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DLF to Suntech Realty — why real estate stocks are soaring?

After the positive commentary by DLF management, market is expecting reduction in debt of other real estate companies and hence this buying is happening on the positive changes taking place in their EPS (Earnings Per Share). (Mint)Premium
After the positive commentary by DLF management, market is expecting reduction in debt of other real estate companies and hence this buying is happening on the positive changes taking place in their EPS (Earnings Per Share). (Mint)

  • According to stock market experts, lower home loan interest rate and fast approaching festival season are two major reasons for rise in real estate stocks' price

On account of lower home loan interest rates, fast approaching festival season expected to fuel demand for real estate properties, realty stocks are witnessing fresh buying these days. Realty major DLF share price shot up 2.40 per cent in the intraday trade while in the last 5 trade sessions, DLF shares scaled around 3.2 per cent. Suntech Realty stocks too gained around 3 per cent in last 5 trade sessions. Realty stock Brigade Enterprises surged to the tune of 3 per cent in this time period.

Speaking on the reason for rise in realty stock price; Avinash Gorakshkar, Head of Research at Prifitmart Securities said, "We can attribute two major reasons for the rise in real estate stock price — lower home loan interest rate and fast approaching festival season. Historically, the period is considered best period for real estate companies in terms of sale. Apart from this, recent DLF numbers have been announced and the commentary of the company promises higher sales in the festival season. Apart from this, after DLF's first quarter result announcement, market is expecting strong quarterly numbers from other real estate companies too."

On how DLF results are fueling real estate share price Ravi Singhal, Vice Chairman at GCL Securities said, "After the positive commentary by DLF management, market is expecting reduction in debt of other real estate companies and hence this buying is happening on the positive changes taking place in their EPS (Earnings Per Share). In coming times, we can expect further rise in the real estate counters as next quarter will be festival season and sales of real estate companies are expected to go up in this period."

Asked about the stocks that one can buy in current market scenario Ravi Singhal said that one can buy DLF, Godrej Properties and Mahindra Lifespace Developers shares for 6-9 months time-horizon. In this period, Singhal said, Godrej share price may go up to 440, Godrej Properties stock may hit 1700 levels while Mahindra Lifespace Developers is expected to go up to 1100 per share levels.

Realty major DLF reported sales booking jump of nearly 7-fold year-on-year to 1,014 crore during the April-June quarter of this fiscal, on strong demand for its independent floors and luxury homes in Gurugram. In its investor’s presentation, DLF said it sustained sales momentum during the June quarter despite the resurgence of COVID infections. Out of the total sales bookings in Q1 of FY22, DLF said the launches of new projects contributed 542 crore.

On borrowings, DLF said its net debt reduced by 141 crore during the June quarter and came down to 4,745 crore at the end of the first quarter.

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