Bangalore/New Delhi: Unitech Ltd and Housing Development and Infrastructure Ltd (HDIL), India’s second and third largest developers, respectively, reported decline in third-quarter net income on Tuesday as sales fell and input costs rose in a slowing economy.
A file photo of Unitech MD Sanjay Chandra
Unitech’s consolidated net profit fell 50.4% in the three months ended December to Rs 55.22 crore from Rs 111.36 crore in the year-ago quarter. Revenue declined 22% to Rs 514 crore from Rs 659.79 crore in the same period.
HDIL’s net profit fell 31% from a year earlier to Rs 155.7 crore in the quarter. Revenue dropped 9% to Rs 422.5 crore.
Sales of houses and apartments have been declining as economic growth slows this fiscal to an estimated 7% from 8.4% the last year. Higher borrowing costs, following 13 interest rate hikes by the Reserve Bank of India since March 2010, have also deterred potential homebuyers.
Concerns for the realty sector include a substantial debt corpus that many real estate firms are trying to pare, said Parikshit Kandpal, a senior research analyst at Karvy Stock Broking Ltd. Lower sales are, meanwhile, causing cash flows to dwindle.
Demand slowdown: A file photo of an Unitech project in Gurgaon. Slowing economic growth and higher borrowing costs have deterred potential homebuyers from making purchases. (Mint)
Unitech’s debt as on 31 December was Rs 5,190.26 crore. It reduced its debt by Rs 383.59 crore during the first nine months of the current fiscal.
“Company’s net debt-to-equity at 0.43 is well within the targeted level of 0.50. It has been continuously reducing its debt by utilizing cash flows from operations,” Unitech managing director Ajay Chandra said in a statement to BSE.
“Company has been able to achieve Rs 941 crore of sales booking during the quarter by continuing its focus on affordable/mid-income housing segments. Business environment remained challenging during the quarter affecting company’s ability to scale up the construction activity,” he said.
HDIL, too, pared its debt by about Rs 100 crore to Rs 4,242 crore and its debt-equity ratio is at 0.42, according to an investor presentation.
Sarang Wadhawan, vice-chairman and managing director of HDIL, said the company’s performance had been affected by the overall real estate scenario.
“We will continue to focus on reducing our debt considerably in the coming quarters through monetization of FSI (floor space index) sales and internal accruals. While we understand the limitations, and uncertainties that have been following the wake of the real estate sector over the past quarters, we are confident that the fundamentals that drive the sector in India are cyclical and extremely robust.”
Shares of Unitech rose 0.7% on Tuesday to Rs 29.75 before the company’s results were announced on a day the benchmark Sensex closed 0.4% higher. Shares of HDIL closed 6.82% higher on Tuesday at Rs 104.10.
madhurima.n@livemint.com