Residential demand is sustainable on a quarter-on-quarter basis: Atul Goyal, Brigade Enterprises
Since registration hasn’t happened and all projects remain in a cycle therefore it is difficult to keep financial in the barometer. But if you have an overall look then we have done good in residential and completed pre-sales of 1 million square feet, which we did in the pre-COVID period. So in residential, we can say that we have achieved 1 million, which means we have reached the pre-COVID levels.
Atul Goyal, CFO, Brigade Enterprises Ltd., talks about the demand in the real estate sector and future outlook of the company during an interview with Swati Khandelwal, Zee Business. Edited Excerpts:
Q: The performance of September quarter is indicating that things are not completely alright yet and concerns are there in terms of demand coming back although the government is pushing the sector a lot to clear the inventory. What is your on-ground observation and how long do you think the demand will come at the pre-COVID or good levels from here?
A: If you have a look at the P&L then today P&L is not a right barometer because under AS 116 especially in residential revenue recognition is made based on the registration. Like in the past, POCM – the percentage of completion method – is not available. So, since registration hasn’t happened and all projects remain in a cycle therefore it is difficult to keep financial in the barometer. But if you have an overall look then we have done good in residential and completed pre-sales of 1 million square feet, which we did in the pre-COVID period. So in residential, we can say that we have achieved 1 million, which means we have reached the pre-COVID levels. And going forward, it seems that the residential will do well. Even the cash flow from residential has been good and if you have a look than residential has 40% contribution.
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Q: Going forward, what is your outlook and what kind of new projects have been lined up? Also, tell us about the cash flow situation and the working capital situation of the company? What is your view on commercials?
A: As far as residential is concerned, then I believe it is sustainable due to certain reasons (i) consolidation among developers, due to which the market share of list-A developers is going up (ii) loan rate – loan rates are quite low and I think that if you are supposed to buy a home against the rental than it is more beneficial and (iii) work from home – many people are working from home due to which they want to operate from larger units and there is a lot of NRI demand in the market for the finished products. So, you will see that the finished inventory is also moving. So, I feel that quarter-on-quarter the demand should sustain. We have a target of maintaining at least 1 million square feet per quarter and will try to increase sales further. As far as commercial is concerned then I don’t think that initial hiccups are there because the companies are strategizing that should we make people work from home or call them to the office. So, a lot of companies is not clear but I think the demand for commercials will be there and it will continue to grow further.
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