Unitech expects strong revenue - Reuters

Unitech Ltd. India's most-valuable listed real estate firm, expects strong revenue and earnings growth as it doubles construction of houses and offices every year for the next four to five years.

"That's the kind of growth we have, because we are in multiple markets now," said managing director Sanjay Chandra.

"A few years ago we were just a Gurgaon property developer. And we are entering new markets," Chandra told Reuters in an interview. Gurgaon is a suburb of New Delhi.

Unitech, which has a market capitalisation of $7.1 billion, reported a profit of 1.0 billion rupees ($22.3 million) on sales of 3.8 billion rupees for the three months to Sept. 30.

Revenues were set to accelerate as it moved into second-tier cities such as Hyderabad, Chennai and Kolkata, where firms were setting up offices to beat rising costs in major cities, which in turn was creating demand for housing and shopping malls.

Chandra said Unitech expected to meet or beat market estimates for its fiscal third quarter to December 2006.

"Next quarter should be good. The stock market has a lot of expectations from us. Lot of houses are trying to figure out what our numbers will be. We should definitely meet them. Possibly exceed them also," he said, but declined to give specific numbers.

Investment bank UBS expects Unitech to have a compounded average growth rate of 105 percent in sales and 126 percent in earnings over the three fiscal years to March 2009.

Industry estimates show that India's retail real estate market could top $460 billion by 2010, from around $290 billion in 2004.

Chandra said housing, which contributes about 70 percent of the company's revenue, would continue to dominate revenues even as Unitech's developed special economic zones (SEZs) being set up by the government to attract investment and boost exports.

While the revenue impact of the SEZs would be "very big" and "lot of growth" would come from that sector, Chandra said it would be two years before it contributed to cash flows and four years for revenues.

Chandra said Unitech was unlikely to give an equity stake to a real estate fund in the near future, but was open to project-specific funding.

"We don't see any need of external equity right now. But yes, there may be opportunities later, we will see. I think project-specific funding is what we are focusing on. But no private placement at the entity level," Chandra said.

In July, the private equity arm of Infrastructure Development Finance Co. Ltd. invested 750 million rupees in Unitech's International Recreation Parks.