Published & Updated as on - 2010-02-26

DB Realty, the second property developer to list this year, and Emmbi Polyarns made weak debuts in a choppy market on Wednesday. DB’s disappointing listing was contrary to investors’ expectations of a strong opening, though the stock managed to recoup most of the early losses. The stock, which fell to a low of Rs 412.50 earlier in the day, closed at Rs 455.40, a 3% discount to the issue price of Rs 468. The stock’s backers, such as independent analyst SP Tulsian, feel the market has not understood the company’s prospects well.

“The stock, even at the issue price, is the cheapest of all the listed peers on the basis of its debt-free status, majority of its land under development in Mumbai (around 68%) and execution capabilities,” said SP Tulsian. “It is a long-term hold of at least 12 months.” The Rs 1,500-crore DB issue was subscribed close to three times the number of shares available for sale, though a section of the market felt the issue was priced at the higher end of the valuation band in line with that of the listed counterparts such as DLF and Unitech.

A research analyst, who tracks the real estate sector at a retail brokerage, said the stock would appear attractive at Rs 390-415. “Several investors bought the stock on Wednesday when it fell below Rs 415… I would recommend investors to wait for a broader market correction to accumulate the stock,” he said. The stock got a boost mid-way through the session on Wednesday after Janus Capital bought over 15 lakh shares at around Rs 435 a piece.

The next bout of correction in real estate stocks and the market is expected around the credit policy by the RBI in April, when the central bank is expected to announce measures to mop up more money supply from banks. Investors fear more such steps could result in a rise in lending rates and affect demand for property. Companies that are in the queue to tap the primary market include Emaar MGF, Lodha Developers, Sahara Prime, Lodha Developers, Oberoi Realty, Kumar Urban, Prestige Estates, Vatika, Neptune Developers and BPTP, among others. Emmbi Polyarns had a far more subdued start. The stock closed at Rs 28.20, a 37% discount to the issue price of Rs 45. The company’s initial public offering (IPO) of 1.64 crore shares was subscribed 1.2 times.

Source:Indian Realty News 26/2/10