Despite some encouraging signs of revival in the real estate market, the first quarter results of Bangalore-based real estate companies in this were muted on the back of a slow growth in demand.
However, developers like Sobha, Puravankara and Brigade were able to keep the debt burden under control with signs of stability in their balancesheet in the near future.
“The results posted by the Bangalore-based real estate companies were decent this quarter despite a fall on a sequential basis. This is due to the conscious decision taken by developers to keep the debt component under control,” an analyst with Anand Rathi said.
City-based Puravankara Projects posted a net profit of Rs 39.69 crore during the first quarter, a drop of 9 per cent in comparison to the January-March period of FY10.
Similarly, the net profit of Sobha Developers was at Rs 34.3 crore, a fall of 38 per cent in comparison to the fourth quarter of FY10.
Brigade Enterprises that posted a net profit of Rs 13.92 crore during the April-June period, also witnessed a drop of 56 per cent in its net in comparison to the January-March period.
However, despite a sequential fall in the net profit, the sales numbers were decent with no significant fall in demand.
“Unlike cities like Mumbai, where property prices had witnessed a significant rise, prices in Bangalore were stable in the first quarter,” he added.
While Puravankara Project’s total income stood at Rs 116.29 crore during the first quarter i.e. a fall of 5.30 per cent over the last quarter of FY10, the net sales of Brigade Enterprises were down 36 per cent to Rs 85 crore as compared to Rs 133 crore posted in the last quarter of FY11.
Similarly, Sobha Developers posted a drop of 20 per cent in its revenues to Rs 319 crore during the April-June period in comparison to January-March period.
“Net sales had dropped in the April-June period in comparison to the last quarter as pent-up demand during January-March period had faded in the first quarter,” a top executive of a Bangalore-based real estate company said.
Revenue growth from this quarter onwards will reflect more realistic numbers as the impact of low base effect and pent up demand had already receded, he added.
Analysts also said that results of Bangalore-based companies would remain flat in the next quarters.
“Generally, real estate companies don’t post any significant rise in numbers during the July-September quarter due to monsoons. So, results are expected to be muted in the next quarter due to the absence of any visible trigger,” an analyst in Anand Rathi said.
