Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Property
India
Prices rise, response wanes. We attended a property exhibition organized by
Maharashtra Chamber of Housing Industry (MCHI) with participation by over 40
developers and over 10 banks / housing finance companies. Prices are up 10% versus
those at the time of the previous exhibition and attendance seemed muted. Our top
picks are (1) Sobha (BUY, TP Rs380) – Bengaluru residential, Oberoi (BUY, TP Rs305) –
visible NAV, cash and (3) Phoenix (BUY, TP Rs300) – three mall openings in FY2012E.
and potential triggers.
Attendance thin; sales remain sluggish
Response to the MCHI exhibition seemed more subdued on each day that at the previous one
(October 2010). We spoke with a few developers who revealed that sales have dropped in Feb and
March 2011 and very few developers have managed to take bookings even after three days of the
exhibition. Unusually, developer sales reps were willing to engage and interact even with mere
information seekers like us and not just customers.
Is it ‘ready-possession’? Are you sure?
Ready-possession projects remained a small proportion (12%), similar to the previous exhibition.
This category elicited keen response – with prospective buyers dwelling at length on the
‘readiness’ through close interrogation. As a gauge to determine ‘user-buyers’ versus others
(investors, speculators, analysts, curiosity), it would show an uptick over the previous exhibition.
Stated prices up across all segments though willingness to negotiate seemed higher
In a change from the intractability of old, or at best indifference, to customers looking to negotiate
or question rates, this time round, developers appeared approachable and open to discussion.
We would not assume that this willingness to engage would result in discounts. Developers have
increased their prices by 10% in Mumbai and by10-15% in Pune versus those at the previous
exhibition (six months ago).
We remain selective – BUY Sobha, Oberoi and Phoenix Mills
We continue to recommend a selective approach as (1) funding is still constrained and our
discussion with companies and other sector participants leads us to believe that raising equity at
the entity level remains a near-impossible task while raising debt has also become more difficult
and effective borrowing costs have increased, (2) impact on developers and consequently prices
could be felt with a lag and (3) company specific risks continue to remain high. Oberoi, Phoenix
and Sobha are our top picks as we believe they are relatively insulated (Oberoi – net cash, Phoenix
– retail, Sobha – Bengaluru residential) and have potential upside to our target NAVs (Oberoi –
NAV accretive land purchases, Phoenix – three mall openings in FY2012E and Sobha – launch of
large projects in Bengaluru and Gurgaon).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Property
India
Prices rise, response wanes. We attended a property exhibition organized by
Maharashtra Chamber of Housing Industry (MCHI) with participation by over 40
developers and over 10 banks / housing finance companies. Prices are up 10% versus
those at the time of the previous exhibition and attendance seemed muted. Our top
picks are (1) Sobha (BUY, TP Rs380) – Bengaluru residential, Oberoi (BUY, TP Rs305) –
visible NAV, cash and (3) Phoenix (BUY, TP Rs300) – three mall openings in FY2012E.
and potential triggers.
Attendance thin; sales remain sluggish
Response to the MCHI exhibition seemed more subdued on each day that at the previous one
(October 2010). We spoke with a few developers who revealed that sales have dropped in Feb and
March 2011 and very few developers have managed to take bookings even after three days of the
exhibition. Unusually, developer sales reps were willing to engage and interact even with mere
information seekers like us and not just customers.
Is it ‘ready-possession’? Are you sure?
Ready-possession projects remained a small proportion (12%), similar to the previous exhibition.
This category elicited keen response – with prospective buyers dwelling at length on the
‘readiness’ through close interrogation. As a gauge to determine ‘user-buyers’ versus others
(investors, speculators, analysts, curiosity), it would show an uptick over the previous exhibition.
Stated prices up across all segments though willingness to negotiate seemed higher
In a change from the intractability of old, or at best indifference, to customers looking to negotiate
or question rates, this time round, developers appeared approachable and open to discussion.
We would not assume that this willingness to engage would result in discounts. Developers have
increased their prices by 10% in Mumbai and by10-15% in Pune versus those at the previous
exhibition (six months ago).
We remain selective – BUY Sobha, Oberoi and Phoenix Mills
We continue to recommend a selective approach as (1) funding is still constrained and our
discussion with companies and other sector participants leads us to believe that raising equity at
the entity level remains a near-impossible task while raising debt has also become more difficult
and effective borrowing costs have increased, (2) impact on developers and consequently prices
could be felt with a lag and (3) company specific risks continue to remain high. Oberoi, Phoenix
and Sobha are our top picks as we believe they are relatively insulated (Oberoi – net cash, Phoenix
– retail, Sobha – Bengaluru residential) and have potential upside to our target NAVs (Oberoi –
NAV accretive land purchases, Phoenix – three mall openings in FY2012E and Sobha – launch of
large projects in Bengaluru and Gurgaon).
No comments:
Post a Comment