Mumbai/New Delhi: In line with analysts’ expectations of a subdued quarter for most real estate firms, Housing Development and Infrastructure Ltd (HDIL) and Unitech Ltd posted lower profit and revenue in the June quarter.

Mumbai-based HDIL reported a 44% drop in net profit on Tuesday to 105.3 crore from 189 crore in the same period a year ago.

Total income fell 60.8% to 201.1 crore.

Gurgaon-based Unitech reported a 53.35% year-on-year drop in consolidated net profit for the June quarter to 45.88 crore on lower demand in key markets.

Its revenue fell 33.75% to 407.74 crore.

HDIL is on track to gradually reduce debt and the target is reduce it to 3,000 crore in one year, Hari Prakash Pandey, vice-president, finance and investor relations, said in an earnings call. HDIL’s debt reduced marginally quarter-on-quarter by 56 crore.

Its current debt to equity ratio is 0.36.

There were no new borrowings during the quarter and debt on 30 June was 3,684 crore.

Sequentially, HDIL’s net profit and total income dipped 66.5% and 67.8%, respectively.

Unitech booked sales of about 701 crore during the June quarter, of which apartment bookings were at 1.44 million units at 607 crore and deliveries at 0.8 million sq. ft of completed area.

The company also launched projects of about 1.27 million sq. ft of area in Noida, Bangalore and Rewari in Haryana.

Sequentially, Unitech reported a drop of 43% in revenue, as construction and sales slowed.

“The company’s focus continues to be on ramping up construction activity and it’s taking several measures to this end," said Ajay Chandra, managing director, Unitech. “A lot of emphasis is also being laid on improving various processes to drive efficiencies and reduce costs."

Unitech didn’t disclose its debt as of 30 June. Its debt as of 31 March stood at 5,399 crore.

Real estate analysts have been upbeat about residential development in markets such as Mumbai and the national capital region where office space has faced challenges due to weaker demand from occupiers.

“For HDIL, Mumbai is not a favourable real estate market, while for Unitech, market conditions are better, but both are operationally weak," said Sandipan Pal, assistant vice-president, research, at Motilal Oswal Securities Ltd.

“For Unitech, revenue recognition has been weak and that is a concern. HDIL is doing both land sales and property sales (and this) will help in debt repayment going forward."

To tap customer demand and optimize the use of land, HDIL is also converting a proposed retail project in suburban Mumbai’s Mulund and another under-construction office space project into residential developments.

For another large project planned in Kochi, it is talking to potential joint venture partners and is also exploring the option of raising private equity (PE) if it develops the land on its own. For the first phase of the project, HDIL will need to raise about 250-300 crore of PE capital if it was to opt for this.

“The idea is to create multiple cash flow options, which will also help in reducing debt," said Pandey.

HDIL vice-chairman and managing director Sarang Wadhawan said the sector is going through a rough phase due to inflationary pressures, higher interest rates and delay in policy approvals, but the coming quarters should be healthier.

While the company has got a positive response for its new residential project in Kurla, Mumbai, another new project in Noida on the outskirts of Delhi met with poor demand.

HDIL dropped 2.5% to close at 83.7 on Tuesday on BSE and Unitech dropped 0.93% to 21.30. The benchmark Sensex rose 0.54%.

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