Bangalore: Sobha Developers Ltd posted a 73% rise in net profit to Rs 45 crore for the June quarter as it sold 25% more space at sharply higher prices in its key market Bangalore.
Revenue rose 57% over a year ago to Rs 433.2 crore.
The realty firm sold 835,600 sq ft. of space during the quarter compared to 665,659 sq ft. in the corresponding period of last year. Average sale price improved to Rs 5,737 per sq ft. from Rs 4,547 per sq ft.
Quarter-on-quarter, though, Sobha’s net profit fell 53.5% and revenue 17.24%.
“The March quarter is typically a stronger quarter in real estate where extra customer payments and advances come in compared to a sluggish June quarter,” said J.C. Sharma, vice-chairman and managing director, Sobha Developers. “The cash flow from operations continues to remain positive. During the quarter, the company generated an operational cash flow of Rs 730 million. We are confident of achieving our guidance for the current fiscal as well,” he said.
Sobha aims to sell about 3.75 million sq ft. of new space for Rs 2,000 crore this fiscal year, as against 3.28 million sq ft. in 2011-12.
The developer has 38 ongoing residential projects with 23.50 million sq ft. of developable area and 42 contractual projects of 9.22 million sq ft. under various stages of construction. Sobha’s net debt as of June was Rs 1,180 crore.
Another Bangalore-based real estate firm Brigade Enterprises Ltd’s results contrasted with Sobha’s numbers.
Brigade on Tuesday posted a 45.8% year-on-year fall in June-quarter profit but a 78.85% rise sequentially toRs 14.38 crore.
Revenue fell 18.72% over a year ago to Rs 138.6 crore, but rose 4.9% sequentially.
Chief financial officer Suresh Kris said revenue fell year-on-year as the company follows a percentage completion method and will enter bookings done during the quarter into its books only after projects mature to a certain stage of completion.
In the June quarter, Brigade sold 303,000 sq ft. of residential space for Rs 111.53 crore at an average price of Rs 3,700 per sq.ft.
During the June quarter, Brigade signed a private equity deal with Government of Singapore Investment Corp. Pte Ltd during the quarter to acquire prime land in Bangalore for Rs 125 crore. It also sold about 145,000 sq ft. of space to investors in two Bangalore projects for Rs 80 crore.
According to real estate analysts, Bangalore developers are performing much better than their counterparts in the rest of India in terms of sales and aggressive project launches.
For instance, Bangalore-based Prestige Estates Projects Ltd surpassed its own forecast of Rs 1,500 crore of new sales for 2011-12 by achieving sales of Rs 2,200 crore. Last week, the firm said its net profit for the June quarter rose 35.27% to Rs 49.28 crore.
“The Bangalore market has been outperforming, with developers launching at a smooth pace, selling to mostly actual users at stable prices and we expect it to remain this way for at least six months,” said Sandipan Deb, assistant vice-president, research, at Motilal Oswal Securities Ltd. “Unlike other markets, pricing also isn’t arbitrary and is based on a cost+margin basis.”
India’s top real estate markets, Mumbai and the National Capital Region, are grappling with slow demand both because of a shaky economy and exaggerated prices.
Fitch Ratings has a negative outlook on India’s real estate sector for the rest of 2012 due to the persistence of weak demand drivers, compressed margins and a paucity of capital.
Parikshit Kandpal, senior research analyst, Karvy Stock Broking Ltd, said the Bangalore real estate market is at its peak now but some developers have been consistently increasing prices and that may affect demand.