Bangalore: A surge in the sale of homes and slum development rights has pushed up net profit of Housing Development and Infrastructure Ltd (HDIL) for the December quarter by more than 100%. Sales rose 30%.
India’s third largest property developer by market value said on Wednesday its third quarter net profit increased to Rs162.8 crore from Rs75.7 crore a year earlier.
The year-ago December quarter figure excludes a one-time gain of Rs109.2 crore in tax adjustment for previous years.
Revenue rose to Rs408.9 crore from Rs313.8 crore a year ago. Over the second quarter, revenue increased by 7.3% as the firm sold about 1.75 million sq. ft of transfer of development rights (TDR) at Rs2,400-2,500 per sq. ft between October and December, compared with sales of 1.7 million sq. ft at Rs2,000 per sq. ft in the preceding three months.
Slum TDR is a tradeable paper issued by state governments in exchange for free development of slums by builders, who use the paper to develop other sites.
While 80% of its revenue came from TDR, the rest was largely from home and land sales. HDIL said it has got customer advances worth around Rs300 crore for its residential projects and it sold land worth Rs40 crore.
In the latest quarter, HDIL launched around 1.3 million sq. ft of residential space for the first time in a year, as well as two commercial projects totalling 2 million sq. ft in suburban Mumbai.
“The strategy will be to focus and launch residential projects at 15% lower than market prices—for better penetration of new markets,” said Hari Prakash Pandey, vice-president finance.
Pandey said that though demand from the commercial realty sector is reviving, HDIL would focus only on the two projects it has launched.
HDIL shares dropped nearly 4% to end at Rs371 on the Bombay Stock Exchange (BSE) on Wednesday in a sluggish overall market. BSE benchmark Sensex was little changed at 17,474.49 points.
BSE’s Realty index was the worst performer on Wednesday, dropping 1.91% to close at 3,930.25.
“The challenge ahead for HDIL would be to execute as much as it has promised,” said Ajay Parmar, an analyst with Emkay Global Financial Services Ltd. “It shouldn’t have a problem in raising money, though, because the overall market conditions have improved.”
Pandey said HDIL needs to raise Rs1,400-1,500 crore in the next two years towards seed capital for its rental housing project, commercial projects and balance payment for land required for rehabilitating people displaced in the Mumbai international airport project.
HDIL is already raising money through non-convertible debentures. Pandey told analysts in a call after the results announcement that the firm has closed the first tranche of Rs400 crore and will raise another Rs300 crore in the second tranche.
After raising Rs1,680 crore through a qualified institutional placement in 2009, the company has a debt of about Rs3,200 crore.
Pandey said HDIL’s land bank has increased to about 194.4 million sq. ft as it has been steadily acquiring some projects.
He added TDR prices would remain firm and not go below Rs2,500 per sq. ft.
Another Mumbai real estate company, Mahindra Lifespace Developers Ltd, part of the Mahindra and Mahindra Group, said net profit for the third quarter rose 146% to Rs28 crore.