Wednesday, December 20, 2006

7 real estate companies

Source :

Almost all the sectors have made smart gains in the ongoing bull run of the Indian Equity market but things could not have been better for the real estate sector which has witnessed an astronomical appreciation in the market prices of its stocks. On the back of strong fundamentals of Indian economy, robust demand, rising property prices, phenomenal corporate earnings and continuous FII pumping, few real estate stocks have appreciated as high as 74,000% and as low as 3,000% in the last four years. Whether one is looking out for one year or four years returns, the real estate sector has outperformed the market convincingly.

Moneycontrol zeroes in on seven realty stocks on the basis of their price performance. Unitech has appreciated in excess of 75,000% in terms of stock price as well as market cap. The market cap in 2002 November was Rs 55 crore and now the market cap is around Rs 41,000 crore.

During the same period, price of Arrow Webtex scrip zoomed by over 44000% from Rs 1.35 to Rs 600. BF Utilities share gained 41800% from Rs 7 to Rs 2932.95, while Ansal Properties rose by 29,500% from Rs 3.33 to Rs 985.70.

Market Price (RS) Market Cap (Crore)
Companies 22 Nov. 2002 22 Nov. 2006 %change 22 Nov. 2002 22 Nov. 2006 %Change
Unitech 0.7 510.0 74,900.0 55.0 41,397.0 75,167.3
Arrow Webtex 1.4 599.8 44,325.9 0.7 180.0 24,900.0
BF utilities 7.0 2,933.0 41,799.3 26.0 11,045.0 42,380.8
Ansal Properties 3.3 985.7 29,500.6 11.6 3,450.0 29,615.8
Dawn mills 100.1 11,763.5 11,657.6 2.4 294.0 12,252.9
Lok Housing 4.3 335.4 7,791.8 5.1 382.0 7,346.4
Ansal Buildwell 3.3 235.2 7,136.9 2.1 173.6 8,087.7
Prices are adjusted for rights, bonus and splits

When we compare the performance of some of the sensex biggies, realty stocks are far ahead during the same period. ONGC appreciated by 258%, Reliance Industries limited went up by 370%, Infosys shot up by 325% and Wipro went up by 114%. Other heavyweights like ICICI Bank zoomed up by 977%, ITC by 354% SBI & HDFC by 417% and 384 % respectively. L&T appreciated by 691%.

Analysts attributed the spiralling of property and construction stocks to the huge amount of foreign investments flowing into the domestic real estate sector through real estate private equity funds and projects specific joint venture’s with leading overseas companies.

Right on cue, the real estate companies have caught the fancy of the investors on the domestic bourses. The valuation of the listed real estate companies with large land banks is piercing through the sky and the public offerings are also being lapped up with great enthusiasm.

For instance, the recent IPO of Parsavnath Developers which had planned to raise 1000 crore, received spectacular responses with 62 times over subscription. Sobha Developers IPO, which opened on 23rd of November, is getting good responses. The IPO’s of Orbit and DLF are yet to come.

Ishaan Real Estate (Raheja Group) raised 180 million pounds on London Stock Exchange (LSE) and on similar lines Hiranandani Constructions is looking at raising $ 500-750 millionn via IPO route on LSE.

Real Estate Potential in India

Market size as of now is estimated to be $12 billion, which is expected to grow at 33% to $ 50bn by 2010. There will be about 5 times increase in office space in the next 5 years, 200-million sq ft for organized retail by 2010 and over 50,000 new hotel rooms are going to be added in the next 5 years.

There is huge funds chasing real estate in India. For example, Goldman Sachs has a proprietary fund of $10 billion, ICICI India Advantage Fund is of $ 800m, HDFC Real Estate Fund of $720m, Pantaloon Group Kshitij Fund of $ 350m.

The Real estate companies has huge amount of land banks in reserve with them

Companies Land Banks (Acres)
Unitech 5100
Sobha Developers 2748
Ansal Properties 5924
Ansal Housing 1500
DLF 4265
Mahindra Gesco 1637

By - Om Prakash Singh