Sobha Ltd, Oberoi Realty, Prestige Estates, DLF among 14 stocks play post-budget real estate theme, experts say brokerages
The Union Budget 2022-2023 lived up to street expectations as it closed benchmarks more than 1% higher for two consecutive days. However, there was no major announcement for the real estate sector in particular this time around. But Finance Minister Nirmal Sitharaman’s budget allocated Rs 48,000 crore to build 80 lakh houses in rural and urban areas in 2022-23 under Pradhan Mantri Awas Yojana, ultimately helping the real estate space.
It was also announced that data centers would be given infrastructure status. In addition, a high-level committee composed of reputable urban planners, urban economists and institutions will be formed to make recommendations on urban sector policies, capacity building, planning, implementation and governance. .
According to ICICI Securities, real estate companies will be the direct beneficiaries of PM Awas Yojna as it will facilitate the availability of funds at competitive rates and drive the growth of data centers. It will also allow faster growth of urban development.
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A major real estate demand to increase the tax deduction limit on interest paid on home loans was also not retained in this budget.
“There was not much for the real sector in the 2022 budget, however, the allocation of Rs 48,000 crores for affordable housing under the PMAY is welcomed by the industry. The market expected to an increase in the tax deduction on interest paid on home loans, but there is no change in this limit, which is disappointing,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.
He said that although the budget is not exciting from the perspective of the real estate sector, but there is a complete turnaround in the sector since the first wave of covid19 due to low interest rates, supportive government policies , from industry consolidation due to RERA, work-from-home culture and increased IT employee earnings.
Meena is of the view that although the sector was suffering before Covid19, things have changed over the last year and a half and there is a significant improvement in sentiment.
“At the moment we are seeing an increase in volume and we can expect prices to improve in the coming days. We have a very optimistic outlook for the sector for the next two years,” he said.
Stocks to buy in the real estate sector
Meena chose Sobha Ltd, Oberoi Realty and Prestige Estate as her top stock picks in this space.
He said Canfinhomes, Kajaria Ceramics, Pidilite, Polycab and Astral are other favorite bets to play this theme.
Brokerage Hem Securities also picked Prestige as its top pick, with 70% of the company’s revenue coming from the residential segment. “Aggressive annuity portfolio expansion and low debt are working in Prestige’s favor from this space,” he said.
The reduction of the corporate surcharge from 12% to 7% and the allocation of Rs 68K for affordable housing bode well for developers, Arihant Capital believes. He chose Macrotech Developers (Lodha), Sunteck Realty Ltd and Arihant Superstructures Ltd in this space.
Brokerage Ventura has chosen Oberoi Realty, Brigade Enterprises, DLF, Prestige Estates, Macrotech Developers and Godrej Properties in this sector, claiming that the reduction in the time required for land and other construction-related approvals and an outlay of Rs 48,000 crore are great triggers for these actions.