Top 8 listed realty firms’ net debt plunge 43% to ₹23,000 crore in last 3 years, says Anarock

Top eight realty firms' net debt fell 43 percent to ₹23,000 crore FY 2023 from over ₹40,000 crore in 2019-20, said real estate consultant Anarock, citing cash flow improved on strong housing sales.

Anarock even noted that the unfettered demand for housing across the country has enabled the leading large and listed developers to reduce their debt.

The consultant analyzed financial performances of the top eight developers -- including DLF, Macrotech Developers (Lodha brand), Godrej Properties, Prestige Estates Projects, Sobha, Brigade Enterprises, Puravankara, and Mahindra Lifespace Developers Ltd -- engaged in the development of residential real estate.

As per details, the net debt of the top eight listed developers has reduced from ₹40,500 crore in FY20 to over ₹23,000 crore in FY23.

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Adding more, Anarock said that the average cost of debt for these eight players fell to 9 percent in FY23 from 10.3 percent in FY20. In 2020-21, the interest cost was 9.05 percent, while the cost of debt was 7.96 percent in 2021-22.

"This decline in net debt is essential because of boosted sales and revenues," Anarock Chairman Anuj Puri said, adding the developers' sales volumes have surpassed pre-pandemic levels and are headed for a new peak.

"With improved cash flows over the last few years, their debt has reduced significantly. Interestingly, the widening gap between the gross and the net debt also indicates a comfortable financial position for these players," Puri said.

In FY20, the difference between the gross and net debt of the developers was about ₹7,400 crore, which widened to almost ₹15,200 crore in FY23. The periodic interest rate hikes since April 2022 have led to a marginal rise in the cost of debt, though it remains lower than the pre-pandemic levels of FY20. However, it will not impact large and listed players' execution capabilities.

"The findings once again vouchsafe the increasing confidence of most homebuyers in projects by these developers, who have entered the new fiscal with stronger and healthier books and values," said Puri.

Apart from the top eight listed developers, large unlisted players are also displaying a similar trend.

The market share of large developers, both listed and unlisted, has nearly doubled -- from 17 percent in FY17 to 36 percent in FY23.

Overall, as per Anarock Research, the last fiscal (April 2022 to March 2023) recorded sales of approx. 3.65 lakh units across the top seven cities - the highest in the last five years.

The first quarter of the current fiscal (April to June 2023) saw approx. 1.14 lakh units sold in these cities -- the highest-ever quarterly sales recorded.

The eight listed players considered for this analysis are those which have consistently reported their cost of debt in investor presentations, Anarock said.

With agency inputs.