Top realtors in the country recorded muted single-digit revenue growth with a majority of them seeing pressure in earnings for the first quarter ended June 30, 2013 over the year-ago period. This comes at a time when the realty sector in the country is grappling with debt defaults and sluggish sales and a challenging macro-environment. Here’s a quick look at the performance of top five realtors.
DLF, the largest realtor in the country according to market capitalisation, saw a modest rise in revenue in Q1 FY14 with net sales rising to Rs 2,314 crore, up 5.3 per cent over the year-ago period. But earnings were hit with net profit declining 37.8 per cent to Rs 182 crore. DLF is expecting its pre-sales in Gurgaon and projects in other parts of the country to drive volume in the current year. The firm disclosed that it has re-initiated the process of exiting the hospitality business after ending the exclusivity agreement to sell Aman Resorts to Adrian Zecha. Zecha had missed two deadlines to complete the transaction as first reported by VCCircle. This is part of divestment from non-core assets to cut debt.
On the other hand, Mumbai-based Oberoi Realty, the second-largest realtor in the country according to market cap, saw slow sales in the first quarter of this financial year, sequentially. Oberoi’s revenue rose around 9 per cent to Rs 218.4 crore during the quarter. However, declines in other income and higher tax expense affected net margins and PAT just nudged up to Rs 101.8 crore against Rs 100.8 crore in Q1 FY13. Analysts covering the stock say the company’s sales volume will be driven by its Worli, Mulund and Andheri projects. Due to weak absorption in the commercial office space, the realtor is planning to convert its Commerz II office project to a residential one.
Another one to follow the path of converting the commercial project into residential one is Housing Development and Infrastructure Ltd (HDIL), which is converting its 52 Corporate Park, a commercial project into a residential one. Hari Prakash Pandey, vice president, HDIL, confirmed the development in a conference call with analysts and said the Mumbai market is a sluggish one and sales have been slow but outside Mumbai the sales have been better. The company has been mired in controversy and litigation in the largest slum rehabilitation project in an urban area, the Mumbai International Airport Ltd (MIAL) project. HDIL registered a drop of 85 per cent in its net profit to just Rs 16.4 crore in Q1 FY14 compared with the corresponding period last year. The company’s total revenues also shrunk by 25 per cent to Rs 150 crore during the same period. HDIL has stopped major floor space index (FSI) sale for the coming quarter as the demand is weak in Vasai-Virar region and it has completely stopped sale of FSI in Mumbai region; it is looking to construct and sell projects.
Unitech, the second-largest realtor by revenues, came in as an outlier posting a 40 per cent rise in net sales at Rs 572 crore in the first quarter with net profit rising 37 per cent to Rs 63 crore. The firm piled up more debt during the quarter and analysts expect its debt to increase further as it has a large construction pipeline of old projects of close to 38 million sq ft.
In Bangalore, Sobha Developers registered sales of Rs 461 crore for Q1 FY14 compared with Rs 433 crore in Q1 FY13, up by 6.4 per cent. Its profit after tax stood at Rs 50 crore against Rs 45 crore, which went up by 11.3 per cent. The developer is also looking to launch projects in various micro-markets like Kozhikode and Kochi during the current financial year. The value of new sales increased 25.7 per cent and the new area sold rose 10.2 per cent, compared with Q1 FY13. The average sales realisation went up 14.1 per cent, compared with Q1 of the last fiscal year and 4.02 per cent sequentially.
(Edited by Joby Puthuparampil Johnson)