Unitech Ltd, India's second most valuable listed real-estate firm, said on Monday its June quarter net profit soared on higher sales and better price realisations.
Average economic growth of about 8.6 percent over the last four years has boosted incomes and spurred ever greater demand for shopping centres, offices and homes, leading to surge in profits of Indian real estate firms.
On a standalone basis, Unitech posted net profit of 3.48 billion rupees ($86 million) for the April-June quarter, compared with 739.2 million rupees in the year-ago period. Net sales for the quarter stood at 7.64 billion rupees.
Unitech, which has mostly been constructing apartments, offices and malls in areas around the capital, New Delhi, is now exploring new territories to expand into and sustain growth.
"We are looking at our entry into the western region in the country ... (And) we will soon be working on commercial properties in Chennai, Kochi and Hyderabad also," Managing Director Sanjay Chandra told reporters. In early July, Chandra forecast revenue growth of 50 to 60 percent in the fiscal year to March 2008. Unitech also plans a foray into airport development and is in talks with potential operators, Chandra said.
India is looking to expand and improve its key infrastructure in a bid to maintain growth and has recently awarded contracts for major overhauls of its busiest airports. "We are looking at Greater Noida, Chennai and Kolkata. Unitech will be the majority stake holder in such projects," he said. Noida is a satellite town on the outskirts of New Delhi and is slated to have its own airport. Unitech has also lined up a joint venture with Indonesia's Salim Group in the eastern state of West Bengal to build an expressway and bridge over river Hooghly.
"We want to bid for projects where infrastructure and land development are mixed. Here we will get 38,000 acres of land to develop. The development cost of the project is 250 billion rupees," Chandra said.
Unitech competes with market leader DLF Ltd, which raised $2.25 billion in India's biggest IPO in June. Chandra said the real estate sector in India continued to be strong: "In national capital region office rentals are up by 35 to 40 percent in last six months. Mall rentals are firm or going up."
But he said higher interest rates had slowed growth in the housing sector with a fall off in property speculation. Developers had to work harder to sell properties, he said, but were pocketing returns until now grabbed by the speculators. According to a housing index launched recently, property prices surged by an annual average 15-29 percent in major metros during 2001-05.