BENGALURU (Reuters) -Shares of realty-to-textile firm Bombay Dyeing and Manufacturing jumped as much as 20% on Thursday on a $627 million deal to sell land, pushing up peers’ stocks on hopes of a pickup in the realty market.
The sale of the 22-acre land in Mumbai to a unit of Japan’s Sumitomo Realty and Development Co would help the company become debt-free, and comes as parent Wadia group faces troubles with its Go First airline filing for bankruptcy in May.
Bombay Dyeing’s stock hit its highest level since Sept. 27, 2018.
The deal, announced on Wednesday, signals investor optimism while the location of the land parcel presents immense development prospects, said Shishir Baijal, Chairman and Managing Director of Knight Frank India.
Shares of Godrej Properties, Indiabulls Real Estate and Oberoi Realty are up between 1.6% and 2.6%, driving the Nifty Realty index up 1.6%.
Also helping sentiment was U.S. data showing a moderate increase in consumer prices in August, which cemented expectations that the Federal Reserve will leave interest rates unchanged in September.
The sale will help Bombay Dyeing record a pre-tax profit of more than 43 billion rupees ($518.24 million), and help “extinguish all its borrowings,” the Mumbai-based company noted in an exchange filing.
Bombay Dyeing shares were last up 15.9%. It has more than doubled so far this year, compared to a nearly 37% climb in the Nifty Realty index.
($1 = 82.9725 Indian rupees)
(Reporting by Varun Vyas in Bengaluru; Editing by Mrigank Dhaniwala and Janane Venkatraman)
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