Parsvnath Developers Ltd reported a 69% increase in revenues for the July-September quarter, compared to the preceding quarter. However, the reported revenue of Rs151.9 crore was around 30% on a year-on-year basis, indicating that the performance is still well off the peak. But note that revenues have declined by about two-thirds in the preceding quarter and so there is a considerable improvement on a sequential basis.
This is also reflected in the trebling of the company’s earnings per share (EPS) from around Re1 to Rs3. Analysts say that the real estate industry has seen some relief in the last few months. Parsvnath has been saddled with huge debt, from which it got some relief when it raised raised Rs168 crore through a qualified institutional placement (QIP) early this month. About 70% of this will be used to retire debt which will improve the debt-equity ratio from 0.8 in the beginning of this year to around 0.5 by March 2010. According to media reports, the company had overdues and outstandings of around Rs143 crore on its loans. Company sources claim there is relief on this following the QIP.
Soon after the QIP issue, the company’s shares jumped by 15% to Rs144, but has since given up some of those gains and now trades at Rs136. At the peak of the crisis in March this year, the shares had fallen to as low as Rs31. With the realty market on the road to recovery PDL is taking the right steps to improve its financial health. It has got Red Fort Capital to invest a total of Rs115 crore, giving it an equity stake of 21% in its premium luxury residential project in Delhi.
According to analysts, Parsvnath took a big hit due to its amibitious growth plans during the boom period and its foray into new areas like commercial projects, IT parks, SEZs and even hotels. Pradeep Jain, managing director of the company says, “We have learnt from the recession that we must focus on delivering existing projects and seeing them to completion,” Of its 193 million sq.ft. land bank, the company will target execution of projects on 42 mn. sq.ft., largely in the residential space. It plans to continue with affordable housing projects where the end-user market is higher and demand offtake will be faster when the realty segment picks up.