Indian Real Estate Stocks See Cooling, Opening Buying Opportunities
The recent downturn in Indian real estate stocks has piqued the interest of investors and analysts seeking selective buying opportunities. The optimism that propelled real estate to the forefront of equity sectors has waned amid broader risk aversion and slowing economic growth.
Analysts like Mohit Agrawal of IIFL Capital Ltd. see the current dip as a potential buying window, emphasizing that the long-term growth story remains strong. "India is still fundamentally in a real estate upcycle," he asserts. The selloff provides an avenue to build positions in undervalued stocks, anticipating a rally upon a market sentiment shift.
Despite the correction, demand for luxury properties continues to grow from India's burgeoning affluent population. Major real estate companies like DLF Ltd. and Macrotech Developers Ltd. have reported exceeding profit expectations for the December quarter despite interest rate hikes and macroeconomic headwinds.
Battered stock prices offer substantial upside potential. The average analyst target for the Nifty Realty gauge indicates a forecasted 41% gain over the next 12 months, despite recent downward revisions. Companies have introduced numerous new projects, and initial buyer commitments have been promising, according to Nikhil Rungta, co-chief investment officer at LIC Mutual Fund.
"The real estate opportunity is still very much alive," Rungta states. He holds shares in select property companies and is considering adding more in the near future.