Ladies and gentlemen, good day and welcome to Sunteck Realty's earnings conference call for Q2 FY 2021. We have with us today Mr. Kamal Khetan, the Chairman and Managing Director of the company, along with the senior management team of Sunteck, comprising of Mr. Manoj Agarwal, Chief Financial Officer, Mr. Prashant Chaubey, Head of Corporate Finance, and Mr. Raunak Rathi, AVP, Investor Relations. Please note this call will be for 60 minutes. For the duration of this conference call, all participant lines will be in listen-only mode. The conference is being recorded. The transcript for the same may be put on the website of the company. After the management discussion, there will be an opportunity for you to ask questions. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touch-tone telephone.
Before I hand the conference over to the management, I'd like to remind you that certain statements made during the course of the call may not be based on historical information or facts and may be forward-looking statements, including those related to general business statements, plans and strategy of the company, its future financial condition, and growth prospects. These forward-looking statements are based on the expectations and projections and may involve a number of risks and uncertainties and other factors that could cause actual results, opportunities, and growth potential to differ materially from those suggested by such statements. I'd now like to hand the conference over to Mr. Khetan, Chairman and Managing Director of the company. Thank you, over to you, sir.
Good evening, everybody, welcome to the earnings call for the second quarter and first half of the financial year 2021. Thank you for joining us. Before I share a few updates, I wish you all a very happy Diwali and a very happy New Year. As you all may be aware, we are now seeing a revival in residential demand, especially in MMR, owing to the combination of various favorable factors such as reduction in stamp duty and lower home loan rates. At Sunteck, we are witnessing an expedited turnaround cycle for purchasing decisions by prospective customers. There is a customer bias towards organized developers, which we see for ready-to-move-in inventory and nearing completion projects. Our luxury projects are also seeing a spike in inquiries, especially on account of, we feel, lower stamp duty.
Post-lockdown as well, our digital platform, Sunteck Air, continues to garner customer interest and add to our sales momentum. We continue to be agile to adapt to the disruptive changes brought about by the ongoing pandemic and are utilizing this phase to strengthen our systems and processes, including onboarding of Grant Thornton's affiliate Walker Chandiok & Co. as our company auditor. All our under-construction sites are now approaching pre-lockdown activity levels, and finishing work is in full swing at few of our projects, which are like Signia, namely Signia Waterfront at Airoli, Gilbert Hill at Andheri West, Sunteck WestWorld in Naigaon. It is also important that we continue to focus on construction progress, which in turn will lead to generate strong cash flows in coming quarters and revenue recognition at regular intervals.
The affirmation of AA- credit rating with a stable outlook by ICRA highlights our continued focus on prudent cash flow management. The sales and collection trajectory has been growing post the easing of the lockdown, and we remain confident of increasing our market share. Our recent project additions are the perfect example of a philosophy of making research-based, asset-light, value-added acquisitions. These projects will largely cater to the mid-income to affordable segment, especially post-COVID-19 scenario. We continue to aggressively explore new opportunities and intend to capitalize on these opportunities at hand, setting the stage for further sustainable growth and attractive ROE. On that note, now I would like to hand over the call to our CFO, Mr. Manoj Agarwal, who will take you through the operational and the financial numbers for this quarter.
As always, I will be happy to answer any of your questions that you may have during the conference call. Thank you. Manoj.
Thank you, sir. Good evening, everyone, and thank you once again for joining us today. Before I begin, I would like to take this opportunity to wish everyone a happy Diwali and a happy New Year. I'll start with update on the revenue recognition method in the financial statements. During this quarter, looking into the current COVID-19 infected environment, we have moved revenue recognition to project completion method from percentage completion method for old and new, as well as upcoming projects. Accordingly, comparative numbers have also been stated. The same was also confirmed by new incoming auditors such as Grant Thornton affiliate Walker Chandiok & Co LLP. Its project completion method for revenue recognition is more conservative.
