Income from operations on a consolidated basis fell 48% to Rs509 crore from the year-ago period. Nevertheless, the recovery in the residential property market has undoubtedly led to an improvement in bookings. From March to September, Unitech initiated project work on around 21 million sq. ft of property and pre-sold around 8.5 million sq. ft. The impact of the recovery will be felt on revenue from the second half of fiscal year 2010, as construction activity picks up.

The operating profit for the quarter fell by around 51% to Rs297.8 crore from Rs611.4 crore during the year-ago period, since the revival in the real estate market has also brought with it an increase in construction costs and employee costs. Besides, analysts say that Unitech’s increasing focus on the mid-segment housing segment instead of the premium segment could lead to a fall in operating profit margin (OPM). In fact, during the September quarter, the company’s OPM dropped to 58.5% from 62.2% in the year-ago period.

Like most real estate firms, Unitech too cashed in on the buoyancy in stock markets. Since April, it raised nearly Rs4,400 crore through two qualified institutional placements (QIPs). It also sold asset and land parcels worth around Rs1,000 crore. The funds were used to repay high-cost debt, reduce the firm’s interest burden and improve its financial health.

The upshot has been a reduction in interest cost, which fell by 55% to Rs60.3 crore from Rs134.1 crore in the year-ago period. There has also been a substantial reduction from the previous quarter. But with expansion in construction activity and deployment of equipment, depreciation costs grew by around 2% year-on-year.

Net profit fell by around 50% to Rs177.9 crore from the year-ago period. On a sequential basis, though, it grew by around 12% from Rs157.8 crore, corroborating the gradual recovery in the current fiscal. The firm’s equity capital expanded from Rs324.7 crore in the second quarter of fiscal 2009 to Rs477.8 crore, thanks to the QIPs.

The share price has steadily inched up from around Rs35 in April, and now quotes at around Rs85. The dismal quarterly results are not really a guide to the stock’s potential, though, because the improvement in its financial position and the initiatives it has taken now will show up in the profit a few quarters down the line.

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