will government's massive surge in investment ... - Myiris.com

Apr-Jun 2013 Earnings Preview
Kejal Mehta
kejalmehta@plindia.com
+91-22-6632 2246
Pratik Shah
pratikshah@plindia.com
+91-22-6632 2256
Top picks
DLF
Real Estate
The Indian Real estate market is likely to continue to remain sluggish as buyers chose
to keep away from a market that is bearing the brunt of delays in approvals, rising
construction costs and high interest rates. Inventory pile up has been witnessed
across cities. Although property registration data in Mumbai has been strong in the
first half of CY13 on account of the previous festive season launches, sales for the
same period have remained dull. Prices have remained soft; however, in the absence
of a significant correction, volumes have not returned. NCR volumes have witnessed
some spikes and Bengaluru has remained strong on the back of several launches and
a favorable affordibility equation.
The RBI, in its mid-quarter monetary policy review, effected no changes in either the
repo rate or the CRR. Its cautious tone makes monetary easing in the near term
uncertain, which is not positive for the real estate sector as it is unlikely that lending
rates would come down in a hurry.
Companies are cautiously optimistic about the environment, given the prevailing
interest rates & liquidity crunch. The slate of launches is expected to be soft as
companies steadily repay debt & repair their balance sheets.
BSE Realty Index was down 19% for the April-June period, while the SENSEX was up
3% for the same period.
Relative Regional Stock performance
Mumbai Realty (Ex DB Realty) Delhi Realty South Realty
180
160
140
120
100
80
60
40
20
0
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
Oct-12
Dec-12
Feb-13
Apr-13
Jun-13
Source: Bloomberg, PL Research
July 8, 2013 161