Sobha Ltd, Oberoi Realty, Prestige Estates, DLF among 14 stocks play real estate theme post budget, say expert, brokerages

The Union Budget 2022-23 met the expectations of the street as it helped close the benchmarks over 1 per cent higher for two days in a row. However, it did not see any major announcement for the real estate sector specifically this time around. But Finance Minister Nirmal Sitharaman's budget did make an allocation of Rs 48,000 crore to build 80 lakh houses in rural and urban areas in 2022-23 under Pradhan Mantri Awas Yojana, ultimately helping the Realty space. 

It was also announced that data centres would be given infrastructure status. Besides, a high-level committee of reputed urban planners, urban economists and institutions will be formed   to make recommendations on urban sector policies, capacity building, planning, implementation and governance.

As per ICICI Securities, real estate companies will be the direct beneficiaries of PM Awas Yojna as this will facilitate easy availability of funds at competitive rates and boost the growth of data centres. This will also enable faster growth in urban development.  

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One major demand of the real estate of increasing tax deduction limit on interest paid on home loans was also not entertained in this budget.  

"There was not much for the real sector in the budget 2022, however, the allocation of Rs 48000 crores for affordable housing under PMAY is welcomed by the industry. The market was expecting an increase in tax deduction on interest paid on home loans but there is no change in this limit, which is disappointing," said Santosh Meena, Head of Research, Swastika Investmart Ltd.

He said though the budget is not exciting from the real estate sector point of view, but there is a complete turnaround story in the sector since the first wave of covid19 due to low-interest rates, supportive government policies, consolidation in the industry because of RERA, work from home culture and rise in income of IT employees.  

Meena is of the view that though the sector was going through pain before Covid19 but things have changed during the last one and a half years and there is a significant improvement in sentiment.  

"As of now, we are seeing a rise in volume and we can expect improvement in pricing in the coming days. We have a very bullish view on the sector for the next couple of years," he said.  

Stocks to buy from real estate sector

Meena picked Sobha Ltd, Oberoi Realty and Prestige Estate as his top stock picks from this space.  

He said Canfinhomes, Kajaria Ceramics, Pidilite, Polycab and Astral are other preferred bets to play this theme.

Brokerage house Hem Securities also picked Prestige pick as its top pick as 70% of revenue of the company comes from residential segment. "Aggressive expansion in annuity portfolio and low debt works in favour of Prestige estate from this space," it said.  

Reduction in corporate surcharge from 12% to 7% and allocation of Rs 68K for affordable housing augurs well for developers, feels Arihant Capital. It picked Macrotech Developers (Lodha), Sunteck Realty Ltd and Arihant Superstructures Ltd from this space.    

Brokerage Ventura picked Oberoi Realty, Brigade Enterprises, DLF, Prestige Estates, Macrotech Developers and Godrej Properties from this sector saying reduction of time required for land and other construction related approvals and an outlay of Rs 48,000 crore are big triggers for these stocks.