also compare top realty stocks with their peers.
Oberoi Realty vs Sunteck Realty
Buyers always trust the developers that have a firm delivery track record.
These players have better access to land deals as landowners will not always trust smaller developers.
Their debt levels are also falling. All listed developers surveyed showed a decline or flat debt numbers over the last year, even though in the last decade they had risen sharply. Also, large developers can borrow at rates that are much lower.
However, one must be careful while selecting stocks from the realty sector.
Here's what Tanushree Banerjee, Co-head of Research at Equitymaster, has to say about the realty sector.
Market experts are suggesting that the June quarter will not be as good as the March quarter due to the state-wise lockdown, but the long-term story of the real-estate market has been maintained.
Record low interest rates, good schemes, discounts, are among the key drivers boosting outlook for the sector even as stamp duty cuts have been rolled back. Construction activities have also resumed.
As per reports, property prices have begun to rise at rates seen only before the 2007-08 global financial crisis (the biggest since the Great Depression).
Industry experts are predicting realty prices in India to rise more as steel and cement costs have risen, making it more difficult for the companies to sell flats without baking in higher input expenses.
But how long can the rally sustain?
The outlook for the sector looks much better than what it was a year ago, but with the pandemic far from over, there can be volatility.
It remains to be seen how the realty sector performs as the activity reopens.
To know what's moving the Indian stock markets today, check out the most recent share market updates here.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...
Yash Vora is a financial writer with the Microcap Millionaires team at Equitymaster. He has followed the stock markets right from his early college days. So, Yash has a keen eye for the big market movers. His clear and crisp writeups offer sharp insights on market moving stocks, fund flows, economic data and IPOs. When not looking at stocks, Yash loves a game of table tennis or chess.
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