NNNNNN BROKERAGE PREFERS DEVELOPERS OVER REITS Morgan Stanley Bullish on DLPF, Prestige, Sobha Morgan Stanley sees a strong recovery 'in the offing for residential volumes within the property sector led by pent-up demand, significant improvement in affordability and new launch pipeline. The brokerage said it prefers developers over REITS and is overweight on DLF, Prestige Estate Projects and Sobha. It has an underweight rating on Godrej Properties and equalweight on Oberoi Realty. The BSE Realty index last year saw an extended period of losses compared to the benchmark and hit its 52-week low in May while Sensex started recovering in March. The BSE Realty index has surged 112% from its 52-week low of 1259 on May 19, 2020. Sensex has recovered over 90% from its March 2020 Iows Morgan Stanley has downgraded Embassy REIT and Mindspace REIT to equalweight from overweight and cut target price on. Embassy REIT by 12%. "Volumes in the mid-income and affordable segments are likely to be better than IUxUry. We expect Volume recovery across metros, including Bengaluru, Greater Mumbai and Gurugram," said Morgan Stanley. Our Bureau TN NV TR NIRRT R IR TR R BRI R s v DLF CMP (): 267.55 Target Price (): 7299 Potential Gain (%): 11.75 DLF has laid out plans to launch 35-40 million Square foot of new projects which have a revenue potential of 36,000 Crore to 740,000 crore over the next few years, said Morgan Stanley, raising target price on the stock by 13%. The firm said DLF has altered its strategy to include several middle-income projects in the product mix and Sales will also begin with the start of construction. Morgan Stanley said an improving physical market and demand consolidation should benefit DLF and help double quarterly pre-sales to 1 000 crore in FY22. ESTATE PROJECTS CMP (): 296.80 | Target Price (7): 372 Potential Gain (%): 25.30 Raising target price by 9%, Morgan Stanley said Prestige has a balanced portfolio of residential and commercial assets. Planned new launches in Bengaluru, Chennai, Noida and Mumbai, along with ongoing and completed unsold inventory, provide good monetisation visibility and the company's valuations appear inexpensive at a 58% discount to forward net asset value, it said. SOBHA CMP (7): 475.95 Target Price (): 573 Potential Gain (%): 479.55% Morgan Stanley, which has raised target price on Sobha by 33%, said the company is positioning itself to benefit from upcoming residential demand with its current projects and upcoming new launches. Sobha continues to diversify geographically to non-Bengaluru markets and has a strong contractual business to augment cash flows, Said Morgan Stanley. Valuation is inexpenSive at 31% discount to NAV, the firm said.