I took a stab at what price, Embassy REIT will become attractive
It all depends on what tax slab is one at and at what surcharge % they are at. Whatever bracket and surcharge, don’t forget to add the 4% Health & Education surcharge.
Let us assume that you are in the top tax bracket of 30%…(33% or 1/3 total for easy calculation)…last quarter was 2.39 rupees distribution was impacted by budget (45% of distribution), …so, the rough impact on the distribution is a 1/3 of the 45% or 15% must be the correction.
Assuming the pre-budget stable level of 330, this 15% correction works to 280.
If the market wants a post budget, post tax return of 6% (again tax brackets as above), the price works to 286.
If you want to breathe easy and buy/forget price, it is more like 273-275.
That is my back of the envelope calculation.
For me, I may not go near this, unless it is comes to 260s
PS - God forbid the REIT investor, if they decide to tax the dividend too !! who knows…anything is feasible. Nothing ever will surprise me, after this budget.
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