The Indian real estate market has collapsed over the past 6-7 years, but is now showing a strong recovery. Through a lower interest rate regime, government support for the sector and home buyers, and industry consolidation. The increased pace of vaccinations and the theme of unlocking is also triggering the revival of residential and commercial construction activities. Notably, the Nifty Realty index gained 19.5% in one week, while it was up 1.06%. We have selected two stocks in the real estate sector that may give decent returns in the near future.
1. The Phoenix Mills Ltd. (NOT. 🙂
Incorporated in 1905, Phoenix Mills is the largest mixed-use retail-led developer in India. The company’s activities cover all aspects of real estate development; planning, execution, marketing, management, maintenance and sales. The group owns real estate assets in Mumbai, Raipur, Pune, Indore, Lucknow, Ahmedabad and Bareilly. Phoenix has approximately 7 million square feet of operational retail space across nine operational shopping centers in six major cities in India. As the eases related to Covid-19 loosen, four-wheeled vehicle attendance and traffic has increased. Inbound traffic has almost reached pre-covid levels. The company is looking for inorganic growth and new markets to diversify its geographic presence. Recently, Phoenix did two big deals. The first is with the Canada Pension Plan Investment and the second with the Government of Singapore. The company will develop residential and commercial projects in major Indian cities. With these joint ventures, PML is expected to double its retail portfolio by fiscal 2026. All of the Phoenix malls are known to have some of the most upscale stores. Increasing urbanization and changing lifestyles are the most likely to preserve the long-term growth story of Class A shopping centers.
In the first quarter of fiscal 2022, Phoenix Mills’ consolidated net sales were Rs 204.26 crore, up 51.63% from Rs 134.71 crore in April-June 2020. The EBITDA stood at Rs 88.21 crore, up 5.77% from Rs 83.40 crore in comparison. FII participation increased slightly in the June 2021 quarter. The stock has a buy signal based on fundamental technical indicators such as RSI, MACD, EMA 10 days / 20 days / 50 days / 100 days / 200 days.
2. Oberoi Realty Ltd (NS 🙂
Oberoi Realty Ltd is a Mumbai-based real estate development company. The company focuses on high-end developments in the residential, office, hospitality, retail and social infrastructure verticals. As the economy opens up, so does the demand for residential areas. Oberoi Realty has a firm reservation for its upcoming residential projects in Mumbai and nearby Mumbai. The company has a good cash reserve and a land bank. Lower interest rates and government supportive policies towards the real estate sector and the upcoming festival season will most likely boost the company’s revenue growth.
Oberoi Realty posted healthy financial results in the first quarter of fiscal 2022. Consolidated profit after tax rose to Rs 80.81 crore, up 176% from Rs 29.27 crore in the corresponding quarter of Fiscal year 2021. Consolidated revenue was Rs 294.77 crore, up 132.4% from Rs 126.86 crore in the first quarter of fiscal 2021. Over the past five years, Oberoi has posted good revenue growth. Its CAGR of revenue was 7.5% compared to the industry average of minus 3.64%. Although there was no change in ownership of promoters, FMs increased their stake slightly during the June 2021 quarter. The stock has a buy indication based on vital technical parameters such as RSI , MACD, 10 days / 20 days / 50 days / 100 days / 200 days.