Watch the interview of SP Tulsian of sptulsian.com with Sonia Shenoy on CNBC-TV18, in which he shared his reading and outlook on the fundamental side of the market and specific stocks.
Below is the verbatim transcript of the interview.
Q: The other point that was made is that now, banks can also invest into Real Estate Investment Trusts (REIT) along with mutual funds and insurance companies. What this does is widen the investor base in REITs. But would that give you an incremental reason to put money into real estate?
A: Two points. I think this is positive for both because even banks have the surplus money and what actually the earlier was worried on the investments made in the real estate because of the regulatory concerns or maybe because of the control or maybe the transparency. But REITs are seen to be quite transparent, but that will not be available with all the real estate companies. In fact, the market for the REITs has to get widened to really see the significant participation by the banks and all that.
So, maybe as of now, I would say that this remains just on paper and if you really want to ask me, I will say that yes, things are looking positive and as and when the markets get deepened for that and maybe expecting that to happen for the time being, you just have one company available in that space that is DLF and market has received well for the DLF share price to move up. So definitely, positive move on paper, but that will probably accelerate the creation of the REIT and you will be seeing then, investments coming in from the banks also in that sector.
Q: Apart from the comment that banks can invest in REITs, banks can also now invest in Infrastructure Investment Trust (InvITs) and because of that, you are seeing a lot of these stocks like IRB Infrastructure Developers, Reliance Infrastructure, MEP Infrastructure Developers, all of them spike up, IL&FS Transportation Networks (ITNL). You track many of these companies, how would you approach them now?
A: If you really ask me, probably banks will be really apprehensive and cautious for the InvITs which you have referred to. Rather, they would be more comfortable in case of REITs. But as we have discussed earlier for the REITs also, if you really see, REITs generally, or it largely happens only in the commercial property and in fact, I am now seeing the trend which we have been discussing for a while, maybe for the last one week, the revival in the housing sector, in the kind of run up which we have seen in the share prices of the housing stocks or maybe the realty stocks.
In fact, the commercial space market is really seen improving here in Mumbai. I am not very much clear about the National Capital Region (NCR), so probably that will broaden the market for REITs. I do not think that banks will be really looking to go for the InvITs at this point of time because of the quality of the company and because of the apprehensions and the safety.So, I am in fact, positive on the REITs but that is what I have said that the market has to get broadened and even that will take time, maybe for the next 6-12 months to get it really broadened and maybe Prestige Estates Projects can be the stock which can look to jump into it because they are holding a huge chunk of the yielding or InvIT yielding realty assets with them. So, maybe apart from DLF, Prestige Estates looks good, but I will only be confining myself to the REITs and not to InvITs.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.