A common theme among the brokerages regarding realty companies is the possible consolidation where bigger companies will be able to ride the storm and gain market share at the expense of smaller players. HDFC Securities, for instance, sees DLF, Prestige Estate, and Brigade Enterprises doing well in the residential segment.
As regards the commercial segment, those at Edelweiss Securities expect the Covid-19 pandemic to hasten the consolidation in the office space in favour of financially strong developers, which in turn will help them gain market share.
Crisil, on the ther hand, estimates retail to be the worst-hit segment with the recovery seen to be slower than the rest. It expects FY21 revenue of the malls to fall by 50 per cent and reach 80 per cent of FY20 level only by FY22.
Analysts at HDFC Securities echo this sentiment. "Pain for malls may continue with increase in vacancy and lower rental resets, whilst offices may see resilient collections with lower rental resets, deferrals in new leasing and marginally higher vacancy."
Within the retail segment, multiplexes that are yet to open would be among the hardest hit. High capacity loss due to social distancing and preference for content over OTT platforms would delay recovery. Apparel segment at the malls would also feel the pinch as some of the demand could permanently shift to online e-commerce platforms, analysts say.
In the last five months, the majority of the realty stocks have underperformed the benchmark index in this bacdrop. In fact, the Nifty Realty index has risen 20.13 per cent from the lows of March 23, 2020 as compared to Nifty's 47.78 per cent gain in the same period.
Among individual stocks also, only three stocks -- Indiabulls Real Estate (up 59.81 per cent), Godrej Properties (up 55.81 per cent), and Sobha Developers (up 51.86 per cent) have outperformed the Nifty50 index.
Among others, Prestige Estate Projects gained 46.09 per cent during this period. Sunteck Realty, DLF, Brigade Enterprises, Oberoi Realty were up in the range of 14-22 per cent while Phoneix Mills and Prestige Estate Projects rose 8.14 per cent and 2.96 per cent, respectively. On the other hand, Omaxe tumbled 51.63 per cent.