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SALES SLUMP Unitech, HDIL post decline in profit
Unitech Ltd and Housing Development and Infrastructure Ltd (HDIL), India’s second and third largest devel- opers, respectively, reported decline in third-quarter net in- come on Tuesday as sales fell and input costs rose in a slow- ing economy.
Unitech’s consolidated net profit fell 50.4% in the three months ended December to `55.22 crore from `111.36 crore in the year-ago quarter.
Revenue declined 22% to `514 crore from `659.79 crore in the same period. HDIL’s net profit fell 31% from a year earlier to `155.7 crore in the quarter. Revenue dropped 9% to `422.5 crore.
Sales of houses and apart- ments have been declining as economic growth slows this fiscal to an estimated 7% from 8.4% the last year. Higher bor- rowing costs, following 13 in- terest rate hikes by the Reserve Bank of India since March 2010, have also deterred po- tential homebuyers.
Concerns for the realty sec- tor include a substantial debt corpus that many real estate firms are trying to pare, said Parikshit Kandpal, a senior re- search analyst at Karvy Stock Broking Ltd. Lower sales are, meanwhile, causing cash flows to dwindle.
Unitech’s debt as on 31 De- cember was `5,190.26 crore. It reduced its debt by `383.59 crore during the first nine months of the current fiscal.
“Company’s net debt-to-eq- uity at 0.43 is well within the targeted level of 0.50. It has been continuously reducing its debt by utilizing cash flows from operations,“ Unitech managing director Ajay Chan- dra said in a statement to BSE.
“Company has been able to achieve `941 crore of sales booking during the quarter by continuing its focus on afford- able/mid-income housing seg- ments. Business environment remained challenging during the quarter affecting compa- ny’s ability to scale up the con- struction activity,“ he said.
HDIL, too, pared its debt by about `100 crore to `4,242 crore and its debt-equity ratio is at 0.42, according to an in- vestor presentation.
Sarang Wadhawan, vice- chairman and managing direc- tor of HDIL, said the compa- ny’s performance had been af- fected by the overall real estate scenario.
“We will continue to focus on reducing our debt consider- ably in the coming quarters through monetization of FSI (floor space index) sales and internal accruals. While we un- derstand the limitations, and uncertainties that have been following the wake of the real estate sector over the past quarters, we are confident that the fundamentals that drive the sector in India are cyclical and extremely robust.“
Shares of Unitech rose 0.7% on Tuesday to `29.75 before the company’s results were an- nounced on a day the bench- mark Sensex closed 0.4% high- er. Shares of HDIL closed 6.82% higher on Tuesday at `104.10.
Source: http://epaper.livemint.com/ArticleText.aspx?article=15_02_2012_008_003&kword=&mode=1
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