Why Buy – Urbanization is a mega trend benefitting Real Estate developers
SMALL CAP| 50 YEARS OLD REAL ESTATE DEVELOPER IN A METRO | 100+ PROJECTS DELIVERED | STRONG GROWTH IN SALES AND PROFITS FOR LAST 5 YEARS | INDUSTRY TO GROW 12-FOLD | ETHICAL | TRANSPARENT | DESIGN DRIVEN | UNPARRALALED CONSTRUCTION QUALITY | 300+ ACRES LANDBANK IN PRIME AREAS | 20+ MILLION SQ FT TOTAL PORTFOLIO | PE RATIO 1/3RD OF INDUSTRY AVERAGE | ENOUGH PROJECTS TO CONTINUE GROWTH | STRONG REPUTATION
Why Buy this Stock – Complete Story in Simple Language
India’s real estate sector is expected to double by 2047. That is a big growth and it will continue for more than two decades.
This stock report is about a highly reputed metro based builder known for its unparalleled construction quality, designs, and ethics.
It owns 300+ acres landbank in prime areas, has completed 100+ projects, and has 20+ million sq. ft. total portfolio
A well established, highly profitable, fast growing builder with huge landbank for expansion – is available at 1/3rd the valuation of industry average. You will find very few such attractive stocks. It may not stay at such low price valuation for long time.
Real Estate is Booming in India
As per a recent Knight Frank report, metro property prices are increasing on average by 5% year on year, making it amongst the fastest growing markets in the world.
The size of the Indian real estate sector is estimated to jump more than 12-fold to USD 5.8 trillion by 2047 from USD 477 billion last year, according to NAREDCO-Knight Frank report.
Real estate growth is driven by pent-up demand, a thriving economy and encouraging consumer sentiments. Notably, the metro cities are experiencing strong demand across both luxury residential and commercial real estate, accompanied by an uptick in realisations.
Private equity (PE) investments in the Indian real estate sector have consistently grown over the past two decades.
The Global Landscape Favours India
Europe is moving towards a probable recession, the US economy is slowing, China’s GDP growth forecast of 4.4% is less than India’s and America and Europe are experiencing highest inflation in years.
India’s production linked incentive appears to catalyse the downstream sectors. Inflation is moderating. India is at the cusp of making significant investments in various sectors and emerge as a suitable industrial supplement to China. India is poised to outpace Germany and Japan and emerge as the third largest economy by the end of the decade. The outlook for private business investment remains positive. Broad-based credit growth, improving capacity utilization, government’s thrust on capital spending and infrastructure should bolster investment activity. According to economic surveys, manufacturing, services, and infrastructure sector firms are optimistic about the business outlook.
Booming business translates into booming commercial real estate, and it also boosts residential real estate indirectly.
Indian Real Estate is expected to grow ~4 times faster than the GDP
Robust housing sales numbers were achieved by the top eight cities in India, with ~3.13 Lakh units sold in FY 2022-23 compared to 2.39 Lakh units in FY 2021-22, marking a growth of ~31%. The Indian real estate market grew to USD 256 Bn in 2022. The market anticipates sustained growth to USD 780 Bn by 2028 – triple in just six years, a superfast growth!
The Budget 2022- 23 sought to lay the foundation for the future of the Indian economy by raising capital investment outlay by 33% to Rs 10 Lakh Crore, equivalent to 3.3% of GDP and almost three times the 2019- 20 outlay, through various projects like PM Gati Shakti, Inclusive Development, Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition and Climate Action, as well as Financing of Investments. All these policies have resulted in a robust and fast-growing economy – that is creating huge demand for urban housing as people migrate to cities for jobs.
Improvements in Business Environment for RE
Getting permission for construction of building in general has been a very lengthy and cumbersome process. It normally used to take months together to get the building plan sanctioned. India has improved considerably on this dampening aspect of ease of doing business. From as poor as 184th ranking in 2014, the ranking had gone high at 27th rank in 2019 when the last ranking was made by the World bank. Several steps have been taken in India over the years to reduce procedures and time involved in obtaining construction permission.
There has been a significant rise in digital launches, virtual property events, online listing and viewing, data analytics, cloud-based services and much more.
About The Company
- Portfolio includes commercial, luxury residential, townships, affordable housing, and retail.
- 50+ Years of Real estate experience
- 100+ Projects delivered
- 15,000+ Homes in the pipeline
- ~300+ acres land bank in prime areas
- Strong reputation because of quality, design, and ethics
- PE ratio is just 1/3rd of industry average
- Strong sales and profit growth in last 5 years
- Debt has reduced and focus is on reducing it further
- Very high operating profit margin
This company has grown for half a century now, has extremely strong reputation because of its unparalleled construction quality, great designs, and strong ethics. It is focused to reduce its debt and has 400+ acre landbank to fire its growth further in future. All its current projects are receiving great response. Its stock is available at extremely low valuation – just 1/3rd of industry average. It is a low hanging fruit.
|Suggested Holding Period