Best Real Estate Shares In India In 2022: DLF Limited, Oberoi Realty, Godrej Properties

Like so many others, the real estate sector was particularly hard-struck by COVID-19. According to a KPMG report, the industry has lost more than ₹ 1 lakh crore since the Pandemic began. However, the sector has changed due to the economy's slow but steady opening.

Best Real Estate Shares In India In 2022

Like so many others, the real estate sector was particularly hard-struck by COVID-19. According to a KPMG report, the industry has lost more than ₹ 1 lakh crore since the Pandemic began. However, the sector has changed due to the economy's slow but steady opening.

Click here to find out 4 other sectors to add to your portfolio in 2022.

Recent years have seen rapid growth in the Indian real estate market. The increase in demand for homes and offices across the nation served as gasoline for this. As investors offer a new perspective on this industry, we also attempt to cover it in this piece. Here, we'll examine the stocks in the real estate sector to watch in 2022 and analyze the sector as a whole.

Overview of the Indian Real Estate Sector

In terms of employment creation, the real estate industry is second only to agriculture, making a significant contribution to the GDP (GDP). The housing sector is responsible for about 5% of the nation's GDP.

One of the industries with the highest international recognition is real estate. Most real estate in India is residential, with the remainder being offices, shopping centres, hotels, and hospitals. It is divided into four subsectors: business, retail, hospitality, and residential.

Mainly foreign investors appear to have a favourable outlook on this industry. The rising FDI inflow into the Indian real estate market is proof of this.

This is a product of the Non-Resident Indians' pervasive optimism (NRI). This would increase their investment in the industry even more.

The Securities and Exchange Board of India (SEBI) has approved Real Estate Investment Trusts to increase participation (REIT). A unique kind of business known as a REIT owns or finances properties that generate income. Thanks to this platform, all different types of investors will be able to participate in the Indian real estate market. In the years to come, it will further provide a market potential in India worth ₹ 1.25 trillion (US$ 19.65 billion).

Also Read: 5 Ways You Can Invest In Real Estate Without Buying A Property

5 Stocks to Watch in the Real Estate Sector in 2022

Here is a list of the top real estate stocks for 2022. 

1. DLF Limited

The best real estate equities to buy are those like this one. It is a prestigious real estate business established in 1946 and has a current market value of ₹ 85,682 Crore. In many regions of the country, this corporation has developed the most significant and well-known real estate developments.

The business has a distinctive corporate structure, with revenue from rentals and development. The infrastructure, SEZ, and hotel industries have all been entered by DLF. ICRA recently updated the company's rating from A to AA-. It arrived when the company's operational performance increased.

DLF reported a profit of ₹843 Crores. in FY22, virtually doubling its net profit from the prior year. The fact that this business pays dividends and has a yield of 0.87% is a bonus. With no promoters' promise, the promoters' ownership in the DLF has stayed constant this year. With a debt-to-equity ratio of 0.11, the market leader has a comparatively low level of debt. The ROCE is 4.78% or Return on Capital Employed. The sector's price-to-earnings ratio (P/E) is 32.65. Given that the business's ratio is 57.12, the company is overvalued.

2. Godrej Properties

Since 1990, Godrej Properties has earned a solid reputation in the industry. Its affiliation with Godrej Industries Ltd. multiplies the credibility of the entity.

One of the company's primary focus areas continues to be the monetization of existing commercial ventures.

The business has finished some of the most well-known township, commercial, and residential projects in India's primary states. It has formed a joint venture with the TDI company to construct a luxury housing complex in Delhi. With a valuation of ₹ 36,210 Crores, the company has the second biggest market capitalization in its sector.

Despite a net loss the previous year, the corporation achieved enormous profits in FY22 of ₹ 539 Crores. As a result, the company's P/E ratio, which was negative last year, is now 102.81.

Additionally, the promoters' commitment to this business is nil. The company has the lowest return on capital employed ratio among its rivals at 8.91%.

3. Oberoi Realty

Oberoi Realty Ltd., a Mumbai-based real estate firm founded in 1980, has completely changed how residential real estate is played in the country. It has several important projects in the works that are anticipated to be good news for shareholders.

This real estate corporation has a market value of ₹ 29,889 billion. The promoter has made no promise. The P/E ratio of 28.54 makes the company more affordable. Compared to its rivals, the debt-to-equity ratio is also modest at 0.27. The investors outperformed their rivals with an average return of 10%.

The business had a profit of ₹ 807 crores, representing an increase of 9.6% annually. Throughout the year, the promoters' holdings remain the same.

4. Prestige Estates Projects Limited

Prestige Estates Projects Ltd., one of the most well-known names in real estate, was founded in 1997. It has constructed first-rate residential, business, retail, and hospitality projects in India.

The market valuation of this dividend-paying firm is ₹ 17,237 Crore, and its dividend yield is 0.35. As it purchased numerous sites in and around Bengaluru, it intends to increase the scope of its storage operations.

In FY21, the company generated the most sales booking revenue, totalling ₹ 1584.3 Crores. With a 190% rise from FY20, Prestige generated a net profit of ₹1577 crore in FY2 of FY21. However, the company's net profits have decreased by 21% to ₹ 1231 Crores. This year, the promoter holding of 65.48% remained constant. The company has a low debt-to-equity ratio of 0.72 and an 8.74% return on capital.

5. Phoenix Mills Limited 

Phoenix Mills Limited works in the real estate development industry. The business is a well-known developer and manager of shopping malls. The eight largest malls in India's six largest cities were built by it, and it is actively creating more.

They have formed a strategic partnership with the Pantaloon Group, the owner of well-known brands, including Pantaloon. CRISIL recently changed the company's rating from Negative to Stable with A+. Phoenix Mills has a market value of ₹ 22,567 Crores.

It is a firm that pays dividends and has a yield of 0.19. After seeing a sharp fall in net profit in FY21, the company generated a net profit of ₹ 247 Crores in FY22. The promoters' ownership in the company has increased by 1.82% to 47.33% in FY22. The promoters' commitment is still at nothing. With a P/E ratio of 95.25, the firm might be overvalued in the current market. The return on capital employed for the company is 5.06%. In FY22, the debt-to-equity ratio decreased to 0.60.

The Bottom Line

There are worries about the new Covid variants and other health hazards throughout the world. Experts are concerned about the potential effects on the real estate industry. Some believe this may result in continuing the housing trends because it may encourage some people to resume working from home. The best course of action is to observe how the events unfold.

It is anticipated that India's real estate market will reach $1 trillion by 2030. It will make up 13% of the nation's GDP by 2025. Commercial and retail real estate and hotels are all expanding significantly and are helping to meet the infrastructural needs of the nation.

Also Read: Real Estate Funds: Why Does It Make Sense To Invest In Them?

To know more about REIT, watch this video

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.


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