Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

HDFC Securities - Real Estate Q3FY21 Results Preview - Has COVID triggered a new cycle?

Posted On: 2021-01-13 08:57:51 (Time Zone: Arizona, USA)


Mr. Parikshit D Kandpal, Institutional Research Analyst, HDFC Securities

Pandemic triggered broad-based recovery: Contrary to the expectations of adverse impact on the sector, given prolonged lockdown, liquidity crisis, and limited government ammunition for fiscal incentives, real estate recovery has surprised positively. While the sector as a whole continues to see muted growth, the pandemic has accelerated market share gains for branded Tier 1 players. The entire ecosystem viz. landowners, financiers, suppliers, buyers and contractors are all backing the organized segment, and on the other side, challenges remain for Tier 2 developers. Supply shrinkage, stable demand, low interest rates, pent-up demand, economic easing and strong IT/ITES sector are driving developers' pre-sales to life-time high, largely driven by existing projects. New launches may help sustain the momentum as pent-up demand fades out post 4QFY21E.

Income-producing assets - concerns on offices remain, malls fundamental improving: Our channel checks suggest that office collections remain steady, but the three big unknowns may limit sector re-rating: (1) once travel restrictions ease, will lease momentum pick up; (2) consolidation of offices; (3) extent of renewal of the expiring leases on the backdrop of firming up of work from home policies. The net leasing has degrown 53% YoY to 19.9mn sqft during CY20 (source: Cushman & Wakefield) and is expected to be about ~25mn sqft for FY21E. Malls are seeing a good uptick, though fashion retail, entertainment and multiplexes remain the pain points. Softer mark to market rental repricing is key near-term concerns for office space.

Limited new launches, pre-sales hitting decade high: Our channel checks suggest that 3QFY21 will see decade-high/all-time high quarterly sales run-rate for few companies, that too in absence of new launches. Pandemic triggered freebies, discounts, attractive payment terms. This has improved sentiments for the sector, affordability is at decade best and interest rates are at all-time lows. Will this trigger a new cycle (as post-GFC the sector has been on the sideline) is something too early to take a call on. For now, we believe that 4QFY21 will match/better than 3QFY21, post which some slackness may surface. FY22E will be driven more by likely state government incentives for housing, new launches and market share gains for Tier 1 developers.

With normalcy returning and pick-up in presales, we have recalibrated our NAV estimates: We have factored in the pick-up in construction and pre-sales, driving the increase in our FY21/22E EPS estimates across coverage universe. During 3QFY21, we expect aggregate rev/EBIDTA/APAT YoY growth of (8)/2/8% for our coverage universe. We have increased our NAV to align it with pre-COVID estimates viz: (1) likely 0-5% increase in residential realization vs (10-20% cut after Mar-20); (2) cap rate compression to 8-8.5% (vs. 9-9.5% earlier); (3) rental growth unchanged at 3% and (4) Hotel ARR correction by 5-15% (vs 20-25% post Mar-20) with lower occupancies.

Downgrade GPL to REDUCE, Brigade to ADD, Prestige Estates to ADD: We downgrade GPL to REDUCE as believe that new launches by other Tier 1 developers will dent market share gains for GPL whilst valuation remains punchy at 65% premium to NAV. We downgrade Brigade to ADD on limited opportunities for it beyond Southern India and Prestige Estate to ADD as it enters new Capex cycle. We maintain BUY ratings on all other stocks with increased NAV. Top picks: DLF, Oberoi Realty, Phoenix Mills, Kolte Patil and Sobha Ltd.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

4th Industrial Conclave - Bullish undertone, favourable valuation - HDFC Securities

Sanofi India - Weak quarter; sequential improvement - ICICI Securities

Sunteck Realty - All eyes on upcoming launches - ICICI Securities

Company Update - Tata Motors - ICICI Direct

Q4CY20 Company Update - Mahindra CIE Automotive - ICICI Direct

Event Update - Hindalco - ICICI Direct

EY report launch at BioAsia 2021 - Moving the needle: Healthcare industry in a post-COVID world

Initiating Coverage - Dalmia Bharat Ltd - HDFC Securities Retail Research Desk

Initiating Coverage - Mastek Ltd - HDFC Securities Retail Research Desk

Hindalco Industries - Status quo maintained - ICICI Securities

Tata Motors - India business scaling in the right direction - ICICI Securities

IPO Review - Heranba Industries Ltd

Company Update - Narayana Hrudayalaya - ICICI Direct

Ambuja Cements - Market share sustenance key for rerating - ICICI Securities

ADD on Astral Poly Technik - An 'astr'onomical growth story - HDFC Securities

FMCG Sector Update Report - Divergence narrows; refocus on core - HDFC Securities

Maintain REDUCE on Jubilant FoodWorks - More legs for growth; reflecting confidence on core - HDFC Securities

Torrent Power - Growth acceleration - ICICI Securities

Mahindra CIE Automotive - CY20 performance closes on a strong note - ICICI Securities

Q3FY21 Company Update - V-Guard Industries - ICICI Direct

Quant Pick - Indus Towers - ICICI Direct

Q4CY20 Result Update - Ambuja Cement - ICICI Direct

Q3FY21 Company Update - Nesco Ltd - ICICI Direct

Maintain BUY on Ambuja Cements - Healthy quarter; multiple triggers ahead - HDFC Securities

Heranba Industries Ltd. - IPO - Sound Financials & Promising Outlook Augur Well

India Equity Strategy Report - Quarterly flipbook: Q3 - upgrades galore! - HDFC Securities

Earnings Wrap Q3FY21: Encouraging quarter, broad based recovery under way!

Shilpa Medicare - USFDA import alert at Jadcherla unit - ICICI Securities

Q3FY21 Company Update - Indian Bank - ICICI Direct

Quant Pick - Torrent Power - ICICI Direct

GE T&D India - Strong cashflow - ICICI Securities

Q3FY21 Result Update - Graphite India - ICICI Direct

Q4CY2020 Result Update - Varun Beverages - ICICI Direct

Q3FY21 Company Update - NBCC Ltd - ICICI Direct

Quant Pick - United Breweries - ICICI Direct

Q4CY2020 Result Update - Nestlé India - ICICI Direct

Q3FY21 Result Update - Time Technoplast - ICICI Direct

Healthy Business Performance Puts ITC Stock Recovery on Track

Gold - Feb 17, 2021 - Reliance Securities

Maintain REDUCE on Nestle India - Steady revenue show; employee cost dents margins - HDFC Securities

Varun Beverages - Q4 CY20 Result and Concall Update - YES Securities

Nestle India - Q4 CY20 Result Update - YES Securities

Reiterate BUY on JMC Projects - Some hits, some misses - HDFC Securities

Varun Beverages - Strong volumes; higher margins - ICICI Securities

Computer Age Management Services - Play on industry AUM growth - ICICI Securities

Nestle India - Just a tad underwhelming (given the high benchmarks expected from Nestle India) - ICICI Securities

NHPC - Earnings robust; projects on track - ICICI Securities

Maintain BUY on ITD Cementation - Gradual recovery shaping up - HDFC Securities

Techno Electric & Engineering - Strong margins, healthy growth outlook - ICICI Securities

Time Technoplast - Outlook upbeat; execution remains key - ICICI Securities



Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020