Real estate stocks are pricier: Shankar Sharma

In an interview with ET Now, Shankar Sharma, VC and Joint MD, First Global, talked about Real estate stocks.

Real estate, a space which was a big money spinner, a big wealth creator and then a wealth destroyer. Currently if you do a dipstick, there is too much of pessimism on the street for real estate. Can real estate stocks surprise us on the upside?

I do not think so. I do not think there is too much pessimism looking at the kind of IPOs that keep coming out every now and then. I do not know whether they created wealth or not. They did create wealth for the promoters but not for the shareholders in general but I have always believed that is a business in which the promoter has a huge edge over the minority shareholder and you can buy them as trades but to buy them with spectacle that you are going to make a lot of money out of them, I do not think that logic holds.

Further, I do not think the valuations are cheap enough for me to get particularly interested in them. Like I said that most real estate stocks are far pricier than Bajaj Auto or Tata Motors or Hero Honda or Maruti and that somehow does not make sense at all to me. So till I see the valuation gap being so much that there is a huge amount of marginal safety which means the stocks have to fall 50%.