NEW DELHI: According to a report from ICICI Securities, it indicates that the net debt levels of listed real estate developers have declined by 37% since the first wave of Covid-19. The report notes that the decline in debt levels was achieved through a combination of reducing the cost of debt by 80 to 160 basis points, reducing the company’s overhead costs by 20 to 40 percent compared to pre-Covid levels, operating cash surpluses, asset sales and equity raising either through QIP or by dilution at the SPV level. “On an aggregate basis, the listed developers of our hedging universe (ex-REITs) were able to reduce their level of consolidated net debt by 37% to Rs 274 billion (ex-DCCDL) between T4FY20-T1FY22 ( March 20 to June 21), “It said.
As the entire real estate industry in India, especially the unlisted space, continues to struggle with high cost and amount of debt, the balance sheets of listed developers have become leaner resulting in places them in a strong position to invest for medium-term growth and is likely to accelerate the pace of consolidation in the sector. The report noted that the developers used a mixture of organic and inorganic pathways to reduce debt.