Sector watch: Nifty Realty index nears 52-week high; DLF hits 22-month high

With high prices and slow demand, residential real estate inventory has piled up massively
Shares of real estate companies were in focus on Friday with Nifty Realty index rising 2 per cent, hitting an over five-month high led by DLF and Oberoi Realty.

At 02:35 pm; Nifty Realty index was up 1.8 per cent at 287.50 points, as compared to 0.91 per cent in the benchmark Nifty 50. The realty index hit an intra-day high of 288.55, its highest level since July 5, 2019. The index is 2.4 per cent away from its 52-week high level of 295.50.

DLF was trading higher for the third straight day, up 3 per cent at Rs 231 on the NSE. The stock real estate developer hit 22-month high and trading at its highest level since February 2018. The market value of DLF has zoomed 62 per cent from its October lows of Rs 142, against 8 per cent rallied in the benchmark index. The stock was included in the MSCI Global Standard Index with effect from November 26, 2019.

DLF posted positive pre-sales trajectory for a second consecutive quarter across the development portfolio, settlement of DLF Cyber City Developers Limited (DCCDL) dues and strong lease rental momentum.

While announcing Q2 results on November 7, the management said the development business has been performing well, and achieved net sales of Rs 725 crore in Q2, and expects this momentum to sustain. Pursuant to the settlement of inter-company payables, the net debt for the company stood at Rs 4,461 crore at the end of the quarter. We are committed to reducing it in the near term, it added.

“DLF’s luxury portfolio is expected to see increased momentum in 2HFY20E. With strong balance sheet, robust lease momentum and residential pre-sales expected to pick-up in 2HFY20, DLF is well placed,” according to analysts at HDFC Securities. The brokerage firm maintains ‘buy’ rating on the stock with 12-month target price of Rs 258 per share.

Meanwhile, Christopher Wood, global head of equity strategy at Jefferies has replaced his investment in Godrej Properties with DLF. CLICK HERE TO READ FULL REPORT

As regards to Oberoi Realty, analysts at Antique Stock Broking maintain a ‘BUY’ rating with target price of Rs 630 per share, keeping in mind the impending new project launches in Thane and Goregaon and substantial progress in underconstruction annuity assets. The brokerage firm believes company is poised for strong growth in volume once the Thane/ Goregaon projects are launched. The stock was trading 4 per cent higher at Rs 528 on the NSE on Friday.

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