DLF | Prestige Estates | HDFC: The real estate index above the peaks? Get these 3 actions: Rahul Shah
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The direct market rally surprised everyone. There was a little bug yesterday. Also today we saw a stock like IRCTC take it on the chin. How do you read this?
The markets have moved 10% in a month and a half. As no correction had taken place in the short term, the misstep was justified. A lot of stocks had gone up for no reason, because of a speculative element. In yesterday’s trades, only these types of actions had corrected. The IRCTC has gone from Rs 4,000 to Rs 6,300 approximately and is in the process of correcting or taking a break.
My point is that investors need to be very careful in terms of stock selection and also the valuation at which they buy stocks from now on. There are many opportunities in all markets, but you have to be very careful in terms of stock recovery. At such high levels, you shouldn’t compromise on quality versus beta or a catch-up of market dynamics.
The real estate index is at its highest for 11 years. The expectation was and is that it’s real estate time, it’s time to buy a property, the offices are reopening. Prices have not increased and a boom cycle usually lasts for many years. Would this fall be an opportunity to accumulate or buy?
Real estate stocks were at an 11-year high and aggregate data shows the number of new listings has increased month-to-month. A lower interest rate regime has contributed to the continuation of this trend. Largecaps or smallcaps, all stocks performed quite well. My feeling is that in such a scenario, real estate stocks will continue to do well. Wherever stocks offer good value propositions, like DLF, it looks very attractive from current levels.
Likewise, Prestige Estates looks very promising. There could be a 15-20% rise in stocks. I would like to add that the biggest beneficiaries of the housing boom are housing finance companies. So the biggest winner should be HDFC Ltd vis-Ã -vis the whole real estate package.
Financials have underperformed and you have to play HDFC Ltd to take advantage of the real estate boom. Another is CanFin Homes. It is again available at a very reasonable price.
What is your rating on Jubilant Foodworks?
The QSR segment has seen momentum – be it Burger King, Jubilant Food, Devyani International. The biggest challenge once again remains on the valuation front. Jubilant Food should be avoided at least in the short term because of stretched valuations.
IEX was also on fire. But today the title is under pressure. How would you approach it?
The stock did pretty well and that’s when we hedged it and the target was exceeded. The action rose quite sharply ahead of time and ahead of our expectations as well. It was time to reserve the profit. I would advise to wait a little longer for a correction before resuming action.
Cotton prices have really gone up. Exporters are doing more business. The Prime Minister also inaugurating textile parks?
There was an economic recovery and a lot of manufacturing companies came back. Updates from banks indicate that the overall economy and cyclical stocks and sectors are doing well. Textiles is one of the sectors that has been very successful.
We are seeing that many stocks in the retail segment like Aditya Birla Fashions have done quite well. But I would advise going for higher quality names. My best bet is ABFRL. There could be another 15% increase in ABFRL from current levels.
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