ibrealestate- how will RERA impact construction stock ?
first question comes in mind RERA; what is this which is in headlines these days? lets understand this first
Real Estate Regulatory Act (RERA),
implemented from 1st may this act will help bringing in the much needed transparency and setting accountability in the unorganized real estate sector. Under this act, construction companies or builders will have to deposit 70% of the funds collected from the buyers in a escrow account (separate bank account) in case of new projects or 70% of unused funds in case of on going projects. Builders will now have to get all the ongoing projects and future new projects to be registered with the regulatory authority.
This act will help to improve the transparency and also play a major role in strengthening the alliance between home buyers and builders. For builders this Act may create a short-term liquidity crunch,the unorganized small and local builders and larger players with over-leveraged balance sheets will have to brace for it.
Two out of the top five listed real-estate developers have a higher debt-to-market capitalization ratio than the industry average (1.10).
Among two one is ibrealestate i.e 1.8 (industry avg 1.10). reason for choosing stock
seems there will be a cash crunch for the company.
Technical view
stock has moved more than 140% frm jan to may in one go.
on hourly chart stock has started showing weakness
strategy
short stock on higher side above 170 with sl of 174
*sl should be strict.
Real Estate Regulatory Act (RERA),
implemented from 1st may this act will help bringing in the much needed transparency and setting accountability in the unorganized real estate sector. Under this act, construction companies or builders will have to deposit 70% of the funds collected from the buyers in a escrow account (separate bank account) in case of new projects or 70% of unused funds in case of on going projects. Builders will now have to get all the ongoing projects and future new projects to be registered with the regulatory authority.
This act will help to improve the transparency and also play a major role in strengthening the alliance between home buyers and builders. For builders this Act may create a short-term liquidity crunch,the unorganized small and local builders and larger players with over-leveraged balance sheets will have to brace for it.
Two out of the top five listed real-estate developers have a higher debt-to-market capitalization ratio than the industry average (1.10).
Among two one is ibrealestate i.e 1.8 (industry avg 1.10). reason for choosing stock
seems there will be a cash crunch for the company.
Technical view
stock has moved more than 140% frm jan to may in one go.
strategy
short stock on higher side above 170 with sl of 174
*sl should be strict.
Trade closed manually
KA