Net debt levels of listed real estate developers decline 37% amid COVID: Report

Net debt levels of listed real estate developers decline 37% amid COVID: Report

IANSUpdated: Friday, August 20, 2021, 04:41 PM IST
article-image
The ICICI Securities report noted that real estate developers have used a mix of organic and inorganic routes to reduce debt/ Representational image |

The net debt levels of listed real estate developers have declined 37 per cent since the first wave of Covid-19.

An ICICI Securities report noted that the decline in debt levels has been achieved through a combination of reduction in cost of debt by 80-160 basis points (bps), reduction in corporate overheads by 20-40 per cent from pre-Covid levels, operating cash surpluses, asset sales and equity capital raise either through the QIP route or through dilution at the SPV level.

"On an aggregate basis, listed developers in our coverage universe (ex-REITs) have been able to bring down their consolidated net debt levels by 37 per cent to Rs 274 billion (ex-DCCDL) between Q4FY20-Q1FY22 (March 20 to June 21)," it said.

While the overall real estate sector in India, especially the unlisted space, continues to grapple with high cost and quantum of debt, listed developers' balance sheets have become leaner which puts them in a strong position to invest for growth in the medium term and is likely to accelerate the pace of consolidation in the sector.

The report noted that developers have used a mix of organic and inorganic routes to reduce debt.

The report noted that listed developers will invest in growth once Covid impact fades away. As per the stated intent of majority of developers in our coverage universe, while they have protected their balance sheets through the tough Covid impacted period, they will again begin to invest in new land parcels in a judicious manner to grow their business over the next three to four years, it said.

RECENT STORIES

Game-Changing Alliance: Ambani's Reliance Ventures Into Adani's Power For The First Time; Acquires...

Game-Changing Alliance: Ambani's Reliance Ventures Into Adani's Power For The First Time; Acquires...

SRM Contractors IPO Subscribed 86.57 Times On Last Day Of Bidding

SRM Contractors IPO Subscribed 86.57 Times On Last Day Of Bidding

Tax-Saving Tip From Zerodha CEO Nithin Kamath: 'If You're Married And Hindu..."; Here's How To Save...

Tax-Saving Tip From Zerodha CEO Nithin Kamath: 'If You're Married And Hindu...

Holy Cities Like Ayodhya, Varanasi Attracting Big Retail Brands: Report

Holy Cities Like Ayodhya, Varanasi Attracting Big Retail Brands: Report

A Big Relief For Byju's: NCLT Rejects Investor Plea To Stay Byju's Rights Issue EGM On March 29 Amid...

A Big Relief For Byju's: NCLT Rejects Investor Plea To Stay Byju's Rights Issue EGM On March 29 Amid...