Realty weakness overdone, midcap correction throws up long-term opportunities: Sandip Sabharwal
Despite a broader market recovery, the real estate sector has remained under pressure, even as sales updates from several developers have stayed strong. market participants are grappling with the disconnect between operational momentum and reported earnings,which have appeared weaker in recent quarters.
Speaking to ET now, market expert Sandip Sabharwal said the current pessimism around real estate stocks may be misplaced, largely due to the way accounting works in the sector.
“A lot of the reported earnings in real estate is not the way to look at it. You have to look at what sales data they have and what the future sales proceeds will be, because of the way the accounting works.Quarter-on-quarter reported profit looks diffrent,” Sabharwal said.
“A lot of the reported earnings in real estate is not the way to look at it. You have to look at what sales data they have and what the future sales proceeds will be, because of the way the accounting works.Quarter-on-quarter reported profit looks diffrent,” Sabharwal said.
According to him, the negativity surrounding the sector appears excessive at this stage. While he does not currently hold real estate stocks, Sabharwal indicated that the ongoing correction is throwing up selective buying opportunities.
“I would be looking to buy some of the good ones in this kind of correction. Stocks like DLF, with its strong balance sheet, zero debt position, strong cash flows and decent sales data, look well placed. Some other companies like Godrej Properties and Prestige have also come to decent levels. Some of them are in the buy zone at this stage,” he said.
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ET Now also flagged recent earnings from lenders such as CreditAccess Grameen.