Stock of real estate player Parsvnath Developers defied its sector trend and rallied well in the first half of 2011 but fell sharply in mid-2011 after it showed little signs of improvement in its earnings picture. Expectations of lower interest rates though, once again provided momentum to this stock which now boasts of a 106-per cent return over a one-year period.

Fundamentally though, not much has changed for Parsvnath Developers. While consolidated sales saw a mere two per cent growth for the nine months ending December 2011 over a year ago, profits dipped 31 per cent.

The company has been resorting to selling non-strategic parcels of land to keep the cash flow going. Nevertheless, that liquidity crunch persists is evident from the steady hike in shares pledged by promoters. In the December quarter, promoters pledged 91 per cent of their shares from 71 per cent in September.

While Parsvnath's debt-equity ratio at 0.8 times as of September 2011 is not alarming, it has had difficulty in infusing money for new projects. In 2011, it had to seek investments from JP Morgan for its residential project to provide an exit route for earlier investor Red Fort Capital. This also suggests that projects have not been progressing at the desired pace.

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