NEW DELHI (Reuters) - Unitech Ltd., India's most valuable listed real-estate firm, said on Monday its quarterly profit rose more than 10 fold as it sold more properties and expanded to new markets.
Unitech is diversifying from residential projects into hotels and malls, and said it would invest $2 billion in building 28 new hotels and 7 malls.
Managing Director Sanjay Chandra told reporters the company, which had an EBITDA margin of 62 percent in 2006/07, was hopeful of maintaining margin growth in the financial year that began on April 1.
"Margins will be sustainable. They could expand a little," Chandra said.
Indian property developers have had robust growth as an economy growing at over 9 percent a year fuels demand for shopping centres, offices and homes.
"We were selling seven or eight projects rather than one or two projects in our earlier days," Chandra said.
Unitech, which has a market value of almost $11 billion, said net profit for the January-March quarter rose to 3.57 billion rupees from 0.35 billion a year ago.
Unitech shares closed 8.9 percent higher at 595.90 rupees in a Mumbai market that rose 0.4 percent.
Net sales quadrupled to 8.49 billion rupees from 2.08 billion in the corresponding quarter last year.
For the full year 2006/07, the company reported a net profit of 13.05 billion rupees on sales of 33.88 billion.
The company's board also approved an issue of one bonus share for each share held.
Unitech competes with DLF Ltd. and a host of other real estate developers. DLF is planning a public issue that could raise up to $2.4 billion, and would surpass Unitech as India's largest listed real estate firm.
After a boom that saw prices double in major cities over the past two years, many analysts think a combination of higher interest rates and oversupply in some centres could lead to a price slide of as much as 40 percent.
"India's real estate market is in pain," Citigroup said in a report this month.
"Transaction volumes are drying up, higher interest rates and prices have damaged affordability, developers are suffering regulatory and capital markets squeeze, supply is impending."
Citigroup has "sell" recommendations on a number of real estate firms, including Unitech and Parsvnath Developers Ltd.
But Chandra said the company expected growth in demand, mainly driven by new markets like Chennai, Hyderabad and Kolkata.
"We will do well," he said. "The end user demand is huge."
http://in.today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2007-05-28T215404Z_01_NOOTR_RTRJONC_0_India-300327-1.xml&archived=False
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