Things couldn't have been better for the real estate companies. The property prices have skyrocketed on the back of a robust demand environment. On the other hand, their ability to raise financial resources has also improved considerably, given the huge amount of foreign investments flowing into the Indian real estate sector, through real estate private equity funds and project specific joint ventures with leading overseas real estate companies. No wonder, ambitions have also soared and many domestic real estate players are looking at significantly scaling up their operations to effectively monetise the large land bank amassed by them. Right on cue, the real estate companies have caught the fancy of investors on the domestic bourses. The valuation of the listed real estate companies with large land banks are piercing through the skies and the public offerings are also being lapped up with real enthusiasm. For instance, the recent initial public offering from Parsvnath Developers to raise close to Rs1,000 crore received a stupendous response with oversubscription of around 62 times! Many other real estate developers like Sobha Developers and DLF have also lined up their public offers.
With so much happening, one could ignore the sector at his peril and so a comparative study was carried out by our research team to identify some promising investment options. This report also presents summarised profiles of prominent players in the sector.
In this report, we have also ranked some of the listed companies with reasonably large land banks based on quantitative as well as qualitative parameters. The transparency of a company's management and its ability to effectively monetise the available land bank are important qualitative factors that influence the valuations of its stock and have been given 25% weightage. In case of quantitative parameters, we have estimated the...