HDFC Securities has a buy on these real estate stocks

highlighting the strong pre-sale momentum in the real estate sector; HDFC Securities’ report said, “Re-rating of real estate stocks has surprised us down the road as well, with Nifty Realty Index outperforming the Nifty Mid-Cap 50 Index by over 63 per cent in the last one year. While we were positive. In this sector, the extent of outperformance has been beyond our forecasts. The pandemic played a catalytic role in increasing the market share in the hands of organized real estate players. Banks, Equity Capital Providers, Buyers and Supply The chains were aligned to lead the way with strong developers. Strengthen this change.”

Citing the reason for the rally on DLF and Oberoi Realty stocks, the brokerage report said, “Buoyed by economic/earnings recovery/wealth creation in strong stock market, top eight cities of India are witnessing a strong growth momentum. We see an increase in the demand for large homes. Buyers are chasing the best developers, while there is a growing demand for plots, independent floors and low-rise developments. Buyers are flexible on capital values ​​beyond a certain pre-determined limit. If a project is good. They are ready to spend more. Now the elasticity of pay is higher in the luxury segment and developers like DLF and Oberoi will benefit.”

As a change from tradition, buoyed by market sentiment, some developers have started disclosing pre-sale numbers ahead of the results. Also, Brokerage Research expects DLF to report presales higher than ₹10 billion (brigade – ₹10 billion and Mahindra Lifespace – ₹3 billion). The momentum of pre-sales may continue into the festive season and new launches are likely to earn incremental delta.

“We expect Prestige, Oberoi and GPL to set new records during the third quarter, if the launch holds true,” the HDFC Securities report said.

Highlighting the Q2FY2021-22 earnings trends for the real estate sector; The brokerage said, “We expect the total revenue/EBITDA/PAT for Coverage Universe to grow by 22/31/0 per cent sequentially. The impact of commodity prices will subside over the project completion period as the companies have a Bars will take a hit. Projects complete. In our estimation, non-Mumbai developers need around 5-6 per cent price hike to absorb commodity inflation, while higher realization in Mumbai projects should guarantee 2-3 per cent price hike Overall, taking price hike may derail recovery and developers may not pursue it.”

On real estate stocks to buy today; “While the sector may see near-term headwinds, the long-term story remains intact. We believe that given the increasing buying preference of consumers for reputed developers in under-construction projects, we believe that there is a growing consumer preference for reputed developers in under-construction projects,” said HDFC Securities report. Tier 1 developers will gain market share. We are positively biased towards this segment. Our top picks are DLF, Oberoi Realty, Phoenix Mills, Brigade and Mahindra Lifespace.”

Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.