In a research note released by Citigroup, analysts have recommended a SELL on Unitech, Parsvnath Developers Ltd and Ansal Properties and Infrastructure. Spiraling property prices, rising interest rates, regulatory intervention in developer funding (on concerns of an asset bubble), supply coming on stream, and aggressive land acquisition by developers (and wannabe developers) are adding to the industry woes.
NAV is best way to value Indian developers : Citi expects NAV to be the standard valuation benchmark for at least the near term, with P/E multiples used more as a secondary methodology or “sanity test”. However, not every institution values Realty stocks like Citi does. Here is how others value Real Estate Stocks.
In the same report, Citi analysts expect Unitech EPS to grow to Rs 20.2 for FY08 and Rs 33.9 for FY09. Parsvnath’s EPS is expected to be Rs 37 and Rs 68 for FY08 and FY09. Ansal Properties’ EPS is expected to be Rs 31.8 and Rs 54 for FY08 and FY09.
Citi says the earnings forecast is already factored into current share price and recommends a SELL with 10% downward potential. Citi expects NCR and other properties to cool off and hence the recommendation.