The pessimism is a little overdone in terms of the mid-income housing segment and consumer purchases of first time buyers. In the range of about Rs 50 lakhs to Rs 1.5 crore, there is still a lot of appetite at least in Bangalore
We are launching a project in the next 20 days which is going to be targeting people between Rs 40 lakhs and Rs 1 crore
Real estate player Nitesh Estates has posted fairly good numbers in the first quarter of FY14. CMD Nitesh Shetty told CNBC-TV18 that one of its projects crossed the revenue threshold limit this quarter.
"Going ahead, over the next two-three quarters we have atleast two-three projects, which are still under execution, but haven’t hit the revenue recognition threshold marks," he added.
Further, he expects sales momentum to remain stable. "The pessimism is a little overdone in terms of the mid-income housing segment and consumer purchases of first time buyers. In the range of about Rs 50 lakhs to Rs 1.5 crore, there is still a lot of appetite in Bangalore," he added.
Below is the verbatim transcript of Nitesh Shetty’s interview on CNBC-TV18
Q: It is a fairly decent set of numbers that you have reported for Q1. In spite of high finance cost you have turned around at the profit after tax (PAT) level, can you take us through how much you could sell in terms of volumes and whether you saw realizations increase in Q1?
A: Absolutely. This quarter the numbers have been reasonably robust. There are a couple of reasons for that. One is that a couple of our projects had not yet reached the revenue threshold limit. So one of them crossed the revenue threshold limit this quarter being the Nitesh Cape Cod and going forward over the next two-three quarters we have at least two-three projects, which are still under execution but haven’t hit the revenue recognition threshold marks. So that has been one of our issues for the past few quarters but now going forward with execution happening that is one of the reasons why you are seeing these numbers coming in.
In terms of sales realisation, we have now increased our average sales realization which is now exceeding Rs 6,000, it is now about Rs 6,092, which is pretty up there in terms of the Bangalore market right now with our peers.
Q: What is painting all the sectors is this consumer down trading, do you think that your realizations will dip in the coming quarters or even in the current quarter simply because even Nasscom tells us that the IT sector is going to hire a good 22 percent less than what they hired last year, so are you getting a sense that realisations will either peak out or even fall in the coming quarters?
A: We have been evaluating this over the last quarter and we have been saying that the macro environment is a little difficult out there. But having said that, the pessimism is a little overdone in terms of the mid-income housing segment and consumer purchases of first time buyers. What we are seeing now in the range of about Rs 50 lakhs to Rs 1.5 crore, there is still a lot of appetite at least in Bangalore. I cannot comment on any of the other markets.
We have seen healthy uptick even in the last quarter. We are launching a project in the next 20 days which is going to be targeting people between Rs 40 lakhs and Rs 1 crore. We believe we will have a good momentum going even in that project.
Q: Are you saying realizations will rise or they will stay stable?
A: We believe that this momentum on sales will be around the same mark what we are doing right now, it will be quite stable.
Q: You have also indicated that you have got about 2-3 projects which will hit the revenue recognition threshold in the coming few quarters, could you tell us what the volume picture will look like for FY14, any kind of guidance that you could help us with?
A: I will give you a macro picture of where each of our projects stands. Currently, our residential portfolio is in excess of about Rs 3,000 crore. Out of which we have sold about Rs 700 crore in unrecognized revenue. By the end of this year, our unrecognized revenue will be in the range of about Rs 1,000 crore.
Our portfolio is going to be increasing close to about Rs 4,500 crore before FY14 completes in terms of launched projects portfolio. Our rental income portfolio, which is under execution, is about Rs 125 crore, which in the next two years should come into play but you can take a guess in terms of there will be unrecognized revenue by this year-end to close to about Rs 1,000 crore on a portfolio of Rs 4,500 crore by the end of the year.
READ MORE ON Nitesh Shetty, Nitesh Estates, Bangalore, Nasscom, IT sector, revenue recognition threshold marks, mid-income housing segment, consumer purchases
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