Sales of listed realty firms just 50% of highest Q4FY19 figures

Even as research reports talk about revival in residential sales of listed realty firms, the total net sales figures do not show such buoyancy.

Total net sales posted by these companies in the June quarter of the current financial year are just half of the highest quarterly sales figure in the March quarter of FY19. The Q4 of FY19 figure was the highest sales they posted so far in the last 45 quarters.

In Q4 of FY19, the top listed companies posted total sales of Rs 20,220 crore, while in Q1 of FY22, they posted sales of Rs 11,107 crore, data culled out by Business Standard Research Bureau showed.

The Q4 of FY19 sales numbers excluded those of property developer Macrotech promoted by the Lodha group. However, Q1of FY22 figures included them as Marcrotech was listed in April 2021. Macrotech is the second largest listed developer in terms of market capitalisation.

In Q1 of FY22, Macrotech’s revenue decreased 37 per cent sequentially to Rs 1,605.4 crore. In the first quarter, profits of these companies were 4.5 times lesser than the highest quarterly profits posted by them in Q3 of FY18, data revealed.

Abhishek Shukla, associate director, India Ratings and Research, said the unusually low revenue and profit in FY22’s first quarter reflect low project completion that was likely driven by slow construction during the pandemic.

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“On the other hand, bullish consultants are talking about new bookings of flats, which are not called revenue in industry parlance. It will result in revenue when the projects concerned get completed,” Shukla said.

On an industry level, residential sales have risen 93 per cent in the second quarter of this calendar year (CY) in the top seven cities. This is due to a low base in the second quarter of calendar year 2020 that saw the first wave of Covid. Also, developers actively pushed products through technology, which gave a fillip to sales, Anarock Property Consultants had said earlier.

However, home sales dropped in Q2 of CY21 by 64 per cent compared to the second quarter of 2019, the pre-Covid year, and 58 per cent on a quarterly basis (compared to Q1 of CY21), said the report.

Unsold inventory across the top eight markets, Knight Frank said, dropped by 1 per cent to 446,787 units in the first half of the year. The age of unsold inventory also increased across the eight major cities to 16.4 quarters from 15.4 quarters a year ago, it said.

According to the new accounting norms of project completion, real estate companies recognise revenue and profit in one shot when a project is over. This accounting practice called Ind AS 115 came around FY18. However, different companies adopted it at different times.

Kapil Banga, assistant vice-president and sector head at ICRA said that the rating firm sees that sales and collections in the residential real estate sector have picked up since H2 of FY21.

Pirojsha Godrej, chairman of Godrej Properties, said when real estate companies talk about quarterly sales, they are referencing bookings done during the quarter, not accounting revenue.

Ashish R Puravankara, managing director (MD) of property developer Puravankara, said “We cannot draw any tangible insights if we compare the 2017 figures with the current year. A myriad of situational factors must be considered to make a sound comparison. In 2017, the advent of RERA (Real Estate (Regulation and Development) Act) and GST (goods and services tax) transformed the industry, boosting customer sentiment. In 2021, the realty market is trying to navigate the repercussions of Covid-19, and buyers are cautious.”

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