Overweight on the HDIL: Param Desai, Angel Broking

Param Desai, Research Analyst, Angel Broking, in a chat with ET Now talks about HDIL.

What is it that you like in the real estate sector - if at all? If you were to make one recommendation if at all, what would it be?

The investors should exit unless the stock price bounces from the current level. There is a lot of negative news flow with respect to the demand, higher interest rate as to Indian lending norms has been factored in to a certain extent but as I said, a lot of negative news flow is still yet to come in, which will keep the stock price under pressure.

Having said that, we remain overweight on HDIL. Purely the net debt to equity is 0.3 times, it is one of the best amongst its peer group. In the last two years, HDIL has been hugely over dependent on the TDR sales, but that has come down to a greater extent. In the last one year, the company had done a good amount of successful residential launches at 10-50% of the market price. So there is a revenue visibility of around 5000 crores if the company follows the project completion methods, which will be flowing in FY12.

So this is a more comfortable stock at this level. The stock is trading on 60% discount to one year price to book of around 0.5 times. The stock is trading currently attractively and we believe the stock will outperform in the medium term from this level.