5/13/2020 UBS Downgrades Also Point to a Grim Realty - The Economic Times - Mumbai, 5/13/2020

UBS Downgrades Also Point to a Grim

Realty
PUTS A SELL on Oberoi, Godrej, Prestige; maintains buy
rating on DLF, Phoenix
Our Bureau

Mumbai:

Top brokerages are cutting their earnings estimates for real estate companies as the Covid-19
led lockdown has intensified the gloom in the sector. A day after CLSA slashed the target
price of Oberoi Realty for high unsold inventory woes, UBS has downgraded the stock to sell
from buy and halved the target price to ₹300.

UBS has also downgraded Godrej Properties and Prestige Estates Projects to sell from buy.
Overall, UBS has cut target prices of these stocks by 53-57%. UBS believes India’s residential
real estate recovery has been derailed by the pandemicinduced lockdown.

“Residential property sales have almost collapsed since the lockdown. Given the economic
impact of Covid-19 and uncertain income/jobs outlook, we believe the path to normalcy could
be longer,” said UBS.

Highlighting the trend during the global financial crisis, UBS said it took 16 months for
aggregate primary property volumes to recover.

The brokerage expects a 25% decline in industry pre-sales and pressure on system realisations
for FY21.

“With 45% average decline YTD (year-to-date), our covered developers still trade at 20%
discount to average and we believe are vulnerable to de-rate as the path to normalcy could be
longer,” said UBS. The brokerage has maintained buy ratings on DLF and Phoenix Mills.

The brokerage expects residential property realisations to correct over the near- to medium
term but said price declines are not likely to be more than 15-20%.

Meanwhile, CLSA believes luxury apartments in Mumbai could see further price decline.
Price expectations have fallen 10-15% and distress sales have also been seen, the brokerage
firm said.

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5/13/2020 UBS Downgrades Also Point to a Grim Realty - The Economic Times - Mumbai, 5/13/2020

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