Realty shares in focus; Godrej Properties, Indiabulls, Sobha hit 52-wk lows

Media reports suggested that stamp duty may be increased by 1% in Maharashtra along with a hike in ready reckoner rates.

Shares of real estate companies were trading weak, with Godrej Properties, Indiabulls Real Estate and Sobha from the S&P BSE Realty index hitting their respective 52-week lows on concerns of hike in stamp duty in Maharashtra with effect from April 2023.

Indiabulls Real Estate, Macrotech Developers (Lodha), Godrej Properties, Prestige Estates Projects, Sobha and Mahindra Lifespace Developers were down in the range of 2 per cent to 4 per cent. At 10:14 AM; the S&P BSE Realty index, the top loser among sectoral indices, was down 0.82 per cent, as compared to 0.50 per cent rise in the S&P BSE Sensex.

Select media reports indicated that stamp duty may be raised by 1 per cent in Maharashtra along with increase in ready reckoner rates.

While there has been no confirmed announcement on the same, a duty hike could impact demand sharply especially with home loan rate increase of ~200 bps in the last one year, ICICI Securities said.

This is negative for Mumbai based developers like Oberoi Realty, Sunteck, Macrotech, Godrej Properties, Keystone Developers, etc, if implemented, the brokerage firm said in a note.

Meanwhile, overall the construction cost inflation is now down to about 6 per cent per annum is evidence of the fact that the impact of the geopolitical circumstances from last year is now starting to moderate and the management of Lodha in Q3 earnings call said that they hope that not only will it help in having more predictable construction cost going forward but also help in moderating the inflation in the overall economy and therefore help the rate cycle to start moving to a peak and then downwards later in this year.

Among individual stocks, Sobha slipped 2 per cent to Rs 422.65 on the BSE. In past six trading days, the stock of real estate tanked 23 per cent after the company on March 22 announced that a search by the Income Tax Department is being carried out at the registered office and other premises of the company.