@Karthik@nithin
I was looking through some fundamental analysis reports of Oberoi Realty stock in www.marketsmojo.com website. In the valuation section it says that while earnings have fallen by 21.8 % over the last 1 year, price has increased 35.9 % in the same period.With the limited knowledge I have in FA( I am more of a trader than investor) I was thinking that price should discount the earnings and should catch up it, but here, in this case, I see that they are in inverse relation.Are the investors ignoring the earnings? What can we infer from this? Experienced investors can you please help me understand this?
The earnings of a reality stock are bit different from other companies . Oberoi reality has many ongoing projects in Mumbai and they are allowed to recognize the income only after completing a certain percentage of the project as per the accounting standard. till then the amount spent on that project is lying in Capital WIP and money received on booking of flats is lying in advances, once the project reaches the income recognition criteria , we can see a sudden jump in the earnings, so the stock may rising on the expectation of higher earnings reporting in this quarter. I suggest you visit the corporate website of oberoi reality - go to investors section and read the earnings transcript and investor presentation fro Q1 for a clear understanding.
The reason could be anything from operator manipulation, simple exuberance to market euphoria. If you see the market is in a strong uptrend and around the top every scrip you see will be in green or in good profits. If you are an investor my opinion you should enter at a proper price instead of entering right now.