Improved sales and customer enquiries are helping listed realty players get back on track. Most players have reported growth in net profit in the third quarter ended December 2012, prompting industry watchers to claim that the slowdown in the real estate segment is bottoming out.

Both Unitech and DLF have reported growth in profits after almost nine straight quarters. The two largest listed players said they were ramping up construction activity in the coming quarters. DLF said it had reduced its debt by Rs 1,870 crore by selling its non-core assets.

Unitech’s consolidated net debt stood at Rs 5,421 crore as on December 31, 2012, with the net debt to equity ratio at 0.45, which the company said was one of the lowest in the industry.

Godrej Properties, another listed entity, also cited improved sales from new projects as a main reason for improved profits.

“The sales numbers have improved mainly on the back of new projects which we launched during the quarter. Despite flat sentiment in the overall real estate market, we received good response for our launches,” Pirojsha Godrej, Managing Director and Chief Executive, said. The company had launched four projects across key markets of Mumbai, NCR and Bangalore.

Unitech meanwhile said finance costs too had declined in the October-December quarter to Rs 8.4 crore from Rs 27 crore in the same year-ago period.

Scaling up

“There has been a significant scale up in construction activity in recent months and the worker strength at sites has reached an all-time high,” Sanjay Chandra, Managing Director of Unitech, said, adding that the company is focused on ramping up the construction activity in the coming months, particularly to clear the delivery backlog.

According to a Knight and Frank estimates, in Mumbai alone as many as 83,000 units, that is, three-quarters of the inventory, remained unsold at the end of 2012.

The increase in inventories, stagnating absorption levels, rise in interest costs for the realty sector, and decline in net profits during 2012 is likely to compel developers to lighten unsold inventory levels and de-leverage their balance-sheets, Knight and Frank said its outlook.