Bangalore: India’s fourth largest developer by market value, Housing Development and Infrastructure Ltd (HDIL), reported a 66% decline in first-quarter net profit, well below market estimates.
Margins took a hit after the firm decided to suspend sales of floor space index (FSI) and prices of slum transfer of development rights (TDR) touched a low. HDIL is India’s largest slum redeveloper.
Slum TDR is a tradable paper issued by state governments in exchange for free development of slums by builders, who use the paper to develop other sites. FSI is the buildable area on a given plot.
HDIL’s net profit fell to Rs107.4 crore for the June quarter from Rs317.9 crore in the year-ago period. Net sales declined 48.2% to Rs295.35 crore. A Mint poll of three analysts estimated average net profit of Rs147.36 crore on sales of Rs356.23 crore.
“Going ahead, HDIL’s performance will depend on the volume of TDR they can sell,” said Abhunav Bhandari, research analyst, PINC Research.
HDIL saw a 42.34% leap in net profit over the preceding quarter, mainly because of a boost in TDR sales. Between April and June, HDIL sold 1.8 million sq. ft of TDR at an average price of Rs1,500 per sq. ft, 70% more than its total TDR sales in 2008. It expects to sell another 6-7 million sq. ft of TDR by the end of the year.
“After selling 80% of the three projects we launched in the last quarter, we are launching another project in the Rs5,000 per sq. ft, mid-segment category,” said Hariprakash Pandey, deputy general manager (finance), HDIL.