The Hindu Business Line : Construction stocks jump on FDI move

STOCK prices of companies with huge land holdings as also those into real estate business shot up on Friday. The rise was based on market expectations that their valuation would increase after the Government allowed FDI in construction.

Brokers say there are several companies in big cities such as Mumbai and Delhi that have huge real estate and many of these are planning to venture into housing and commercial complexes. These companies are now considering options such as setting up joint ventures or can even selling land on the strength of the FDI approval.

Bombay Dyeing, Modern Mills, Nesco and NRC are among the companies that are tipped to benefit from the Government announcement. There is also interest in real estate companies' stocks such as Ansal Properties, Ansal Buildwell and Lok Housing.

Stocks of all these companies gained in today's trading. The major action was witnessed in the Bombay Dyeing counter as the stock gained 20 per cent to close at Rs 297. The sharp jump came on the strength of company having a lot of real estate in central Mumbai, brokers said. Several Mumbai-based companies with large land holdings that are not currently in use are also being tipped to benefit. This segment includes Nesco (up 10 per cent at Rs 189.75) that has huge tracts of land in North Mumbai. Several builders have already shown interest in it.

NRC Ltd (up 8.75 per cent at Rs 36.45) is another company that the market took fancy to as it has significant land holdings in Thane (near Mumbai) where it is planning to build housing complexes.

On the other hand, there are several closed textile mills in Mumbai which are sitting on lands with huge values. Modern Mills (up 12.55 per cent at Rs 26) is one and Ruby Mills (up 5.89 per cent at Rs 193.15) is another. There are also textile mills that do not generate much market interest on account of low liquidity.

Meanwhile, the market euphoria is rubbing off on real estate companies such as Ansal Housing (up 10 per cent at Rs 46.45), Ansal Buildwell (up 10 per cent at Rs 27.85), Ansal Properties (up 5 per cent at Rs 141.75) and Lok Housing (up 5 per cent at Rs 21.14).

The market talk is that foreign real estate developers might pick stake in these companies.

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