debt yield commercial real estate

Attractive price points and a revival in the fortunes of the Real Estate sector have helped India’s largest realty player lure buyers for its residential properties. The company is likely ot maintain its mid-income housing focus which has yielded good results in delhi where it was able to sell 1,400 units (2 mnsqft) and 1,250 units (1.8 mbsqft) at the Delhi Capital Greens project (phase I and II, respectively) and 0.5 mnsqft in Bangalore over the last six months. Including the above, the company has launched about a third of the proposed 15-16 mnsqft residential projects for the fiscal. The story is not as rosy on the commercial and leasing segments. While the company sold over a 1 mnsqft of commercial and office space in the first quarter and demand seems to be improving, the fortunes of this space is likely to see a significant upswing only next year. Its leasing business, too, is going through a similar business cycle.

While things are looking up, the slow and gradual pick up in volumes will continue to be a drag on its revenues. Analysts estimate that its September quarter revenues will be down by half y-o-y. Ebidta margines are likely to shrink 900-1,000 bps to about 50 per cent as the company realigns its focus towards affordable housing segment (below Rs 30 lakh per unit). The company plans to exit non-core business (wind power, SEZs) and land bank to raise Rs 5,500 crore in 2009-10. This will help it to improve its cash position, manage debt repayments of Rs 1,165 crore and increase pace of execution. Though the stock trades at a discount to its, NAV,  a fall of 10-15 per cent in its share price would make it attractive from a long term perspective.

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Article Source: ArticlesBase.com – Dlf New Look In Real Estate Sector