Investors prefer to be safe at market places. Hence, assessing potential
financial distress and predicting stock failures are much crucial for their
investment decisions. This article highlights the analytic values of financial
ratios and discusses the uses of Altman Z-score model in assessing the financial
distress and predicting stock market performance of Indian realty sector. The
panel regression procedure administered on the 10-year firm-specific data for
the period of 2006–2015 demonstrates how the performance dimensions
embedded into the distress prediction score forecast the future stock price
behaviour. The findings of the study suggest that the analytic value inherent in
Altman Z-score model has utility in both distress classifications and stock
market predictions in Indian context. To be precise, the current Z-scores of
realty firms carry sufficient information content that forewarns their stock
market failures 2–5 years in advance. The results may provide a valuable
guide to the investors of Indian realty firms in analysing financial failures
and thereby can substantiate their investment decisions.
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