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Business News/ Companies / DLF net decreases 77%, in line with market projections
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DLF net decreases 77%, in line with market projections

DLF net decreases 77%, in line with market projections

Awaiting revival: A DLF Gurgaon property. The company’s revenue fell 52% to Rs1,810 crore from Rs3,744.39 crore a year ago. Harikrishna Katragadda / MintPremium

Awaiting revival: A DLF Gurgaon property. The company’s revenue fell 52% to Rs1,810 crore from Rs3,744.39 crore a year ago. Harikrishna Katragadda / Mint

New Delhi: DLF Ltd, India’s largest developer by market value, said second quarter profit fell 77% to Rs440 crore from Rs1,935.35 crore a year ago as property prices are yet to recover after the boom that ended last year, when the credit markets were gripped by a liquidity freeze.

While there has been a revival in home sales recently at the lower end of the market, residential prices are still 25-30% down from their peak, while commercial and retail are down 40-45%, said Rajiv Talwar, group executive director, DLF. Demand for commercial and retail space is still low, he added.

Awaiting revival: A DLF Gurgaon property. The company’s revenue fell 52% to Rs1,810 crore from Rs3,744.39 crore a year ago. Harikrishna Katragadda / Mint

“Almost Rs900 crore of their revenue would have come from sales of phase two of their Capital Greens project on Shivaji Marg (in Delhi)," said an analyst with a domestic brokerage firm, who did not want to be named. “DLF Assets did not contribute to the company’s revenue which has reduced their revenue and profit substantially on a year-on year basis."

DLF did not realize any revenue from DLF Assets Ltd (DAL), which is majority-owned and controlled by the family of chairman K.P. Singh. DAL, established to buy and hold completed commercial assets of the developer, typically contributed around 40% of the company’s revenue until the December quarter of 2008.

Shares of the firm, which declared its results after market hours, closed 6.81% down at Rs375.60 on the Bombay Stock Exchange. The current price reflects a drop of 23.47% from the 52-week high of Rs490.80 reached on 21 October. The bourse’s benchmark equity index, the Sensex, closed 1.42% down.

“The second quarter of the fiscal carried forward the momentum set during the first quarter," said Rajiv Singh, vice-chairman, DLF. “As the demand has recovered, sales in homes have picked up considerably. Keeping in line with this pick up in demand, we will continue to launch a mix of attractive products across locations and generate buyer interest by providing excellent location and superior product specifications at the best price."

The Indian real estate market which crashed in September last year amid of high prices and falling demand has started recovering. Demand has come back into the market as developers such as DLF’s rivals such as Unitech Ltd launching homes in the Rs15-30 lakh range and lowered prices of existing projects.

DLF will continue to focus on de-leveraging, the company said in an emailed statement. The firm realized around Rs550 crore through the sale of non-core assets and land parcels during the second quarter and total realization in the current fiscal from such sales is Rs1,064 crore. DLF will continue to sell such assets, the company said in the statement.

DLF got booking for 2.74 million sq. ft of homes during the quarter including 0.35 million sq. ft of luxury homes (DLF Magnolias) in Gurgaon. There are signs of revival in the luxury housing segment, the statement said.

The company said it was buying out Laing O’Rourke’s stake in their joint venture, for better integration.

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Published: 30 Oct 2009, 12:34 AM IST
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