Kshitij Anand of ET has pointed out that the realty index has severely underperformed and lost over 11 per cent in the last one year.
He has spoken to leading experts like Kishor Patel, Saurabh Mukherjea, Daljeet Singh Kohli and Nitasha Shankar and pointed out that the recent correction offers a golden opportunity to investors to invest in some of these stocks with a longer investment horizon. He has also collated the favourite realty stocks of the experts:
Stock picks of Daljeet Singh Kohli of IndiaNivesh
Oberoi Realty & Ashiana Housing:
We have a buy rating on Oberoi Realty. The trigger point for the company is launch of Borivali project. Pre-launch and all those talks have been going on for quite some time, but formally they will be launching in around Dussehra time. I guess that will become a trigger point for the stock for a rally, and we have normally seen that Oberoi Realty gets a good pre-booking amount. They have been very successful in earlier projects because of this pre-booking part. They also mentioned something about the Worli project which is again much awaited project.
I guess there are things going on well for Oberoi Realty. The good quality companies will continue to perform well. Of course, we do not expect that it will be fireworks for all these companies, because all these projects will take time to actually materialise.
We also have a buy rating on Ashiana Housing.
Stock picks of Prakash Diwan of Altamount Capital Management
We have heard this often that this company follows a very asset light model, gets into very strategic JVs with people who own the land and the contentious issues that you would face in acquiring land banks is not something that they have had to grapple with.
It has a lean balance sheet that they have used to grow. My sense is that some of the launches in the recent past which have not been factored into the price. When we look at realty stocks, we have a huge list which kind of edges out the likes of Godrej Property. But, nobody talks much about this company, but real estate is coming back thanks to some marquee investors.
From last year onwards it has not participated in the market, and it has been in fact an underperformer for quite a bit of last one year also.
DLF has already shown some smart moves. It looks like that the stock has bottomed out to the extent that it would at least in current situation. If there is any turnaround kind of potential on upside, real estate makes a great particularly if the companies are good, balance sheets are decent enough.
Oberoi Realty, Godrej, Sobha Developers:
Most of the real estate stocks such as Oberoi Realty, Godrej Properties, Sobha Developers have not participated much in the last one year. These are hidden gems that would kind of start getting polished and resurfaced given the fact that real estate is making a comeback of sorts.
Stock picks of Nitasha Shankar of YES Securities
The company has high leverage and high working capital cycle currently, and will benefit from the rate cut on both counts.
J Kumar Infraprojects:
J Kumar has a high working capital cycle that has got stretched owing to its entry into metro projects. Even though it has low leverage (debt to equity at the end of FY15 was 0.5x), it would still benefit from a rate cut as it would help any incremental capex activity, as it is can potentially witness better order flows.
Another company which may benefit indirectly as the private sector may start capital spending and given its superior balance sheet, the company can potentially witness solid order inflows.