Real Estate stocks shine as sector becomes organised

November 13, 2006	(Be the first to rate this story!)  Loading ...
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The share prices of real estate companies, who have been specialising in particular areas of construction, like residential complex, or malls, have not only outperformed the benchmark 30-share Sensex including those companies who fall under the category of construction stocks but are not part of this business structure.

The real estate stocks have gained in the range of between 10% and 27%, while the Sensex gained 1.16% between November 3-10.

A real estate analyst opined that the real estate prices are yet to reach it peak and said, “The stock prices of only those companies have performed well who are into making residential complex or malls, or corporate offices.”

“More over the other reason as to why these companies have performed better is because most of these companies have a proper organisational structure. Better performance can be expected from companies who are organised, and have a value chain in their organisation. And that is what investors look for before investing,” said the analyst who did not wish to be named.

Perhaps this was one of the reasons as to why the initial public offerings (IPOs) of two new real estate companies — Parsavnath Developers Ltd (PDL) and Lanco-Infratech Ltd (LIL) — whose offer closed on Friday have been oversubscribed.

PDL received bids for more than 201 crore shares as against 3.32 equity shares on offer. This, analyst says is primarily driven by robust demand from overseas and other institutional investors. And LIL received bids for over 52 crore shares against the offer of 14.44 crore equity shares.

Interestingly, some of the top real estate stocks performed quite attractively during the period of these two IPOs (November 6-10). Narendra Properties Ltd, share prices gained 27.42% at Rs 69.70, Vijay Shanthi builders Ltd share price increased by 22.13% to close at Rs 54.35, and Ansal housing and construction Ltd share prices rose from Rs 283.20 to close at Rs 328.95 an increase of 16.15% during the period.

However, there have been a few who have been lagging the race, and their share prices saw marginal decline.

The analyst also said, “Because of the rising need for residential complexes in urban areas, fuelled with higher disposable incomes, the demand for quality housing has also gone up, which has boosted the sector.”

Long-term investors have also started investing in many mid-cap stocks of the real estate sector, which they feel may soon become large caps in the coming years, she added.

Source from financialexpress.com

News Published Under:   Real Estate India |

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