Realty cos hit by AIM-less listing

LONDON: Despite the boom in Indian real estate, Indian realty companies listed on London's Alternative Investment Market (AIM) have seen value erosions and are generally trading at a discount of 8-20% to their issue prices.
"While this is disappointing, it is not surprising," said Shiv Dayal, managing director of Langham Capital Ltd, a boutique financial advisory firm with a focus on corporate cross-border transactions between India and the UK.
"News is sporadic about these companies and there is a lack of information for the investor to trade on. So, there is a slide," said Dayal.
Hiranandani's Hirco, Raheja Group's Ishaan Real Estate, Unitech, Eredene Capital, West Pioneer, Alpha Tiger and Dev Properties of the Indiabulls Group are some of the Indian real estate companies listed on AIM.
While most of these companies have a huge potential, their stocks are trading down.
Most analysts have put the lack of a profile in the UK as the major cause for the slide. "They have to keep investors informed of developments with regular information and education if they want to attract new investors," Dayal told DNA Money.
"Indian real estate should not see AIM as just a one-off way to raise capital," he added, insisting that they should learn investor relations from Wipro.
Indian real estate companies also have a lead time of around two years before any profits will show up. "It takes two-three years for the development of projects and there is no real pick-up in equity prices until the properties are close to occupation," said Dayal. Investors need to ride out the lead time.
Analysts also believe that as many of the real estate companies listed are family businesses like Raheja Group, it is a good opportunity for investors to get a stake in them. However, this also has the downside in that there is no certainty about when the returns will come, given the fact that investments may be made at a time of the family's choosing.
Non-family-owned companies tend to deploy their capital quickly and efficiently and so offer returns on investments more enough.
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