Indian real estate majors, DLF and Unitech, are set to miss their FY11 guidance, despite prices reaching the highs of 2007. Mid cap names like HDIL, Ackruti City and Sobha Developers are however on track to meet their targets. At the end of quarter three itself, DLF will be missing its FY11 target of selling 12 million sq ft and that is likely to come true. The company will have to sell about 5.5 million sq ft in quarter four if they really had to achieve that, CNBC-TV18 reported, citing analysts.
The company wanted to launch 8 million sq ft and they have launched about three projects. It is estimated that they would have sold about 2 or 2.5 million sq ft or thereabouts. So, DLF will really miss in terms of clocking in the total number of sales. It needs to pay about Rs 210 crore mandatorily by March 2011. Unitech will be completing its target of 10 million sq ft this financial year. But in the beginning of the year itself, Unitech had downgraded its forecast. So, from 16 million sq ft they went to 10 million sq ft. Now it is pretty much on track to cover that 10 million sq ft. At the same time, it is at a discount from what it actually achieved in FY10 so that’s a bit of a concern for Unitech.
Some analyst have been pointing out that they have some mounting receivables in their balance-sheet. Therefore, there is a concern on the operating cash flows of Unitech. Also, the other big trigger will be, what will be in the charge sheet that is likely to come on March 31 and to what extent Unitech will be implicated in the 2G scam. In the midcap space however, companies like DB Realty, HDIL, Akruti City, Sobha and Puravankara Projects are companies that will be meeting its target. So, HDIL will do about 5 million sq ft, DB Realty will complete its 3.2 million sq ft, Sobha Developers is almost on track with 2.8 million sq ft.
The South-based companies pretty are much insulated from the rest of the market because what has been going on. The rampant price increase and the volume drop has not really caught up with South India as much as it has in Mumbai and NCR region. These companies have diluted stake in order to really achieve its target, the midcap companies that is. Not all of their projections and sales have come from sale of homes, they have also had to dilute their investments. This is not a very good picture in terms of the earnings that are going to come. It is a very bleak picture at this point in time because no company has actually exceeded targets. Of course, the big boys, DLF and Unitech, have really failed on the targets and the midcaps are still alright.