The consolidated net sales, however, are expected to increase by a sharp 21% to R4,842 crore against R4,000 crore in quarter ended September 2012, data showed. Growth in sales may reflect the increase in bookings on account of more project launches in the first half of 2013 against 2012. Sequentially, too, the growth in consolidated net profit for the September ended quarter is expected to remain subdued at mere 2.1% growth compared to quarter ended June of R548.5 crore.
On a q-o-q basis, the consolidated net sales in the second quarter are seen to be up by 4.2% from three months of April-June. However, in the June quarter, the consolidated net sales had declined 11% from quarter ended March 2013 (R5,218.5 crore) due to a seasonal slowdown, which typically takes place between the March and June quarters.
Fresh bookings for homes in the September ended quarter are expected to range between 55-60 million sq ft, a tad lower than the previous quarter on account of weak project launches and slowing demand. Project launches have been slow, and with the general downturn and hardening of interest rates, booking volumes are on the lower side for the real estate industry, DLF Group chief financial officer Ashok Tyagi told FE.
In the quarter ended June 30, sales bookings across six major cities in India fell 3% to 62.24 million square feet, compared to 63.98 million square feet in bookings seen in the January to March quarter, data from real estate research firm Liases Foras shows.
Though booking volumes are very company specific, some companies may see a dip of around 10-15% in the second quarter, said an analyst from a domestic brokerage.
DLF, for example, had a bumper first quarter with two project launches of Chamelias and Crest and saw sales booking of R2,400 crore. However with a big chunk already booked in the last quarter, incremental booking will slow down and company may see pre-sales in the range of R750 crore. Meantime, Unitech is expected to post a near 16% increase in net sales with some momentum expected on project execution, said analysts.
For HDIL, realisation from old FSI of R900 crore is expected to improve cash flows in the near term, while project launches are yet to pick up, said a JP Morgan report.
While bookings may remain flat, new launches during the quarter could have seen a 10-15% drop, according to market sources who add that the drop may be seasonal in nature as construction activity slows down during the monsoons.
The construction activity during the second quarter was at similar levels as the previous quarter, with no significant downside observed, said a senior official of one of the top real estate companies.
In the April-June quarter, new launches in the top seven metros slipped 8% on a q-on-q basis to 46,500 units, according to data from Jones Lang LaSalle.
DLFs Tyagi said that most companies are looking at completing pending construction work and deliveries, with very few new launches planned. There is no let up in completion of pending construction activity, he added.
While country-wide statistics suggest a sluggish real estate markets, certain markets specially Bangalore and Chennai are showing steady growth.
Bangalore followed by Chennai have seen uptick in bookings, while in Mumbai and Delhi & NCR markets the volumes have remained flat from previous quarter, said another official at a realty firm.
Between April and June, sales volumes in Hyderabad more than doubled to 4,500 units, according to report from Morgan Stanley. The Bangalore realty market saw sales of 6,500 units compared to an average of 4,800 units over the last six quarters, even as sales in Gurgaon slipped 13% q-o-q to 4,600 units, the report notes.
Analysts will also keep a close eye on the debt levels of realty companies as quarterly results start to pour in, although no sharp change in net debt levels is being expected.
Net debt of the top eight realty companies stood at a massive R37,825 crore at the end of June 2013, only 2% lower than the R38,605 crore seen at the end of the March quarter.
DLF, which accounts for a large chunk of this debt of about R20,400 crore, is expecting to bring its debt down to R17,500 crore by end of 2013-2014. However, a recent report from Macquarie Equities Research observed that DLF may only succeed in bring down its debt to R19,000 crore by FY14 end.
We think timelines for deal closure may extend in a weak macro economic environment as seen in Aman resorts, says Macquarie.
HDIL has debt of over R3,800 crore on its balance sheet needs visible reduction to allay concerns on the high level of pledged promoter shareholding, observed JP Morgan in a recent report.
However, the foreign brokerage puts Sobha Developers debt at a comfortable level and said With the scale up in earnings (as key projects hit recognition threshold), Net Debt/Ebitda will decline to 1.8x levels in FY14E, which is fairly comfortable, in our view. The Bangalore-based company recorded R1,230 crore of debt in the first quarter.
Oberoi Realty stands out as a top pick, according to Edelweiss Securities. Oberoi Realty is expected to have a stable quarter, with around 65% of revenues coming from Oberoi Exquisite. Rental revenue from its mall, commercial and hospitality verticals are expected to be largely stable. Key monitorables are launch of its Worli and Mulund projects, launch of the next phase of Oberoi Exquisite and conversion of Prisma/Maxima into a residential development, said Edelweiss.