Brokerage firm HSBC has come out with a report, advising investors to avoid those realty companies that have a large business in the country's financial capital Mumbai.
Mumbai's inventory levels are at 25-months high, significantly higher than the last down cycle. Inventories in Hyderabad are also high. High inventory levels without new launches are a worrying sign, the report notes. Inventory overhang could persist for a longer period and the outstanding inventory is unlikely to improve in a hurry, the report said.
Based on these finding, HSBC has downgraded HDIL to neutral from overweight.
However, there is strong growth in South India, which has resulted in stable inventory levels in Bengaluru and Chennai. These cities have reported strong volume growth year-to-date. Bangalore sales are up 40 per cent while Chennai has seen sales rise in excess of 35 per cent. Gurgaon has also reported stable inventory.
HSBC has upgraded DLF to overweight from neutral.
Both HDIL and DLF traded with over 1 per cent losses today.
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