The consolidated net debt of eight real estate companies rose by just 2% in the second quarter ended September, while their interest outgo fell by a sharp 11%, after the central bank cut key lending rates by 50 basis points in April, making loans cheaper.
DLF, the countrys largest real estate developer, saw its net debt rise by R540 crore or 2.4% sequentially to R23,220 crore in the September quarter, on dividend outflows and government charges. DLF has announced it has received R2,000 crore from its divestment of a National Textile Corporation mill land in Lower Parel, Mumbai, following which its debt, as on date, stands at R21,220 crore.
Though DLF saw a surge of 19% in bookings during July-September period compared with April-June, lower sales dented the consolidated net profit of the company, which declined by a steep 63% to R139 crore on year-on-year basis.
Meanwhile, debt of companies like Unitech and Mumbai-based Housing Development & Infrastructure (HDIL) has remained flat sequentially, at R5,565 crore and R3,801.5 crore, respectively, in September.
According to Sandipan Pal, an analyst with Motilal Oswal, Unitech has some respite as it has managed to refinance its debt and is expected to repay R700-800 crore by end of 2012-2013 fiscal.
HDIL, too, had said in the last quarter it is on track to reduce its debt and wants to bring it down to R3,000 crore in a year. The company, in an analysts presentation, said the consolidated net debt in the second quarter includes R225 crore of self liquidating debt, excluding which the net debt stood at R3,576.05 crore.
Meanwhile, Sobha Developers and Prestige Estates, both Bangalore based, have continued, executed and delivered more projects, which analysts feel will help them maintain their debt levels. Sobha Developers bought some land parcels for future projects and, hence, saw an increase in its debt levels.
Bank of America Merrill Lynch said Prestiges debt remains stable due to robust development in business, but expects it to marginally rise in fiscal 2013 as the developer advances cash in land deals.
Sobha, on the other hand, recorded new sales of 9.5 lakh sq ft in July-September period worth R530 crore, its highest ever. Sobhas strength of end-to-end capability, market diversification and gradual operational scale has led Morgan Stanley to remain overweight on the company.
Operational cash flows have remained a strong point for Godrej Groups real estate arm Godrej Properties (GPL) as well. Positive operational cash flows aided the company in reducing its debt. JP Morgan found GPLs second quarter results ahead of expectations on the back of improving operating margins. GPLs sales volume during July-September increased a little over 2.5 times to 15.7 lakh sq ft from April-June period of 6 lakh sq ft.