One should, how­ever, ex­er­cise cau­tion as Q4 earn­ings could have some neg­a­tive sur­prises in store

The Economic Times - - Companies: Pursuit Of Profit -

Mum­bai: In­vestor­sarenowup­beat on hous­ing fi­nance and real es­tate com­pa­nies, thanks to the bud­getary mea­sures i nt e nded t o g ive hous­ing a boost. But one should be cau­tious as the earn­ings of the next quar­ter could well be the real mea­sure for sus­tain­able ex­u­ber­ance in the sec­tor, say ex­perts.

In­vestors can ex­pect 15-40% re­turns on in­vest­ments in shares such as Satin Cred­it­care, HDFC, DHFL, Go­drej Prop­er­ties, Sobha De­vel­op­ers and DLF over a year’s time, say bro­kers.

“Some re-rat­ing in stock val­u­a­tions can be jus­ti­fied due to the bud­get pro­pos­als,” said Ajay Bodke, CEO and chief port­fo­lio man­ager of Prab­hu­das Lil­lad­her.

“In­vestor money is com­ing in. Sus­tain­abil­ity of higher prices is de­pen­dent on strong earn­ings growth for those com­pa­nies in the medium term… Any fal­ter­ing in earn­ings growth will jeop­ar­dise th­ese level of high val­u­a­tions,” he added.

The Union Bud­get for 2017-18 has given in­fra­struc­ture sta­tus to the af­ford­able hous­ing seg­ment, a move that will help hous­ing fi­nance com­pa­nies raise funds at cheaper rates. It has also pro­posed to in­crease al­lo­ca­tion for the Prad­haan Mantri Awas Yo­jna (PMAY), which would pave the way for con­struc­tion of more houses. Time for com­ple­tion of projects too has been ex­tended to five years from three years.

“With rel­a­tively lower debt on their bal­ance sheets, some real es­tate com­pa­nies are draw­ing in­vestor at­ten­tion now,” said San­deep Nayak, CEO, Cen­trum Broking.

De­mand for af­ford­able hous­ing fi­nance is likely to in­crease fol­low­ing higher al­lo­ca­tion for PMAY, ICRA said in a re­port. This au­gurs well for builders and lenders. “Bud­get has given re­lief for both hous­ing fi­nance and real es­tate com­pa­nies,” said San­jiv Bhasin, ex­ec­u­tive VP, mar­ket & cor­po­rate af­fairs, IIFL.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.