Nuvama released a report on real estate market, saying that the homogeneity of FY21 to FY24 could be a thing of the past. The international brokerage said that the housing markets of Bengaluru and Chennai can still continue to grow, but Hyderabad is likely past its peak.
Mumbai Metropolitan Region's (MMR) housing market is at a mid-cycle stage, while Pune has shown 'growth fatigue', according to the brokerage note cited by ET Now. Gurugram however faces an 'affordability challenge', it added.
Speaking about the real estate stocks, Nuvama Institutional Equities said that they can remain range-bound if cyclicals continue to be out of favour. The domestic brokerage prefers Prestige Estates and Brigade Enterprises as its top picks in the sector.
'Sentiment around the real estate sector will remain cautious'
According to the brokerage, sentiment around the real estate sector will remain cautious in near term amid challenges like weak volume growth on the back of a fall in affordability, lower hiring due to tariff-related concerns, and a slow recovery in economic growth, according to the brokerage note cited by Informist.
"We believe volatility shall continue and reckon stocks shall continue to remain range-bound with downside protected by falling mortgage rates while the upside is capped by valuation/volume growth concerns," the brokerage said. "With price increases likely to moderate, investor-led demand may decline," it added.
Nuvama's top real estate picks: Prestige Estates & Brigade Enterprises
Nuvama maintains a 'Buy' rating for Prestige Estates and Brigade Enterprises. It has a target price of Rs 2,009 apiece for Prestige Estates, implying an upside potential of more than 21 percent from the stock's previous closing price.
The domestic brokerage has a target price of Rs 1,437 apiece for the shares of Brigade Enterprises, implying an upside potential of nearly 51 percent from the stock’s previous closing price.
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