Realty shares in demand; Oberoi, IB Realty, Prestige Estates, Sobha up 5%

The real estate sector is undergoing major consolidation as very few developers have the financial stability to undertake large capital-intensive projects, Oberoi Realty's management said

Shares of real estate companies were in demand in Monday's session, pushing Nifty Realty and the S&P BSE Realty to their respective multi-year highs on expectations of improved outlook.

At 10:25 am, Nifty Realty Index (up 3.9 per cent) and the S&P BSE Realty Index (up 3.8 per cent) were up nearly 4 per cent, as compared to a 0.6 per cent rise each in the Nifty50 and the S&P BSE Sensex. In the past three months, realty indices have surged 35 per cent compared with an 8.4 per cent gain in the benchmark indices.

Oberoi Realty, Prestige Estates Projects, Indiabulls Real Estate and Sobha were up 5 per cent each while Brigade Enterprises, Godrej Properties, Sunteck Realty and DLF were up between 2 per cent to 4 per cent on the BSE in intra-day trade.

According to ICICI Direct, the realty index and its constituents have just recorded a strong breakout from a decade long base formation and are placed on the cusp of the next major structural bull market. "We expect the sector to outperform in coming years wherein companies like DLF, Oberoi Realty, Godrej Properties, Phoenix Mills, Brigade enterprises, Indiabulls Real Estate and Sobha, which collectively contribute 87 per cent of Nifty Realty Index, are poised to generate above-average returns in years to come and should be considered as long term investment bets in portfolios," it said.

Among individual stocks, Macrotech Developers, the recently listed real estate company, surged 6 per cent to Rs 905.70 on the BSE in the intra-day trade on Monday. The stock was trading at its highest level since its listing on April 19, 2021. In the past one month, the stock has zoomed 32 per cent as against a 0.75 per cent rise in the benchmark index.

In the April-June quarter (Q1FY22), Macrotech Developers clocked a total sales booking of Rs 957 crore, of which Rs 654 crore came in June. Bullish on the outlook for housing demand, Lodha said: "Importance of owning a house has increased significantly since the outbreak of Covid-19 pandemic. People are using their savings to buy homes. Interest rates on home loans are at a historical low." CLICK HERE FOR FULL REPORT

On Friday, Macrotech Developers reported a consolidated net profit of Rs 161 crore for the quarter ended June. It had posted a net loss of Rs 134 crore in the year-ago period. Total income grew to Rs 1,712 crore in the first quarter of this fiscal year from Rs 573 crore in the corresponding period of the previous year.

Oberoi Realty, the top gainer, was up 7 per cent and hit a new high of Rs 720.45 after it reported sales volume of 0.9 lakh sq ft (up 6.5x YoY on washout base of Q1FY21 but down 91 per cent QoQ) largely due to the second wave impact and high base of Q4FY21, which had a couple of launches including a big launch at Goregaon. The sales value was up 5.9x YoY, down 91 per cent QoQ at Rs 170 crore. On the financial front, reported revenues grew 141 per cent YoY but were down 64 per cent to Rs 284.3 crore. Margins at 43.9 per cent were down 334 basis points (bps) QoQ.

The management said the real estate sector is undergoing major consolidation as very few developers have the financial stability to undertake large capital-intensive projects. Therefore, the market share of reputed brands with strong execution capabilities will continue to grow, it said.