Stronger than H1FY14 growth seen in Q3: Prestige Estates

Enthused by a good demand seen in projects launched in Chennai, Irfan Razack, chairman and managing director, Prestige Estates Projects, says the company will see strong growth in Q3.

Speaking to CNBC-TV18, Razack says the Q2 sales amounted to approximately Rs 1150 crore which includes both residential and commercial properties. Also read: Realty check: Is it the best time to buy your dream home?
On increased input costs and margins, Razack says the increased margin costs are only due to revenue recognition.
“For instance if I am recognizing a villa project my margins are much higher; If I am recognizing a mid-income project like Tranquility or Bella Vista then my margins gets impacted a bit but then that is a couple of percentage point plus or minus but at the end of the day it averages out. So, there is no serious cause for concern on the margins,” he adds. Below is the edited transcript of Razack's interview to CNBC-TV18. Q: Give us an idea of how the festive season sales were and actually how might the Q3 and the second half pan out. Does it look like it has been a hit for Prestige Estates Projects?
A: The Q1 and Q2 have been good. We have been on track as per whatever we thought we could do and Q3 is also going extremely well and probably it will be a hit as compared to the other quarters. Q: Give us some details about your performance in the second quarter in terms of million square feet sold realisations and if you can compare it with what do you expect in Q3?
A: In Q2 we did sales amounting to approximately Rs 1,150 crore which translates to about couple of million square feet of sales of which commercial is only about 1.11 million, so bulk of it is residential and the average realisation per square feet also has gone up.
Hence compared to whatever else is happening in the market around us, we have exceeded sales of every other developer, which gives us a good feeling. Q: Will Q3 be an upscale since it’s a seasonably strong quarter?
A: Currently Q3 has to be stronger. We have pre launched a project called Prestige Lakeside Habitat and that has done exceedingly well and it is still going well, it is going strong. This development is in Gunjur, Whitefield. So, keeping that in mind and the rest of the projects that we already launched and has good sales momentum, Chennai is also doing well, we have launched a villa project there. So, a sum total of all this in Q3 will definitely add up to the numbers and we will exceed what we have done in Q2. Q: Your sales figures are looking good but some bit of pressure appears on margins front and your realisations have gone up so are input costs going up?
A: Input cost is a constant endeavour to see how we can become more efficient, how we can produce at more reasonable cost because steel, cement, all the input costs are constantly going up. However, when we do the pricing, we definitely figure in all this.
Hence, the margins do not get impacted that much. However, if one sees margins going down a couple of percentage, it is only because the type of revenue recognition that happens are much higher.
For instance if I am recognizing a villa project my margins are much higher; If I am recognizing a mid-income project like Tranquility or Bella Vista then my margins gets impacted a bit but then that is a couple of percentage point plus or minus but at the end of the day it averages out. So, there is no serious cause for concern on the margins.