Please note, while cash flow of the project and company remains as it is, it is mere timing difference of revenue accounting. Now I would like to run you through the financial and business performance numbers for the second quarter and half year of financial year 2021. Pre-sales in Q2 FY 2021 stood at INR 200 crores and at INR 300 crores for H1 FY 2021. Distribution mix of quarterly pre-sales remain healthy and are as follows: 56% in Sunteck City, Borivali, 27% in ODC, 16% in Naigaon, and the rest in other projects. On collections front, momentum picked up in this quarter is a function of healthy pre-sales of recent past, as well as increase in home loan disbursements. We recorded collection of INR 141 crores in Q2 of FY 2021, a 117% increase on quarter-on-quarter basis as against INR 65 crores in Q1 FY 2021.
In terms of financial highlights, we reported a consolidated revenue of INR 143 crores in Q2 FY 2021 as against INR 53 crores in Q1 FY 2021, a 120% growth on quarter-on-quarter basis, and as against INR 132 crores in Q2 FY 2020, an 8% growth of year-on-year basis. Revenue stood at INR 196 crores for H1 FY 2021 against INR 305 crores in H1 FY 2020. On the EBITDA front, the consolidated EBITDA for Q2 FY 2021 is INR 31 crores against INR 13 crores in Q1 FY 2021, 140% growth on quarter-on-quarter basis. EBITDA for H1 FY 2021 was INR 44 crores against INR 110 crores for H1 of previous financial year. Our consolidated EBITDA margin for H1 FY 2021 stands at 22%.
With respect to PAT, we recorded INR 14 crore in Q2 of this financial year against INR 28 crore in Q2 of previous year, FY 2020, and INR 11 crore for H1 FY 2021 as compared to INR 61 crore in H1 FY 2020. Our consolidated PAT margin in H1 FY 2021 stood at 6%. We continue to focus on our cash flow management and financial discipline, a must in this environment, and that continues to reflect in our low net debt/equity ratio, which is 0.25, which excludes further equity component. We can now open the forum for questions from the participants. Thank you very much.
Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question, address star and one on your touchtone phone now. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. In the interest of time and fairness to all participants, ladies and gentlemen, please restrict questions to two per participant in the initial rounds. If you still have more questions, kindly join the queue afresh. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. To ask a question, please press star one. We have our first question from the line of Sagar Chalkane from Motilal Oswal. Please go ahead.
Hi, thanks. Am I audible?
Yes, you're audible.
Yeah. Thanks for this opportunity. Sir, my question was more broad-based on this new integrated comprehensive development control regulation, this UDCPR. What can be the potential upside for us in our lands in Naigaon, Vasai, and in Asangaon if they are to be implemented the way the draft is right now? If you can highlight something on that.
Sagar, good evening. Sagar, it will be very frankly too early to comment what the advantage will be . I would refrain from making any comment on that, very frankly. Because we have to get into detail of every project versus that policy. Once everything is cleared, we will likely get on to that.
Sure, sir, no problem. I'll come back in the queue for more questions.
Oh, you can ask a second question if you want.
The next question was on the update on our Oshiwara project only. If you can highlight what steps we are taking to improve the sales velocity in ODC, that would be helpful.
Sagar, just wanted to highlight, if you see the quarterly performance in Sunteck City for the last two quarters that we've sent it out, we have been able to achieve significant sales, especially in Avenue One, which is now ready. OC has been received. Even for Avenue Two, which is nearing completion. As Mr. Khetan said, we are also seeing more and more demand in this category of projects. Sunteck City continues to see good momentum for the last few quarters, and we're fairly confident going forward also. I think we've sold w e sold 27 units in this quarter, 26 in First Avenue, and one in Second Avenue, worth about INR 54 crores.
In fact, Sagar, Prashant just said in the entire first half, we have done sales of close to around INR 90 crores in ODC. From that perspective, our digital sales platform, which is the Sunteck Air platform, that has served us quite well.
It has enabled us to go ahead with the sales momentum, plus the completion of Avenue One. As Avenue One has received OC, so that is also now giving it another level of growth. That is something which will also help.
