Realty rally surprises analysts
The Hindu Business Line, May 6, 2009, Page 10
Indiabulls Real Estate says preferential warrants to promoters have lapsed.
Our Bureau, Mumbai
Realty stocks continued their upward journey on Tuesday as the sectoral index on the BSE surged 8.45 per cent even when the Sensex ended on a flat note.
In the last month the BSE realty index has gained more than 35 per cent. The Sensex gained by 17 per cent during this period.
Analysts said they were clueless as to why exactly the realty share prices are on the rise. “It is rather difficult to guess. The fundamentals have not changed to that great an extent and the fourth quarter results of the listed real estate companies have been rather dismal,” said Mr Shailesh Kanani, Real Estate and Infrastructure Analyst at Angel Broking.
Investors probably feel that as these stocks have already plummeted 90-95 per cent, it cannot go down any further, he added.
Until a few months ago most of these stocks were trading at a 90 per cent discount from their 52-week highs. Investors may have seen some inherent value in these stocks, said Mr Hardeep Dayal, Managing Director (realty and infrastructure) at Centrum Capital.
During the second half of the last calendar year most of the realty stocks were trading below their IPO prices.
High beta stocks
“The realty stocks are high beta stocks, which is another reason for their rise,” said a realty analyst. High-beta securities fluctuate a lot more than the market index
Another analyst said while last year these companies were trading at bankruptcy levels and most people expected them to go bust, the companies have still survived: “Some investors may take this as a positive.”
Mr Dayal said positive reports coming in from the mid-market and affordable housing segments could be another boost for this sector. This segment has seen a little bit of pick-up in volumes as the pricing is very competitive.
Debt Rejig
Another reason could be that some of these companies have been able to raise money.
Unitech was able to rejig quite a bit of its debt to infuse liquidity into the company. “Liquidity is the main problem faced by these companies and if they are able to get it (money), then it will be a completely different ball game for the real estate companies,” said Mr Kanani.
Anant Raj, Ansal Infrastructure, DLF, HDIL, Peninsula Land and Unitech are the stocks that have gained between 28 per cent and 70 per cent in the last month.
Indiabulls Real Estate said the preferential warrants (which would have worked out to Rs 2,322 crore) allotted to its promoters and top officials have lapsed.
The allotment of 4.3 crore warrants (convertible at Rs 540 each) had been made on November 5, 2007, the company said in a filing to the BSE.
On Tuesday Indiabulls closed at Rs 139.65 a share on the BSE.
Ten per cent upfront money was paid, according to regulations, at the time of allotment of the warrants. The warrant holders were entitled to apply for and obtain allotment of one equity share of the face value Rs 2 each fully paid-up of the company upon payment of exercise price of Rs 540 a warrant, against each warrant held.
The last date for exercise of such right was May 4.
The Hindu Business Line, May 6, 2009, Page 10
Indiabulls Real Estate says preferential warrants to promoters have lapsed.
Our Bureau, Mumbai
Realty stocks continued their upward journey on Tuesday as the sectoral index on the BSE surged 8.45 per cent even when the Sensex ended on a flat note.
In the last month the BSE realty index has gained more than 35 per cent. The Sensex gained by 17 per cent during this period.
Analysts said they were clueless as to why exactly the realty share prices are on the rise. “It is rather difficult to guess. The fundamentals have not changed to that great an extent and the fourth quarter results of the listed real estate companies have been rather dismal,” said Mr Shailesh Kanani, Real Estate and Infrastructure Analyst at Angel Broking.
Investors probably feel that as these stocks have already plummeted 90-95 per cent, it cannot go down any further, he added.
Until a few months ago most of these stocks were trading at a 90 per cent discount from their 52-week highs. Investors may have seen some inherent value in these stocks, said Mr Hardeep Dayal, Managing Director (realty and infrastructure) at Centrum Capital.
During the second half of the last calendar year most of the realty stocks were trading below their IPO prices.
High beta stocks
“The realty stocks are high beta stocks, which is another reason for their rise,” said a realty analyst. High-beta securities fluctuate a lot more than the market index
Another analyst said while last year these companies were trading at bankruptcy levels and most people expected them to go bust, the companies have still survived: “Some investors may take this as a positive.”
Mr Dayal said positive reports coming in from the mid-market and affordable housing segments could be another boost for this sector. This segment has seen a little bit of pick-up in volumes as the pricing is very competitive.
Debt Rejig
Another reason could be that some of these companies have been able to raise money.
Unitech was able to rejig quite a bit of its debt to infuse liquidity into the company. “Liquidity is the main problem faced by these companies and if they are able to get it (money), then it will be a completely different ball game for the real estate companies,” said Mr Kanani.
Anant Raj, Ansal Infrastructure, DLF, HDIL, Peninsula Land and Unitech are the stocks that have gained between 28 per cent and 70 per cent in the last month.
Indiabulls Real Estate said the preferential warrants (which would have worked out to Rs 2,322 crore) allotted to its promoters and top officials have lapsed.
The allotment of 4.3 crore warrants (convertible at Rs 540 each) had been made on November 5, 2007, the company said in a filing to the BSE.
On Tuesday Indiabulls closed at Rs 139.65 a share on the BSE.
Ten per cent upfront money was paid, according to regulations, at the time of allotment of the warrants. The warrant holders were entitled to apply for and obtain allotment of one equity share of the face value Rs 2 each fully paid-up of the company upon payment of exercise price of Rs 540 a warrant, against each warrant held.
The last date for exercise of such right was May 4.
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