Tulsian`s view on real estate stocks

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Tulsian`s view on real estate stocks

SP Tulsian of sptulsian.com shares his view on real estate stocks.

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Excerpts from Closing Bell on CNBC-TV18 Watch the full show » ALSO READ See previous views by SP Tulsian See what other Experts & Brokerages are saying about Ansal Housing See messages about Ansal Housing

SP Tulsian of sptulsian.com shares his view on real estate stocks.

Tulsian told CNBC-TV18, "If you see all the real estate stocks, obviously when you look from the promoter's angle, they find it quite cheap. When you talk to them they say that our stocks are ruling at 25-30% of the current NAV, but market is not looking to these stocks from an NAV angle because in fact it is more seen from the profitability or more seen from the off take in the real estate sector because if you see the net worth of all these companies, I am not talking of Ansal Housing , which has a huge debt and I think they have a debt of close to about Rs 1500 crore with a very low market cap of maybe about Rs 300-400 crore, but if you take the call on the profitability or maybe the return on the capital employed, things are looking quite scary and actually the NCR region was seem to be quite insulated from this slowdown, maybe couple of months back, maybe because of the F1 race, at that time lot of interest seen, but that inquiry or that enthusiasm seems to have got tapered off and in fact the situation is very poor whether you take a call on NCR, whether you take a call on Mumbai or Bangalore and all sort of things."

He further added, "Sometimes I am unable to understand that if these companies - the case in point is Ansal Housing, if they have such a huge kind of debts, whether the share buyback justify this kind of move having initiated by the management, but sometimes you feel that probably this could just be an exercise to shore-up the market price and all sort of thing, but now SEBI has also become smart and whatever the board authorizes to buyback, SEBI has put a condition that 25% of that must get bought from the market. So I think all these things are positive in the longer term. It is good if the management can really take a judicious view of share buyback and shore-up the book value or shore-up the earnings and all that on the reduce equity and this things points are good, but it must justify the judicious financial planning and financial move in this direction."