During the just-concluded results season, the real estate sector was expected to show dismal numbers. The star player in the realty pack, DLF, came out with its third quarter results on January 31. The company’s net profit was down by 68.72% from Rs 2144.98 crore to Rs 670.79 crore on YoY basis.
“Real estate prices would come down to inflation-adjusted 1998 prices,” Rajiv Singh, Vice Chairman of DLF, said.
Speaking on the results, Singh said the company is ready to fight the price war and would offer customers a lucrative price — the company, he said, has launched new projects at lower prices and has stopped buying land. “We saw the slowdown as early as December last year,” Singh said. DLF, he said, had tweaked its product mix to include affordable housing as demand for luxury housing and corporate offices had come down.
Singh added that things had improved after September, when customers found it difficult to avail of credit. “New volumes had declined but thankfully, old bookings didn’t get cancelled. Now, people have started thinking of buying.”
Talking about the company’s about 50% margins, Singh said margins of realty companies were a little deceptive. “We have about 100% margin in rentals. If you remove that component, the margin would come to about 35%,” he said. The working capital cycle in some cases is about 15-20 years, he added.
Here is a verbatim transcript of the exclusive interview with Rajiv Singh on CNBC-TV18. Also watch the accompanying video.
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