Buy 3 Real Estate Stocks For Potential Return As Recommended By Motilal Oswal

Leading brokerage firm Motilal Oswal in its recent report on the Real Estate sector has recommended "buy" 3 leading real estate sector stocks for potential gains in near future. These stocks are Macritech Developers Ltd. (Lodha), Prestige Estates Projects Ltd. (PEPL) and Brigade Enterprises Ltd. (BRGD).

Macritech Developers Ltd. (Lodha)

Macrotech Developers Limited (formerly known as Lodha Developers Limited) was incorporated in India in 1995. Lodha Group is among the largest real estate developers in India and has been involved in the real estate business since the 1980s. Being an Indian multinational real estate company headquartered in Mumbai India the Company developed residential & commercial properties in Mumbai Thane Hyderabad Pune and London. It is a large cap real estate company having a market cap of Rs 49,190.77 crore

Lodha - Stock outlook

The current market price of the stock is Rs 1,021.70 apiece on NSE. The 52 week low of the stock is Rs 814.20 as on 26 May 2022 and the 52 week high is Rs 1,539 apiece as on 1 December 2021, respectively.

It was listed on 19 April 2019 and since then it has given 119.95% positive return. In the previous week, the stock of the company has given 7.52% negative return. Whereas, in the past 1 year, it has given a positive return of 1.55%.

Lodha - Key Management Commentaries

LODHA entered the Bengaluru market by signing one JDA project with a GDV of INR12b. Bengaluru has only four-to-five large developers, with the management targeting 10% market share over the next five years. Guidance: It reiterated its FY23 pre-sales guidance of INR115b (up 27% YoY), of which Residential will contribute INR105b (up 24%). Cost inflation: Cost fell 2.2% QoQ, bringing its overall annualized cost inflation since Apr'21 to 9% p.a.. On a cost basis, this translates into a sub-2% impact on its overall portfolio.

Prestige Estates Projects Ltd. (PEPL)

Prestige Estates Projects Ltd. is one of the leading real estate development companies with projects in the office, residential, retail and hospitality segments. Its operations are spread across South India, Pune, Goa and Ahmedabad. The company has diversified over time into a number of related/non-related services, each of them spearheaded by individuals with adroit capacity. It is a mid-cap Real Estate sector company having a market cap of Rs 18,399.55 crore.

PEPL - Stock outlook

The current market price of the stock is Rs 458.35 apiece on NSE. The 52 week low of the stock is Rs 379 apiece as on 20 June 2022 and the 52 week high is Rs 554.90 apiece as on 18 January 2022, respectively.

In the previous week, the stock gave a 4.7% negative return. Whereas, in the past 1 year, it has given a positive return of 11.22%. The stock in the past 3 years has given 59.17% positive return and in the past 5 years, it has given 62.74% positive return.

PEPL - Key Management Commentaries

Driven by a strong launch pipeline across Bengaluru, Mumbai, and Hyderabad, the management aims to grow its pre-sales to INR120b (from INR100b in FY22). Mumbai projects: On the back of healthy traction at Prestige City, Mulund and projects in Marine Lines and Worli (Shiv Shahi), the management is aiming to generate INR35-40b sales from Mumbai in FY23.

 

Brigade Enterprises Ltd. (BRGD)

Brigade is a leading property developer in South India. Our Projects extend across several major cities in South India including Apartments and Villas in Bangalore, Chennai, Chikmagalur, Hyderabad, Kochi, Mangalore and Mysore. Explore Apartments in Bangalore, Apartments in Chennai and Hyderabad. Brigade Group is headquartered in Bangalore, with branch offices in several cities in South India and a representative office in Dubai. It is a small cap Real Estate Sector company having a market cap of Rs 12,517.78 crore.

BRGD - Stock Outlook

The current market price of the stock is Rs 544.25 apiece on NSE. The 52 week low of the stock is Rs 358.35 apiece as on 21 September 2021 and the 52 week high is Rs 585 apiece as on 12 September 2022, respectively.

In the previous week, the stock gave 5.14% negative return. In the past 1 month it has given 9% positive return, whereas, in the past 1 year, it has given a positive return of 45.41%. The stock in the past 3 years has given 184.82% multibagger returns and in the past 5 years, it has given 202.83% multibagger returns.

BRGD - Key Management Commentaries

Launches and guidance: The management expects demand momentum to continue and reiterated its over 20% growth guidance in the near term. It has a launch pipeline of 7msf/1.2msf in the Residential/Leasing segment. Commercial portfolio: The management is targeting to fully lease out the vacant area in its Commercial portfolio by FY23-end.

Valuation and view

While rising interest rates is likely to have a sentimental impact on the sector in the near term, in a scenario with: 1) high construction costs and the cost of capital, and 2) constrained industry growth, larger developers will further consolidate their market share. "We prefer players with an ability to generate robust cash flow over the next three-to-four years and those investing in developing their pipeline, which will provide further growth visibility and lead to a re-rating. In our Coverage Universe, we prefer LODHA (Buy), PEPL (Buy) and BRGD (Buy)," the brokerage has said.

Disclaimer

The stocks have been picked from the brokerage report of Motilal Oswal. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.