Rising input costs, falling property sales and a foray into mid-income housing hit the net profit of Delhi-based property companies – Unitech and Parsvnath Developers during the second quarter of the current financial year.
Mid-income housing projects carry lower profit margins.
Unitech, the country's second largest developer, posted a decline of 13 per cent in its net profit to Rs 359 crore in the quarter compared with Rs 410.12 crore in the corresponding quarter last year.
The company's net sales went down by 3 per cent to Rs 985 crore (Rs 1,013.48 crore) in the period.
Sanjay Chandra, managing director, Unitech, said, “In an increasingly challenging business environment, company has been reorienting its product portfolio towards mid-income housing to boost sales.”
Earlier, another realty major DLF also cited increase in mid-income housing projects for the decline in its net profit.
Shares of Unitech have fallen 90 per cent from the beginning of this year, with nearly 50 per cent of the decline witnessed during a single day of last week. The company's interest pay-out also went up 70 per cent to Rs 134.14 crore (Rs 78.98 crore).
Meanwhile, Parsvnath Developers has posted a 79 per cent fall in its net profit for the second quarter of the current financial year as compared to the corresponding quarter last year.
The company has posted a net profit of Rs 22 crore (Rs 103 crore) in the period.
The company's net sales have gone down by 45 per cent to Rs 222 crore (Rs 401 crore).
Analystsz expect the coming quarters to be tough for the real estate sector as sales are set to fall further. "The second half of 2009 and early 2010 will have to be seen closely as market is expecting degrowth in top line, bottom line and operating margins,'' said Shailesh Kanani, an analyst with Angel Broking.
