The Hindu Business Line : Realty stocks climb betting on DLF issue

Shares of Ansal Properties and Infrastructure Ltd were up 2.59 per cent while Unitech Ltd, the country's largest realty firm in terms of market capitalisation, touched an intra-day high of Rs 524.90 before closing 0.47 per cent up at Rs 507.45. The stock of Lok Housing and Construction Ltd rose 1.15 per cent to close at Rs 167.70.

DLF will raise up to Rs 9,625 crore at the upper band of Rs 550 per share, which would result in a market value of Rs 93,500 crore, thus displacing Unitech as the top listed realty firm.

The sector has been prone to a lot of volatility with most realty stocks falling drastically earlier this year, due to rising interest rates. However, ever since SEBI cleared DLF's Rs 9,000-plus IPO in May, most of the stocks have been performing better.

Important landmark

According to analysts, the DLF issue is an important landmark for the real estate industry, which has seen stock valuations take a dip on concerns of overheating.

"Since DLF is the largest realty company in India, we expect this to show better valuations to other realty stocks. It will give better valuation and direction to other undervalued players in the segment," said a research analyst from Religare Securities.

Even though there is a positive sentiment attached to the sector, inflation continues to be a concern.

"However, with inflation coming back down to the 5 per cent average, there might be a softening of interest rates. Such a slowdown in interest rates will be even more beneficial to the real estate sector," said an analyst.

Other realty companies eager to enter the market would be looking to the performance of the DLF IPO as well. As much as Rs 4,000 to Rs 5,000 crore are expected to be raised by companies such as Omaxe Ltd, Housing Development and Infrastructure Ltd and IVR Prime.

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