Housing Development and Infrastructure Ltd (HDIL) has won a Rs2,000 crore slum rehabilitation project in Mumbai. The company will develop around 1.2 million sq. ft, which analysts feel may take anywhere between four and five years for completion. While this may not result in immediate revenue for HDIL, it comes at a time when the economics of TDRs (transfer of development rights) is improving. Development of residential units under TDR is HDIL’s forte, where the slums are developed free of cost and the developer is given a TDR as an incentive.
From a low of around Rs1,000 per sq. ft in the last quarter of fiscal 2008-09, TDR rates have been steadily moving up to around Rs2,400 per sq. ft at present. This is reflected in a sequential rise in revenue every quarter during the current fiscal.
HDIL has launched around 6-7 million sq. ft of residential projects during the present fiscal. Besides, it has two commercial projects, an airport development project and a rental housing project. All of these are in Mumbai, and will add to revenue from fiscal 2011 onwards.
While revenue is expected to decline on a year-on-year basis this fiscal, analysts expect revenue to grow by 30-40% in the next fiscal.
One concern, however, is that the company may require funds for its ongoing projects in the near and medium term. This could have an impact on the profit, depending on how it raises the funds.
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