Cost overruns and festive discount offers are expected to erode the profitability of real estate firms in the upcoming quarterly earnings, according to market analysts. Realty majors such as DLF, Prestige Estates and Sobha are expected to report a drop in profitability by as much as 30% compared to the preceding quarter. \u201cIncreasingly, it is getting tough for companies to maintain margins because prices have not moved in tandem with projections,\u201d said an analyst. Companies are having to rely heavily on discount or some form of ease-of-payment schemes to generate any interest in their projects. Additionally, companies, including DLF and Prestige, are liable to pay a high interest cost, which is aggravating the crisis. A report published by HDFC Securities said profit after tax (PAT) of the six top listed stocks, excluding Godrej, is expected to drop 28% on a quarter-on-quarter basis and 22% when compared annually. Revenue of these companies are also on the decline, but marginally. Sales are expected to drop by 3% for DLF and 8% for Oberoi Realty on a sequential basis. The Bengaluru-based companies Sobha Developers, Prestige Estates and Brigade Enterprises are expected to report a decline of 10%, 6% and 3%, respectively. A Crisil report recently said there is going to be no meaningful recovery in the real estate sector before 12-18 months, stating that homebuyers at the moment continue to be fence sitters. That being said, RERA was implemented in this quarter, leading to a launch lockdown for more than a month. Though developers were free to market and launch projects in August in Maharashtra, it took another month before they were able to do the same in Karnataka. This might add to the sluggishness in the performance of companies.