Sure. Got that. Just one more thing, any update on the retail or commercial development in that plot?
I think, Sagar, we updated in the last analyst call as well, that looking at the current pandemic going on, it will be too early. We all know what is the state of retail, in fact, in this pandemic situation. It will be stupid to start any retail project at this juncture. The commercial, the clarity is still not there. We would like to wait and watch whether there is a demand which comes like the residential, like that demand has picked up in residential, that certainty is not there in retail and commercial. Once that is clear, we will definitely look to start, I would say, as on yesterday basis.
Nevertheless, if we see that demand is paused for quite a long time, or there is some problem in the demand of retail or commercial, we can always launch looking at the residential demand, which has picked up. We can always launch a residential tower or a residential phase in that particular component of three million sq ft.
Okay. Just one thing I wanted to understand. It is possible that we may not do any retail development in ODC also, is that what you're saying?
If the market does not allow, why should we do it?
Right.
Just for the heck of it. We'll do maybe the limited retail. The size of the retail may change, the size of the commercial might change. Looking at the demand, we would like to see that what kind of demand is there. Accordingly, we have that advantage that we can shift from the commercial. What we were looking to do, 3 million sq ft of commercial and retail. Maybe we do it 2 million or 1.5 million. We'll continue to explore. We don't say we'll not do retail or commercial. We'll continue to explore retail and commercial. We'll see what is more beneficial for the company. Obviously, we'll do that.
Sure. Understood. I was just asking it from the perspective that it can improve the velocity of sales for our residential units.
I think if you look at that micro market, I think we feel we have done decent without any launch, without any new activation, on a regular sustainable basis. I think this momentum, what we see over the past years, in fact, this has been better than the previous quarters, even pre-COVID quarters, when there was not a launch. I think this is quite decent, and we see this momentum continuing, and this will only pick up from here.
Got it. Thanks for those inputs. Very helpful. Thank you, and all the best.
Thank you. Your next question from the line of Murtuza Arsiwalla from Kotak Securities. Please go ahead.
Yeah. Hi, sir. Just two questions, sir. One of them on the ODC commercial has been answered. Just want a clarification on the percentage completion because the wording in the notes to accounts says certain assets. I just want to be sure, we've moved across the board to project completion, or it's selective, that some assets are on percentage completion and some on project completion? I just want to clarify on that.
Going forward, obviously all the projects will be on the project completion method.
Okay.
The old, which are almost nearing completion, or project which are completed or going to complete within next one quarter or two quarter, obviously there is no point shifting because substantial amount of profit has been already booked. We are trying more conservative method. Obviously, we want.
Sure. Sure. Just on the big projects, can you just say which are the ones which are still on percentage completion?
Like Avenue One and Avenue Two, which are almost near completion or almost completed. They are on percentage completion. The MaxXWorld, which is completed, these are on percentage. Going forward, I said, like MaxXWorld is on project completion. Which is moved from percentage completion to project completion. Anything new we launch, obviously that will go into project completion.
Okay. Whatever is launched in existing inventory, given that it doesn't make much of a difference since the project's already nearing completion, you have not changed. Going forward, all the new projects will be on project completion.
Yes, sir.
Okay. Thank you so much, sir.
Thanks.
Thank you. Participants are requested to restrict their questions two per participant. Your next question from line of Parvez Afsar from Edelweiss Securities. Please go ahead.
Good afternoon, sir. Congratulations for the performance. Couple of questions from my side. First, how do you see your launch trajectory going ahead? This quarter we have done pretty well despite. Going ahead, what kind of projects can we expect to launch in the next one year or so? Second thing is, if you can give us an update on the commercial project in BKC that is in the completion phase.
Sorry, you're breaking. Your voice. I think you're taking a call from your mobile phone, so the question is breaking.
I said the first question was about the launch pipeline. What kind of project can we be getting launched in the next. Take the three, four quarters. The second is an update on the BKC commercial projects timeline.
