Will fund infusion trigger realty sector's revival? Builders, analysts pose contrary views

He said that this will help first-time homebuyers, who have invested in units worth less than Rs 1 crore.

"This stimulus package will bankroll the stalled projects in the affordable and mid-income housing segment and keep the needle moving in the micro markets. It will also revive the demand for construction materials and assuage the stress in other major sectors in the economy," says Rohit Poddar, managing director, Poddar Housing and Development.

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Meanwhile, commenting on the realty sector impact of the fund infusion, Abhidev Chattopadhyay of ICICI Securities said that this will have no impact on the realty stocks.

He said, “We continue to retain our view of larger, organized developers gaining market share and sector consolidate theme. The move by the government will have no impact on realty companies as these measures are related to stuck projects. None of our coverage companies consist of any such projects.”

As per the ICICI’s research report, they expect strong traction in sales volumes in H2FY20 across the board as mortgage rates hover between 8-9 percent and developers focus largely on the mid-income/affordable housing segment to drive volumes.

The brokerage reiterated buy on DLF, Oberoi Realty, Prestige Estates, Brigade Enterprises, and the Phoenix Mills.

Sharing the same view as Abhidev, Sandeep Mathew of SBI Capital Markets believes that the anticipated fund infusion will hardly impact the listed developer universe.

He said that apart from a sentiment perspective as none of the major listed developers that we track (DLF, Oberoi, Prestige, Sobha, Sunteck) have any stuck or stalled projects.

“From a long-term perspective, any liquidity relief such as proposed fund infusion into stalled projects can help revive buyer sentiment and could potentially elongate the on-going consolidation process of larger stronger developers”, added Mathew.

Both analysts bet big on DLF, Oberoi Realty and Prestige Estates.

Realty stocks have seen fair demand this year but data by PropTiger.com shows another side of the reality.

As per the data this quarter (July-September), home sales fell 25 percent when compared to the levels seen in the same quarter last year. In fact, new launches fell 45 percent annually in the quarter ending September.

Irrespective of home sales taking a hit this year, the realty sector saw the most amount of upmove in CY19. The index rallied 18 percent with major gains in Godrej Properties, Brigade Enterprises, Prestige Estates and Sunteck Realty percent this year.