Bangalore/New Delhi: DLF Ltd, India’s largest developer by market value, posted a 39% decline in net profit for the three months ended 31 March from a year earlier because of increased costs.
Net profit fell to Rs 211.7 crore in the fiscal fourth quarter, from Rs 344.54 crore in the year-ago period, the company said in a filing to the stock exchanges on Wednesday. Revenue fell marginally (2.47%) to Rs 2,616.78 crore from Rs 2,683.09 crore.
DLF’s profit fell below expectations of Rs 273 crore based on the median of 17 analysts’ estimates compiled by Bloomberg. Higher costs, including interest expenses, the price of land and development rights, dented profit at the company, which had debt of more than Rs 22,000 crore as of 31 December. In the quarter gone by, the company spent Rs 603.89 crore on interest payments.
Shares of DLF dropped 2.53% to close at Rs 183.35 on BSE on a day the benchmark Sensex lost 0.77% to close at 16,312.15 points.
Increasing burden: A file photo of DLF Centre in New Delhi. The developer posted a 39% decline in net profit for March quarter. (Priyanka Prashar/Mint)
The company reported earnings after market hours.
A Mumbai-based analyst, who didn’t want to be named, said that while debt reduction had happened to an extent, timely delivery of projects is going to be a key factor in the coming quarters without which cash flows will not come in.
“In northern India, particularly, even though most developers have low-cost land banks, profitability has been squeezed and most projects are delayed by 2-3 years or so,” he said.
Real estate firms had been expected to perform marginally better in the March quarter as they improved execution of projects and sales bookings. But concerns remain over debt and cash flows. Developers also struggled to improve quarterly sales and profit in 2011-12 as the economy slowed, though most were able to launch more projects even as cash flows remained a worry.
New Delhi-based Parsvnath Developers Ltd reported a Rs 23 crore loss in the quarter ended 31 March because of higher costs, interest expenses, and raw material prices. That compared with a Rs 32 crore profit in the year-earlier period. Its revenue during the period dropped 8% to Rs 219 crore.
Parsvnath said it hadn’t been able to reduce its debt during the March quarter from Rs 1,200 crore in the October-December quarter.
Chairman Pradeep Jain said 2011-12 had been challenging because of rising costs and a funding crunch.
“This has affected our business adversely both in terms of top-line and the bottom-line of our results. We have also been affected adversely by the rollback of income tax exemption by the central government on affordable housing projects,” he said.
Another New Delhi-based developer, Omaxe Ltd, reported a 103% increase in its consolidated net profit to Rs 23.73 crore for the quarter ended 31 March from Rs 11.67 crore a year ago. Its net sales increased by 6.15% to Rs 603.58 crore from Rs 568.6 crore in the year-ago period.
Rohtas Goel, chairman and managing director of Omaxe, said demand in smaller cities such as Ludhiana, Indore and Lucknow had helped push sales. The company will explore new locations and expand existing projects to meet demand, he said.
Mumbai-based real estate firm Housing Development and Infrastructure Ltd (HDIL) said net profit for the March-ended quarter rose 71.14% from a year ago to Rs 315.2 crore, and revenue rose 13.13% to Rs 625.1 crore. Over the December quarter, HDIL’s revenue rose 46.9% and net profit 102.9%.
Sarang Wadhawan, vice-chairman and managing director, said, “We are on track with regard to our target for debt reduction, which has reduced by Rs 237.45 crore, and will continue to focus on the same in the coming quarters through project sales and internal accruals.”
HDIL’s current debt is Rs 4,082 crore with a debt-equity ratio of 0.40. Property analysts said that despite slow sales, all developers had uniformly focused on bringing down debt. Omaxe reduced debt by Rs 213 crore during the year from internal accruals and the debt-equity ratio has been brought down to 0.76 from 0.93 in 2010-11.
Shares of Parsvnath Developers rose 0.09% to close at Rs 52.85; Omaxe shares dropped 0.52% to close at Rs 144.8. HDIL’s shares fell 2.39% to end at Rs 65.25.