Jul 4, 2023
By: Katya Naidu
Rising interest rates have not taken the sheen off Indians’ love for owning homes, as evidenced by sales hitting a peak in April-June 2023 with a 36 percent rise on year, as per Anarock Research.
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Market liquidity and an improved buyer confidence are pushing developers to turnaround projects quicker and plan new ones. This has set off a virtuous real estate cycle that can last 6-8 years, says a report by DAM Capital.
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Investors can gain from this upcycle by investing in companies across sectors that can gain from the boom, including wood panel makers, pipe makers and tiles and sanitaryware makers.
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Via these stocks, investors can play the real estate upcycle beyond the top 7-10 cities where urbanisation and its impact on construction is far swifter versus mature cities, says DAM Capital.
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With more new homes and even commercial properties comes the need for new furniture and that’s positive for wood panel companies. They will see a compounded annual growth rate (CAGR) of 15 percent over the next ten years, the brokerage says.
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DAM Capital has a buy rating on stocks like Greenpanel Industries, Century Plyboards, Greenlam Industries, and Greenply Industries.
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Pipe makers have seen a CAGR of 13 percent over the last decade, despite hiccups like Covid and more. High real estate demand will bring in more demand for the sector hereon, DAM Capital says.
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Prince Pipes and Fittings, Apollo Pipes, Astral, and Supreme Industries are its top picks.
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The real estate launches done over late 2021 and 2022 should come up for tiling work in two-three quarters from now, opined DAM. Branded bathware players can also gain from quality and after-market service, and they hold better pricing power, says DAM Capital.
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DAM Capital has a buy rating on three stocks in this area. It advises investors to buy Cera Sanitaryware and Kajaria Ceramics on dips. It classifies Somany Ceramics as an opportunistic high-risk bet.
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