Chris Wood rejigs India portfolio; adds Macrotech Developers, Adani Ports

In terms of sectors, Wood remains bullish on the real estate sector and suggests the Indian realty market to be one of Asia's hottest investment bets, besides Singapore

Christopher Wood, global head of equity strategy at Jefferies has rejigged his India exposure – both in his Asia ex-Japan and India long-only portfolios. The investment in Godrej Properties has been replaced in his Asia ex-Japan long-only portfolio with an investment in Macrotech Developers with a 6 per cent weighting. The investment in Bajaj Finance, on the other hand, has been reduced by one percentage point.

As regards the India long-only portfolio, Wood has replaced Jubilant FoodWorks with an investment in Adani Ports & Special Economic Zone with a 4 per cent weighting. CHECK ENTIRE PORTFOLIO HERE

“As for the India long-only portfolio, the investment in Bajaj Finance will be reduced by two percentage points while the investment in State Bank of India (SBI) will be increased by two percentage points. The investments in Macrotech Developers and DLF will be increased by two percentage points and one percentage point respectively, while the investments in Godrej Properties and Century Textiles will be reduced by one percentage point each,” Wood wrote in his weekly note to investors, GREED & fear.

In terms of sectors, he remains bullish on the real estate sector and suggests the Indian realty market to be one of Asia’s hottest investment bets, besides Singapore.

“Both (property markets) are booming after protracted downturns. The India property data (for October) shows a continuing acceleration in activity, which confirms again GREED & fear’s base case, namely that rising interest rates will not stall the recovery,” Wood said.

And recent Knight Frank data does prove Wood correct.

According to a recent report by Knight Frank – a leading international property consultancy – Mumbai, Bengaluru and New Delhi registered an increase in average annual prices in the September 2022 quarter. The rise in average prices in Mumbai, according to the report, was recorded at 4.8 per cent year-on-year (YoY), Bengaluru (3.3 per cent YoY) and New Delhi (1.2 per cent YoY).

“India continues to distinguish itself as one of the most resilient large economies of the world and market sentiments remain strong. While increasing mortgage rates have weighed down prime residential markets globally, the Indian prime residential market has been relatively strong and should be able to sustain the momentum,” said Shishir Baijal, chairman and managing director at Knight Frank India.

At the bourses, the Nifty Realty index has, however, underperformed amid rising interest rates, falling around 5.2 per cent thus far in calendar year 2022 as against 8 per cent rise in the Nifty50.

The stock performance, too, has been polarised. While Phoenix Mills, Oberoi Realty, DLF, Prestige Estate and Brigade Enterprises that comprise the Nifty Realty index gained between 2 per cent and 47 per cent during the year, Indiabulls Real Estate, Sobha, Godrej Properties and Sunteck Realty slipped between 17 per cent and 47 per cent, ACE Equity data shows.

That said, analysts remain optimistic on the road ahead for the realty sector in the hope that the Reserve Bank of India (RBI) may moderate the pace of rate hikes in 2023 as inflation is tamed. Momentum in the residential segment, revival in commercial and retail segment as the economic activity gathers steam and continued market share gain by top developers make analysts at Elara Capital bullish on this segment.

“We upgrade Godrej Properties to Buy from Accumulate with an unchanged target price of Rs 1,508; downgrade Prestige to Accumulate from Buy with an unchanged target price of Rs 525. We recommend buying Oberoi Realty, Sobha and Mahindra Lifespace; and Accumulate on Brigade Enterprises. Key risk is a sharp rise in interest rates by the RBI,” wrote Rupesh Sankhe of Elara Capital in a recent note.