Moody's Investors Service says that Indiabulls Real Estate (B1 stable) weaker-than-expected sales performance in the nine months to December 2014 is credit negative.

''Continued weakness in sales performance will delay revenue recognition and cash flow generation, which eventually will delay the expected improvement in Indiabulls' credit metrics,'' says Vikas Halan, a Moody's vice president and senior credit officer.

The company achieved sales of 1.2 million square feet (Rs 14.8 billion) in the nine months to December 2014, against Moody's expectation of annual sales of 3-4 million square feet (Rs 25-Rs 30 billion).

''The shortfall in sales was mainly attributable to slow sales and delays for its two projects in Gurgaon, which together accounted for over 50% of Indiabulls' total saleable area remaining unsold as of December 2014,'' adds Halan.

Halan was speaking on Moody's just-released report on Indiabulls, entitled ''Continued Weakness in Sales Performance Will Put Negative Pressure on Ratings''.

Indiabulls' net borrowings also increased significantly to Rs 56.9 billion as of December 2014 from Rs 26.7 billion as of March 2014, following its acquisitions in London and Mumbai in 2014.

Nevertheless, Moody's notes the company liquidity has improved with cash and cash equivalents of Rs 12.9 billion as of December 2014, compared to INR3.0 billion as of March 2014. In addition, the company also has current investments of Rs 3.3 billion. This level of cash and investments will be sufficient to fund INR6.8 billion of debt maturing over the next 12 months and repayment of Rs 7.5 billion of debt in UK.

Shares of the company gained Rs 1.2, or 1.54%, to settle at Rs 78.90. The total volume of shares traded was 992,565 at the BSE (Monday).