Buy realty stocks at 15-30% correction; don’t enter defence pack now: Dipan Mehta

economictimes.indiatimes.com:

Dipan Mehta, Director, Elixir Equities, says real estate stocks have given fabulous returns, and at this point, as is the case with a lot of other stocks, the risk-return profile is not in your favour. Mehta says he would just wait and watch and look for a correction, 15-20% correction or so, which may provide us with some margin of safety.

If one had to play it from a stock market angle, how are you looking at the real estate space? Where do you find promise?

Dipan Mehta: It is better to be cautious on the real estate side. They have been having a tearing rally and a lot of sales have taken place, pre-sales have taken place, the fundamentals have improved significantly and, of course, the real estate cycle is really on the upswing. But a lot of the positives have been factored in and one could easily expect a slight correction in deals as well as prices, even in an upcycle in the real estate industry and valuations are certainly not cheap. Of course, every quarter, the net asset value or the total book value of these companies tends to go up by 10-15% because of new projects but look these stocks have given fabulous returns, and as I said I think at this point of time, as is the case with a lot of other stocks, the risk-return profile is not in your favour. So, I just wait and watch and look for a correction, 15-20% correction or so, may just provide you with some margin of safety.

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