DLF Ltd. and Unitech Ltd. fell in Mumbai trading after Credit Suisse Group cut its ratings for the stocks on concern new projects may be delayed as demand wanes and funding costs rise.
DLF dropped 2.4%, the most in eight days, to 446 rupees at 10:40 a.m. local time. Unitech, based in Gurgaon, declined 2.5% to 159.70 rupees as the Sensitive Index slipped 2.8%. DLF was cut to “underperform” from “neutral”. Unitech was downgraded to “neutral”.
Accelerating inflation and borrowing costs that have climbed to the highest in six and a half years are deterring home buyers, while companies are delaying real estate investments due to faltering economic growth. The developers may also defer new projects in the next fiscal year as the drop in Indian equities and high debt costs crimp fund raising.
New Delhi-based DLF’s planned $255 million share buyback is “ill advised” and the funds would be better used for new projects. Its stock price target was cut 48% to 342 rupees.
Sobha Developers Ltd. and Parsvnath Developers Ltd. were also cut by Agarwal and Noorani. Unitech’s price target was cut to 175 rupees from 353 rupees. Indiabulls Real Estate Ltd., the nation’s fourth-largest developer, was upgraded to “neutral” from “underperform”.
Sobha fell 1.4 percent to 248.95 rupees in Mumbai trading. Parsvnath shed 1.1% to 112 rupees.
