Thursday, April 30, 2009

Housing Sector In India

DLF posted their results for the 4th quarter and the entire year.

Is revenues plunging by 97% is not a catastrophe? House buyers have just clammed down. Comparing it to US, where the dust still hasn't settled, the house sales are actually flat or marginally lower over last year.

I think the only reason India is still standing is because housing and mortgage industry in India is still small compared to other parts of the economy and so not so badly impacted by this precipitous fall. Ppl are much less leveraged and they can hold on to their houses for ever rather than sell at a lower or default. This only makes the housing mkt in India very illiquid in times of downturn. Also, this means that it would take a long time for this housing crises to correct.

Sidebar: How is DLF still making money with 3% of its revenue? Unless all its costs are variable costs, this just does not seem reasonable. What about interest payments to banks and other depreciation? The sales came doen from 1600 crore to 56 crore and yet they made 30 crore profit. I accept I do not get the real estate business.

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