Real estate majors Unitech and DLF announced their dismal results for the quarter ended December 2008. While DLF registered a decline in its profits by 69 per cent, Unitech announced a fall of 74 per cent.
Curiously, their margins remained high, with DLF enjoying an unbelievable net margin of 49 per cent and Unitech 28 per cent.
While DLF saw a mild correction in its net margin from 59 per cent in December 2007 to 49 per cent in December 2008, Unitech saw a significant fall in its net margin. It fell from 46 per cent previous year to 28 per cent — still very high — in the quarter ended December 2008.
As high interest rates and high property prices weakened demand in the sector, both the realty majors witnessed a decline in their sales. DLF saw its revenues fall by 62 per cent, while Unitech’s revenues were shaved off by 57 per cent.
For the nine-month period ended December 2008 the profit growth for DLF and Unitech went down by 21 and 29 per cent respectively.
Experts say that fall in interest rates alone can’t help raise the demand in the real estate sector. “There is no demand in the market and developers will have to cut down prices to bring in demand,” said the executive director of a public sector bank who did not wish to be named.
Meanwhile, Parsvnath Developers Ltd reported a consolidated net profit of Rs 5.42 crore for the quarter. Its consolidated total revenue was at Rs 98.01 crore for the quarter. The total expenditure as a percentage of sales has gone up by 17 per cent, which has resulted in reduced margins.