Shares of real estate companies were trading higher for the fifth straight day, with Godrej Properties and Oberoi Realty hitting their respective all-time highs on the National Stock Exchange (NSE) on Monday.
At 11:05 am, Nifty Realty index, the largest gainer among sectoral indices, was up 1.5 per cent to 289 levels, as compared to a 0.6 per cent rise in the Nifty50 index. In the past week, the realty index has rallied 6 per cent, relative to a 1.4 per cent rise in the benchmark index.
Among individual stocks, Godrej Properties hit a new high of Rs 1,065 per share, rallying 6 per cent intra-day, after the company on Saturday said it has raised Rs 2,100 crore by issuing equity shares to qualified institutional buyers (QIBs). The company issued shares at price of Rs 928 per share.
The real estate arm of Godrej Group proposed to use the funds to invest in its subsidiaries and joint ventures to meet the funding requirements for existing and new development projects and debt repayment.
Furthermore, Oberoi Realty, too, hit an all-time high of Rs 626 apiece, soaring 3 per cent intra-day. The stock was trading higher for the fifth straight day on the NSE. It has surged 15 per cent in the past week.
According to the management of Godrej Properties and Oberoi Realty, the consolidation is a key trend in real estate against the backdrop of liquidity stress. The current market provides an interesting opportunity for larger developers to acquire projects at reasonable valuations.
Moreover, with higher subsidies provided to buyers, a rising focus on affordable housing and marginal GST rates —coupled with a thriving start-up ecosystem around real estate for student housing and flexible work spaces – the real estate market appears set for better times.
Analysts at JM Financial believe Godrej Properties is well placed to reap benefits in current operating environment by leveraging its brand name and well capitalised balance sheet. The brokerage firm expects company to gain market share across regions.
Given Oberoi Realty’s strong presence in MMR (Mumbai Metropolitan Region) region, analysts at Karvy Stock Broking believe the company will be a key beneficiary of current environment wherein organised players are expected to gain market share as financial stress rises.
Brokerage firm Motilal Oswal Financial Services believes that listed players with a good operational track record will be the key beneficiaries over the medium to long term, as the structural reforms-led consolidation is likely to continue, with larger players gaining a significant market share at the cost of small and large developers with poor balance sheets and funding constraints and affordable housing will continue gaining traction on government grants and subsidies.