Realty to post uptick in Q2FY13 sales: MOST

Motilal Oswal has come out with its earnings estimates on real estate sector for September quarter FY13. According to the research firm, real estate universe is expected to post a YoY uptick in 2QFY13 sales momentum on the back of (1) spillover launches (which were deferred by delay in approvals) and (2) low base of weak 2QFY12.

Macro impetus and reform thrust positive for the sector

• Recent favorable macro trends and reform thrust, viz, much-awaited FDI in multibrand retail, policy relaxation in single brand retail, expected interest rate downcycle, etc, are positive for the real estate (RE) sector.
• Approval hurdles in worst performing Mumbai market are seemingly easing off with fast-track clearances on the back of new DCR (development control regulations), resulting in visible increase in new launches.
• Rational approaches from developers in choosing right product and market mix in their near-term monetization plan have led to better offtake in their recent launches.
• While leverage situation is broadly unaltered, improving liquidity outlook and success in divestment transactions have enhanced the expectation of substantial de-leveraging over 2HFY13.

Despite seasonal weakness, 2QFY13 to see YoY improvement in sales momentum

• We expect our real estate universe to post a YoY uptick in 2QFY13 sales momentum on the back of (1) spillover launches (which were deferred by delay in approvals) and (2) low base of weak 2QFY12.
• Some much awaited launches in Sep-12 (e.g. Phoenix's One Bangalore West and Godrej Summit, Gurgaon) have seen encouraging success even during a weak home buying season.
• Phoenix sold ~0.7msf (275+ units @ INR7,000/sf, INR5.3b) in a week's time after launch and Godrej Properties sold ~1msf (695 units @ INR5,800/sf) on the day of launch, despite doing unconventional non-broker marketing. This reaffirms the underlying demand for products offered by branded developers at right prices.
• We expect the outperformance to continue in NCR and Southern Markets, but meaningful sign of sales revival in Mumbai market is anticipated in take place only over 2HFY13.

(INR Million)

Company	Sales			Net Profit
	Sep.12	Var. % YoY	Var. % QoQ	Sep.12	Var. % YoY	Var. % QoQ
Anant Raj Industries	868	-4.9	-12.2	299	-13.8	-15.6
DLF	21,370	-15.6	-2.8	2,331	-37.4	-20.4
HDIL	4,192	-5.1	108.4	1,084	-27.3	2.9
Mahindra Lifespaces	1,173	25	12.6	303	-3.4	3.5
Oberoi Realty	2,134	-4.1	6.7	1,090	-2.2	8.1
Phoenix Mills	628	32.5	0.3	301	26.2	-1.5
Unitech	4,888	-21.9	19.9	492	-46.8	7.2