DLF Q2 net profit dips 11% to Rs 372 crore
India’s biggest real estate company DLF Ltd has reported 11% lower consolidated net profit for the second quarter
By ET Bureau | Updated:
NEW DELHI: India’s biggest real estate company DLF Ltd has reported 11% lower consolidated net profit for the second quarter, as it continues to be hit by rising interest rates, muted home sales, growing raw material costs and mounting debt.
The company’s consolidated net profit for the quarter dropped from Rs418.38 crore a year ago to Rs372.41 crore. Total consolidated income during the period, however, grew 2.28% fromRs2,519.8 crore to Rs2,577.16 crore. Analysts, according to a Reuters Thomson Poll, had expected the company to post a net profit of Rs363 crore.
Aashiesh Agarwaal, real estate analyst at Edelweiss Securities, said, “The company’s profit after tax is lower due to higher interest and taxation. The increase in debt is likely to be viewed as a key negative by investors.” The company’s outstanding loans at the end of the quarter had grown 9.5% to Rs25,449.84 crore.
The company said that proceeds from the sale of some assets would help in moderating the company’s current debt levels, which have increased in the second quarter. Rising interest rates have resulted in lower home sales for all real estate companies who have so far refused to bring down prices and are saddled with high debt levels.
According to Edelweiss, at the end of June, the top 11 listed firms had a total outstanding debt of Rs38,500 crore on their books. The company booked sales for 1.28 million sq ft of space in the quarter compared to 2.2 million sq ft in the previous quarter.
“The company has witnessed muted sale volumes as its previous product offerings received a strong customer response and it did not have much unsold inventory. Sales volumes of the company were further impacted by the delay in the approvals of the new launches,” it said.
In the current quarter, the company has been able to progress on its non-core asset sale, selling a plot of land in Gurgaon for Rs400 crore.
It is also selling an IT park in Noida for Rs500 crore, which will help the company reduce its debt. It is also trying to sell other assets during this fiscal year, including the Aman Resorts hotels business. This will not include the flagship Delhi hotel.
The company’s consolidated net profit for the quarter dropped from Rs418.38 crore a year ago to Rs372.41 crore. Total consolidated income during the period, however, grew 2.28% fromRs2,519.8 crore to Rs2,577.16 crore. Analysts, according to a Reuters Thomson Poll, had expected the company to post a net profit of Rs363 crore.
Aashiesh Agarwaal, real estate analyst at Edelweiss Securities, said, “The company’s profit after tax is lower due to higher interest and taxation. The increase in debt is likely to be viewed as a key negative by investors.” The company’s outstanding loans at the end of the quarter had grown 9.5% to Rs25,449.84 crore.
The company said that proceeds from the sale of some assets would help in moderating the company’s current debt levels, which have increased in the second quarter. Rising interest rates have resulted in lower home sales for all real estate companies who have so far refused to bring down prices and are saddled with high debt levels.
According to Edelweiss, at the end of June, the top 11 listed firms had a total outstanding debt of Rs38,500 crore on their books. The company booked sales for 1.28 million sq ft of space in the quarter compared to 2.2 million sq ft in the previous quarter.
“The company has witnessed muted sale volumes as its previous product offerings received a strong customer response and it did not have much unsold inventory. Sales volumes of the company were further impacted by the delay in the approvals of the new launches,” it said.
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In the current quarter, the company has been able to progress on its non-core asset sale, selling a plot of land in Gurgaon for Rs400 crore.
It is also selling an IT park in Noida for Rs500 crore, which will help the company reduce its debt. It is also trying to sell other assets during this fiscal year, including the Aman Resorts hotels business. This will not include the flagship Delhi hotel.
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