Indian realty sector including DLF sinks again

The current indications, if we go by those, are not satisfactory and to a certain extent, appalling. Even though ups and downs are common in the business scenario, any excess gets tantamount to dearth of steadiness and the same thing is happening with DLF. The biggest real estate developer in the realm of India has encountered a 77 per cent drop in its net profit during the quarter ended September. What can be the reason of this dismal performance? Experts hold the demand for real estate that continued to be sluggish compared to last year is most culpable.

The company, in point of fact, registered a profit of Rs 439.7 crore during the quarter, compared with Rs 1,934.1 crore during the comparable quarter last year (depicted by the consolidated results announced by the company) and sales (and other receipts) during the quarter also dipped 53 per cent to Rs 1,751 crore. But this scenario is not limited to DLF only. Hordes of other prominent real estate companies witnessed the same fate.

Housing Development & Infrastructure Ltd (HDIL) posted a 44 per cent dip in net profit to Rs 148.6 crore, while Sobha Developers’ net profit was down 38.2 per cent to Rs 27.5 crore during the quarter. As per analysts, they were expecting such dips in the numbers, given the fact that the September quarter of last year was considered good for many real estate companies.

“The first half of FY2009 was good for many real estate firms. Only from next quarter onwards does it make sense to compare on y-o-y perspective,’’ said Sastha Gudalore, analyst with Alchemy Shares & Stock Brokers.

Commenting on this reality, Rajiv Singh, Vice Chairman, DLF Ltd, said: “As the demand has recovered, sales in homes have picked up considerably. Keeping in line with this pickup in demand, we will continue to launch a mix of attractive products across locations.” The company also intends to sell noncore assets. “We remain committed to deleveraging the balance sheet and actions on sale of non-core assets are currently underway,” Singh said.

“Sales started picking up from June and we are seeing a 20-25 per cent rise in demand for our upcoming projects,” said a official from Sobha. The company will also start withdrawing the discounts it was offering for its residential projects,” he said.