Nifty Realty is among the best performing indices in the past one month with gains of 10 percent, outperforming Nifty 50 which rose 3 percent. Along with robust fourth quarterly sales updates, a pause in rate hikes created positive sentiments among investors, driving the growth in the real estate share prices.
A pause in interest rate hike, but not in the realty stocks rally
Along with robust fourth quarterly sales updates, a pause in rate hikes created positive sentiments among investors, created a rally in the real estate stocks.
On 6th April, the Monetary Policy Committee (MPC) decided to keep repo rate unchanged, which cheered the real estate stocks. Nifty Realty index rose in past 10 out of 11 sessions taking a leap of 17 percent. The index with gains of 1.4 percent today is the best performer with all its constituents trading in the green. Sobha, Godrej Properties and DLF are the top three gainers from the Nifty Realty pack.
Sobha with gains of about 7 percent today, recorded its best ever sales quarter with a value of Rs. 14.63 billion and saleable area of 1.48 mn sft for the last quarter of financial year 2022-23. The real estate developer launched three projects during the quarter with a cumulative saleable area of 1.06 mn sft. The Bengaluru market accounted for the highest new sales of 9.2 lk sft, followed by NCR and Kerala. Aided by a strong fourth quarter, the company is expected to report healthy growth for the full financial year 2022-23.
HDFC Securities says "Godrej, Macrotech and Sobha reported their lifetime high in residential sales. This has been on the back of robust launches in H2FY23, especially in Q4FY23. We expect the rest of the developers also to outperform both their own guidance and our expectation."
Godrej Properties exceeded its full year guidance by 22 percent for the financial year 2022-23. The real estate developer's sales bookings growth of 56 percent led to total bookings of 12,232 crore for the year. The company attributed it to improving project mix and strong volume growth of 40 percent. The company in a press release said "we will have a stronger launch pipeline in the current year than ever before."
Macrotech Developers recorded pre-sales growth of 34 percent to Rs 12,064 crore, thereby surpassing its guidance. The full year also saw addition of 12 new projects having nearly 14 million square feet of saleable area with gross development value of close to Rs 19,800 crore across various macro-markets of Mumbai Metropolitan Region, Pune and Bengaluru.
However, not all is good in the hood. The affordable segment is witnessing early signs of weakness due to its high sensitivity to a rate change which directly hits the loan eligibility. While the RBI paused rate hikes in its previous MPC meeting, it still wants to keep the doors open for more. Hence, the rate overhang is expected to continue in near term and market can expect a few more quarters of uncertainty. Although, demand in the luxury segment is robust and is the driving force for higher price realisation.
Nifty Realty is among the best performing indices in the past one month with gains of 10 percent, outperforming Nifty 50 which rose 3 percent.
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