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Small & Midcap mantra | This real estate stock owned by Rakesh Jhunjhunwala & Radhakishan Damani almost doubled in May. Should you bet on it?

Rakesh Jhunjhunwala holds 2.06 percent stake in Prozone Intu Properties Ltd as per March shareholding data while Radhakishan Damani holds 1.26 percent stake in the company.

June 01, 2021 / 03:36 PM IST
 
 
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Rakesh Jhunjhunwala and Radhakishan Damani-backed Prozone Intu Properties has been on investors’ radar lately. It was locked in an upper circuit of 10 percent on May 31. It has rallied about 90 percent from Rs 16.75 on May 6 to Rs 31.75 on May 31.

The real estate company, which has a market-cap of nearly Rs 500 crore, is based out of Mumbai's western suburbs. It develops and manages regional shopping centres and associated mixed-use development projects. It has 17.79 million square feet of fully paid-up land bank in prime locations, according to the company website.

Rakesh Jhunjhunwala holds 2.06 percent stake in  Prozone Intu Properties Ltd as per March shareholding data while Radhakishan Damani holds 1.26 percent stake in the company.

It is a debt-free company with assets of over Rs 2,000 crore and more than 3 million square feet of land under development.

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In December 2017, the stock was trading around Rs 78-levels, but by April 2021 it had fallen to the levels of Rs 15. Since then it has bounced back.

Experts said the next possible target for the stock is at Rs 40, and then possibly Rs 60 in the long run.

Prozone Intu Properties reported Rs 9-crore loss for the quarter ended December 2020. But revenue increased to Rs 14 crore in the quarter from Rs 3 crore in the previous quarter.

It is a high-flying stock but investors should be cautious when buying it for long term. Technical experts see this as more of a trading play than an investment bet.

“It is a loss-making company, and there is no improvement in business performance. With the ongoing second wave of Covid, business to remain under pressure in the subsequent quarters due to likely less footfall in managed shopping malls,” Sumeet Bagadia, Executive Director at Choice Broking said.

“Sharp gain in stock price can be attributed to the presence of marquee individual investors. Amidst the prevailing high liquidity scenario, retail participation in the stock market is at a record level now, and to take investment cue they are closely tracking the investments of successful investors like Rakesh Jhunjhunwala and Radhakishan Damani,” he said.

Yash Gupta Equity Research Associate, Angel Broking Ltd told Moneycontrol that if we look at the overall investment of Rajesh Jhunjhunwala or Radhakishan Damani into Prozone Intu, it is very small in amount for them. It may be less than 0.1% of their overall portfolio.

“Prozone Intu is a small-cap company and as we see some tough times ahead in the real-estate sector, we suggest having good quality stock in portfolios like Oberoi Realty and Brigade enterprises,” he said.

What do technical experts say?

Traders can deploy fresh money in the stock based on the long-term trend. If you are a long-term investor then it is best to stay put or book partial profits, suggest experts. But, there are better investment avenues available.

“Technically, the stock is diverging positively on long-term charts, which is an indication of the change in the prevailing trend. The prevailing trend was down and it has started moving upward,” Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities said.

“We feel it is heading for the levels of 40 on the minimum side, which is 50% retracement of the entire fall and in the long run we could see the levels of 60. On the downside keep the final stop loss at 20 for all long positions,” he said.

Chouhan advises investors to hold positions with a trailing stop loss at 20. “If investor added positions on lower levels -- say between 10-15, then they should take 50% profit at current levels. For those who have bought at 70 in the past, for them it is advisable to buy some more shares with a final stop loss at 20 or exit at 60,” he said.

During last week, the stock has given a Falling Trendline Breakout and sustained above the 50-WMA, which indicates further strength in the counter.

“Spurt in Volume is also a sign of the bullish presence and buying interest among the traders. In addition, a momentum indicator RSI (14) & MACD witnessed a positive crossover on the daily timeframe, which suggests a good upside move in the upcoming sessions,” Sumeet Bagadia, Executive Director at Choice Broking said.

“For the long-term prospect, we are expecting a bullish move in the counter, and every dip in the stock would be a good buying opportunity for long-term investors,” he said.

Bagadia further added that if the stock continues to move in the same rhythm, we can expect the target of 52 & 65 in the upcoming months. However, on the downside, there is good support at around 22 levels.

Realty Index up 7% in May:

Real Estate stocks have been in the limelight in May as part of the unlock trade which investors want to capture. The sector (Nifty Realty) has rallied over 7 percent so far in May. The Nifty Real Estate index has doubled in the last 12 months.

Smart money is moving towards real estate stocks especially commercial real estate which could see recovery as various states begin to reopen. Attractive valuations seem to have fuelled the rally in the Realty index.

“We have seen a very good recovery in the real estate sector in the 2nd half of 2021 after the sector was hit by the pandemic in April 2020. In Q4FY21 results several companies have reported very good sets of numbers and almost all the companies reported highest quarterly pre-sales, as the market has seen pent-up demand,” says Gupta of Angel Broking Ltd said.

“In similar lines, we expect Prozone into properties also to post strong pre-sales numbers for the quarter Q4FY21. But, as again state-wise lockdown has affected the real-estate business so the first half of FY2022 will again be challenging for the Real-estate companies,” he said.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Kshitij Anand is the Editor Markets at Moneycontrol.

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