Jefferies’ Mahesh Nandurkar Says Real Estate Could Drive Earnings Growth Next Fiscal
The battered real estate sector will lead a sharp recovery in Nifty earnings in the upcoming fiscal, according to Jefferies’ Mahesh Nandurkar.
“We have started a real estate-led cyclical recovery phase. We are seeing very initial signs of it,” Nandurkar, macro strategist at Jefferies India, told BloombergQuint’s Niraj Shah. “We believe if that theory proves to be right, we would be looking at 35% earnings growth in FY22 and maybe another 15-20% in the subsequent year as well.”
To be sure, Nandurkar does not imply that the real estate sector alone will drive this growth. Rather, the multiplier effect of the real estate sector will be the central pillar of recovery. He added that the long-beaten-up sector would pave way for a strong earnings growth in years to come.
So, on an overall basis, we see that over the next three to five years the housing market alone can add 1-2% points to the GDP growth.Mahesh Nandurkar, Macro Strategist, Jefferies India.
Nandurkar said Jefferies has gone overweight on property developers. The equity strategist said that market share gains, alone, are a good enough reason to justify being bullish. “One doesn’t even have to subscribe to the view that the housing market will bottom out, growing substantially over the next three-five years.”
A market share shift is happening from the weaker players to the stronger ones, Nandurkar said. This scenario makes it positive for listed players that emerge as the biggest beneficiaries. “(Property) segment is clearly going to be the most direct and the primary beneficiary of the trend.”
Ancillary players including mortgage companies, financial lenders, cement, tile, ceramic as well as plumbing pipe companies will play a role in the growth of the real estate sector, he said.
Watch the entire conversation here: