NTC mills' sale triggers boom in firms with land

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Our Bureau

Mumbai, July 25

THE sale of two Mumbai's textile mills at very high prices has once again driven up share prices of companies with huge real estate.

There was across the board buying in the shares of companies that own land in Mumbai or other major cities in the country.

Some of the companies that gained in today's trading due to this are Siel (up 20 per cent at Rs 95.80 on the BSE), Bombay Dyeing (up 0.19 per cent at Rs 372.70), Nesco (up 10 per cent at Rs 655.30), Indiabulls Financial Services (7.56 per cent at Rs 230.40), Morarjee Realities (up 10 per cent at Rs 274), and Mahindra Gesco (up 7.61 per cent at 209.20).

There were many other companies in this segment that saw traders' interest on Friday.

Brokers said the two deals in Mumbai show that builders and real estate companies are willing to pay very high price.

"If this trend continues, companies with huge land and planning to use it for residential and commercial properties would benefit," said a dealer at a domestic broking firm.

Other than the two deals announced, the tender by Siel last week about its plans to sell 24 acres in Delhi for real estate development also led to interest in the company's stock. After the announcement, the stock has jumped 20 per cent each on two consecutive days.

Investment by foreign companies in real estate is seen as the biggest factor for sudden interest in the stock price of such companies.

But some market experts said the current real estate prices are not sustainable. Moreover, while buying the shares, traders are not factoring that several of the companies have liabilities, they added.

(This article was published in the Business Line print edition dated July 26, 2005)
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