Relative valuation of the real estate stocks

While the sensex is currently trading at a P/E multiple of 18.62 (as on 23^rd July) the real estate index is trading at a P/E multiple of 19.72 (as on 23^rd July) and while the sensex is down only 5% since the same time last year, BSE realty index is down 35% down since July 07.

And while the sensex picked 18% in the last week, the BSE Realty index picked up 23% over the same period.

The question to answer is whether there is still a downside to the real estate stocks.

Percentage drop from 52 week high

Ansal properties 84%

Parsvnath developers 78%

Omaxe 77%

Sobha developers 72%

Unitech 66%

DLF 65%

BSE realty Index 64.5%

Akruti as mentioned earlier is the only outperformer among the real estate scrips and yet in the NSE market of 2,175 stocks, the stock has a 6-month relative strength of 34 which means it has underperformed 66.0% of the market