Realty share price target

With a launch pipeline of ~6.4mn sqft in residential segment and ~2.5mn sqft in commercial segment, the company remains well on track to achieve the pre-sales guidance of ~4mn sqft for FY20E. However, the quarter witnessed less than enthusiastic collections (-18% QoQ). Mid-income and affordable segments are expected to drive residential sales with ~80% of BEL's inventory below Rs 10mn ticket size. Despite capex commitment of Rs 13.7bn, pending Rs 24.8bn pre-tax cash flows from real estate projects should suffice. However, timing mismatch could result in further debt drawdown. We maintain NEUTRAL. Key monitorable: Leasing velocity in SEZ projects. We maintain NEU on BEL with SOTP-based TP of Rs 289/sh. 1QFY20 financial performance was below estimate. Strong residential pre-sales momentum and uptick in leasing in two SEZs were key positive.

Change in rating: Due to the recent price performance we downgrade Brigade to NEU from BUY. The NIFTY Realty index has gained 14.9/20.1% over 6M/YTD respectively post the NBFC liquidity crisis easing partially and receiving clarity on GST credit rules. But, the index has remained flat over the last 3 months as concerns remain on burgeoning inventory levels in the system (including slow-moving high-end inventory) and overall funding constraints for developers. We have seen developers increase affordable projects in their overall mix.

We believe the recent influx of orders from Raymond, Oberoi, Raheja demonstrate CIL's growing presence (esp. in Mumbai) at a time when developers are emphasizing on timely completion of projects (post- RERA). While we appreciate its constant endeavor to expand the non-resi portfolio, we continue to closely monitor its projects for any signs of stress (esp. among the non marquee clients). We believe the backlog is healthy and have built in 22% revenue CAGR (FY19-21E). Maintain BUY. We maintain BUY on CIL with a TP of Rs 351/sh. We have cut our FY20/21E EPS by 8.4/6.3% to factor in higher competitive intensity in private residential segment as peers chase quality developers to gain new orders. Rising share of highly competitive government orders will also put pressure on margins

Commercial real estate continues to remain upbeat Net absorption of commercial space in India is expected at ~42.1 million sq ft (msf) exceeding the overall anticipated supply of 34.9 msf in CY18 (gross leasing was clocked at 47.4 msf (5.3% YoY growth) in CY18). Amid strong demand, vacancy levels fell ~810 bps to ~15.0% in CY12-17. It is expected to further decline to 12.0% in CY19E. Higher absorption rates, coupled with declining vacancy rates could drive up rental rates for office spaces, going ahead. In Q1CY19, total gross leasing activity remained strong as it touched...

Embassy Office Parks Real Estate Investment Trust (EOPREIT) is expected to be India's first publicly listed REIT. EOPREIT's portfolio consists of seven Grade A office parks and four prime city-centre office buildings with total area of 32.7 msf, including hotels totalling 1,096 keys and 100 MW solar park, all located in strategic submarkets of key cities in India. The portfolio has 95.0% committed occupancy for its office portfolio, while overall hotel occupancy is at 67.7%. The IPO issue size is | 4,750 crore, which would lead to 20.5% post-IPO equity dilution. The IPO size...

IPO note Embassy Offer Parks REIT Issue Open: Mar 18 - Mar 20, 2019, Price Band: Rs. 299 - 300, Total Issue Size: 15.833cr units, Net Issue Size: 12.91245cr units (Net of Issue to strategic investors of 2.9208cr units)

REITs pool funds from a number of investors and invests them in rentgenerating real estate properties. These are usually commercial properties (offices, shopping centres, etc.) that generate rental income. SEBI requires REITs to distribute a minimum 90% of their income earned to investors on a half-yearly basis. Similarly, 90% of sale proceeds are to be paid out to unit holders, unless the amount is reinvested in another property. Thus, you get to receive regular income and also get to benefit from price appreciation, thereby boosting your returns...

REITs pool funds from a number of investors and invests them in rentgenerating real estate properties. These are usually commercial properties (offices, shopping centres, etc.) that generate rental income. SEBI requires REITs to distribute a minimum 90% of their income earned to investors on a half-yearly basis. Similarly, 90% of sale proceeds are to be paid out to unit holders, unless the amount is reinvested in another property. Thus, you get to receive regular income and also get to benefit from price appreciation, thereby boosting your returns...

Change in rating, Top Picks: No Change in Rating. Minor TP changes to factor in Dec-20E valuation roll over. Top Picks: Oberoi realty & Prestige estates. Over last 1-Yr, Nifty Realty index has corrected 36%. Large part of this fall has been on back of tepid real estate demand, weak pricing power and higher interest rate. The fall was further accentuated by NBFC liquidity issues and its impact on overall lending to real estate sector.

Change in rating: With recent price correction we upgrade Kolte Patil to BUY from NEUTRAL. Over last 3M, Nifty Realty index has corrected 25%. Reversal of interest rate cycle and tightening of liquidity to NBFCs has hit sentiments. Whilst a large part of our coverage universe is organized, slowing down of NBFC lending may delay pre-sales recovery. Cost of funding for developers may also increase for land acquisitions as NBFC/CPs funds dry up.