Realty Q3 review: Cos shift focus to low-cost housing

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The Indian real estate sector has reported a mixed bag of results for the third quarter of financial year 2010. Though the signs of recovery seem to be pretty evident on a quarter on quarter basis, the net profits are seemingly coming under some stress. This is because the companies have shifted focus to mid-income and affordable housing.

Real estate companies book profits on a project completion or on a percentage completion. So whatever sales they have effected, say about three months ago is coming into play in their results at the current moment.

While the revenue of realty major DLF grew 12% on year-on-year basis, its net profit dipped 31% (YoY). Unitech recorded a surge in its revenue as well as net profit, which were up 52% and 29% respectively. The revenue growth of HDIL and Bangalore-based Sobha Developers were up 14% and 31% respectively.

Unitech booked three million square feet land in the third quarter and realised Rs 1,550 crore, while DLF booked 3.5 million square feet, an increase of 53% (QoQ). Sobha too booked 431 units in Q3 versus 177 in Q2 and 115 in Q1. HDIL too was not far behind with booking 400 units in the quarter.

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Rise in debt burden

In the nine months, realty majors including DFL, HDIL and Unitech have cut significant amount of debt.

DLF's gross debt has increased by Rs 2,400 crore to Rs 17,100 crore.

However, real estate firm Purvankara Projects says that its debt burden could increase because it has tied in bank funding of Rs 150-200 crore.

Upcoming IPOs

The real estate sector is set to come up with three new initial public offers (IPOs) including DB Realty, Vascon Engineering and Lodha Developers.