Muted second quarter for real estate companies

Oct 22 2013, 08:44 IST
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SummarySlow growth, tight liquidity conditions and high interest rates are expected to keep the second quarter performance for real estate companies muted.

Slow growth, tight liquidity conditions and high interest rates are expected to keep the second quarter performance for real estate companies muted. The country’s top eight real estate firms are expected to see a tepid growth of 4.5% in the consolidated net profit for the quarter ended September 30 at R560 crore, against R536 crore last year, according to data from Bloomberg and the BSE.

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

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