Akruti City beats market expectations with profits trebled

Despite testing market conditions and dangling results from other real estate developers, Akruti City has posted profitability growth of 284% as more projects hit the market. Akruti reported first-quarter net profit of 1.71 billion rupees, more than trebling from a year ago. Its total income also surged to 2.4 billion rupees from just 715.6 million a year ago.

The company has not bought any land over the last 6 months and has enough land to build and execute projects for the next 4 years. The management believes that as land prices soften in the coming months, it will go and buy land as it does not expect the demand for property to go down drastically in the long term given the demographic and other factors in India.

Focus on execution and the right product mix ensured that Akruti was ahead of the competitors. Forecasting a lack of interest in malls, the company had cut its exposure to retail projects a year back and converted seven malls into commercial space, where demand is booming. Akruti has focused on a low-cost strategy by acquiring cheap land through slum redevelopment projects, and setting up projects on the outskirts of cities it is present. It recently launched a project each at Mira Road near Mumbai, and in Pune.

As already stated in earlier posts, Akruti has outperformed other realty stocks. It is currently quoting at Rs 731 with a PE ratio of 12.1. and a market cap of Rs 48 billion. Given its growth and the ability of management to predict market conditions and take necessary measures, the company is slated to outperform the market and possibly the other Realty stocks.