Sunday, December 24, 2006

Realty Stocks Overvalued?

I've not really been tracking IPOs much of late. The main reason for ignoring these is the fact that there is almost nothing on the table for long-term investors in IPOs today.

The lack of sufficient historical information coupled with some really eye-popping valuations thanks to the bull market make me jittery, to be honest. Also, the mammoth oversubscriptions in most of these imply that the average investor gets a miniscule allocation that is simply not worth the effort. Even if you were to sell at a handsome profit on the first trading day, the absolute value of your returns doesn't make it really worthwhile.

Among IPOs, the ones I am most leery about are realty companies, which are blessed by being at the intersection of both a stock market boom as as well as a property boom and hence these companies are cashing in big time. This article illustrates the issue beautifully.


Prasanth said...


Agree with you. I just don't understand on what basis these realty stockes are given such high valuations. Just check the recently concluded Shobha developers issue for example.
I seriously doubt the long term sustainability of these valuations.


Hi Everyone

Really interesting article by blog owner. it is a pleasure to post a comment here.
Indian Stock Market is on a jittery note as of now. It is a fight to death of the bulls and bears. Gone are the days when our Share Market was dependent on other markets.
This may not be the right time for stock Stock Trading , but taking a view for the longterm, this might surely be a good bet. Investing in the SENSEX / NIFTY will be a good bet to take right now for the longterm players.

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