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Dun & Bradstreet India (D&B India) has conceptualised Realty Check: The Indian Real Estate Story to highlight the performance of the sector over the past few years. The publication profiles some of the leading players in the segment, while the Insights section provides an overview of current and past performance of the profiled companies. For the purpose of financial analysis, BSE and NSE listed companies with a minimum turnover of Rs 750 mn in FY08 were taken into account. These companies have been further categorised into large, medium and small sized companies based on total income. Large sized companies accounted for 80%, medium sized companies accounted for 15% and small sized companies accounted for 5% of the total number of companies considered for this study. Key takeaways of this study have been summarised below 1 :

• From FY05 to FY08, the real estate market experienced a flurry of activity as the property market was attractive, and property prices skyrocketed despite firmness in interest rates towards the start of FY08. Driven by robust demand and a positive economic situation, the net sales of the real estate companies grew at a CAGR of 84% to Rs 233.9 bn between FY05 and FY08. Net profit from operations also grew at a CAGR of 215% over the same period.
• The ROCE for the small firms has been higher as compared to its larger peers at 21.5% during FY08 which implies that the small firms are using their capital efficiently. On the other hand, during FY08, the ROCE for large and medium sized companies stood at 20.2% and 19.8% respectively.
• In troubled times like today where liquidity is hard to come by and sales are limited, developers are facing a scenario where interest expenses are constantly increasing on account of limited and costly refinancing options. For companies in the study, leverage is a concern as interest payouts have increased by 75-80% over the previous year.
• In the third quarter of FY08, the boom in the real estate market came to an end with real estate companies reporting dismal sales figures. Volumes dried up and the sales of large, medium and small sized companies declined by 63.6%, 43.9%, and 20.4%, respectively when compared to the same quarter last year.
• So far, the biggest impact of the slowdown on the sector has been felt during the quarter ended Dec 2008 - net profit from operations for medium and small companies fell by 81.4% and 63.3% respectively as compared to the same quarter last year. Large companies were worst hit, with net profits for the quarter moving into negative territory.

D&B India is confident that Realty Check: The Indian Real Estate Story will provide the right international platform for profiling companies that are playing a key role in transforming the real estate sector. D&B India promises to track this transformation and capture the pulse of this critical industry through future editions of this publication.

Kaushal Sampat
Chief Operating Officer
Dun & Bradstreet India

¹All data and analysis pertains to the shortlisted companies in the publication only