Real-estate gems

During the real-estate boom just before the subprime-mortgage crisis, every real-estate company looked promising. But the aftershock of the bursting of the real-estate bubble was so severe that most of the companies in this sphere are still struggling to stay afloat today. There are more than hundred real-estate companies that are listed on the Indian bourses and are traded on daily basis. Few of them qualify to be labelled as fundamentally strong. Most of them are struggling with debt and huge interest burden, and are facing difficulties in executing their projects due to lack of demand. Still there are a few names which have been able to make way through tough times. We wanted to find out the companies which have good capacity to pay interest and have margin of safety in terms of returns on investment and equity. To our surprise, we were able to get only six companies which satisfied basic fundamental parameters. The fact that there are only six such companies points at the current state of the sector. Our filters required a company to have a return on equity and a return on investment of more than 8 per cent (which is the risk-free return), the interest coverage ratio of more than two and the debt-to-equity ratio of less than 1.5. Ashiana Housing Ashiana Housing is a rare real-estate company that has very negligible debt on its books, with the debt-to-equity ratio of just 0.07. The company's non-aggressive and careful approach towar