Okay, great. Parvez, with the launch pipeline, obviously, we have a lot of projects right now in our hand to launch. We have phase 3 we can do for the Naigaon project. Phase 1 and phase 2, we have already launched, and we have successfully got a good response. We have phase 3 where we can launch. We have our Vasai project, which we are looking forward to launch. We have the Vasind, what we have taken recently. That is, we are looking at to launch. These are the few projects. Maybe the second, one more tower in ODC, since we are almost in the verge of almost exhausting quite a lot inventory, almost 2 BHK. We have almost exhausted in the Fourth Avenue first tower. We are looking to launch even the second tower.
There are quite a few in pipeline, and you'll see these multiple launches happening very soon. Coming to your second question on the update of the project timeline completion of the BKC commercial projects. I think both are on track. We have already got a CC above the plinth level. There was obviously some delay of three to four months because the execution was stopped due to the pandemic COVID-19. Now since the constructions are back to normal almost across all our sites, they are also in the full speed, and we see them to get completed over the next 12 to 15 months. If not 12 to 15, I would put it on a more conservative side, 15 to 18 months.
Sure, sir. Thanks, Achyut, for my turn. I'll come back in the queue for more questions.
Thanks, Parvez. Thanks.
Thank you and one who wishes to answer a question you may press star one on your touchstone phone now. Your next question from the line of Dhruv Galada from Aurum Capital. Please go ahead.
Good morning, sir. Are you able to hear me?
Yes. Yes, Dhruv.
Yes, sir. I have two questions. First one being, can you give a figure for the total value of ready or almost ready inventory?
Yes.
Hello. Hi, Dhruv.
Hello, sir.
Hello?
Hello.
Dhruv, the ready inventory across all our ready projects today stands close to INR 2,200 crores.
Okay. Thank you, sir. Thank you for that. I just had another question as well about the total realization potential of the current and future projects in the Sunteck's pipeline.
Dhruv, if I understand your question correctly, you're simply trying to understand what is the estimated future sales value potential of the company, right?
Exactly, sir.
Dhruv, what we can share with you right away is that, as Ronak said, our total estimated operating cash flow from the completed projects is close to INR 2,200 crore. From our ongoing projects, we are going to realize another INR 2,000 crore. From our upcoming projects, we have the potential to realize another close to INR 4,000 crore. All in all, you are looking at a total future operating surplus of close to around INR 8,800 crore-INR 9,000 crore. That is the number basically that we have.
Right, sir. Excluding obviously not the projects which are not launched.
Only the projects which we have launched.
Dhruv, can you hear us?
Yes, sir. That's it from my side.
Thank you.
Thank you, sir. We have next question from the line of Prem Khurana from Anand Rathi. Participants are requested to stick questions two per participant. Mr. Khurana, please go ahead.
Thank you. Thank you for taking my question, sir. Three questions from my side, sir. One was I wanted to share your thoughts on the upcoming in terms of the revenue you could expect to.
Sorry.
coming to the market or.
Excuse me, Mr. Prem, you're not audible properly. Can you please speak slow and.
Am I audible now?
Yeah. Now you're better.
Is it better?
Yeah.
My first question was with respect to recent acquisition, Vasind. If you could share timeline and when do we expect to have approvals in place and then take to market. Also, I think when you give us a launch pipeline, I think there was no mention of Bandari, Vadkhal, so any thoughts there as well, please?
Yeah. Prem, Bandari project, obviously we are not got any approval till now, I don't want to comment on where we are seeing any delay or any possibility due to any other reasons. I think we want to hold to announce on that. I would not like to say that it will be very soon or something. I think whereas you're asking about the Vasind, where we have moved fast on the approval side, I think. You wanted to know the numbers on the Vasind side, I believe?
Yeah. I mean, in terms of timing, do we expect this to launch this next year or the year after that? The presentation says the landowner is responsible for licensing and approvals are not driving. These are moving as per your expectation on?
Yes, Parvez. Where we are seeing the land owner is able to get the most of the approval parts. We are talking only about the projects. When I said about the launch project, we are not talking about the launch which can happen after 15 months or 18 months or two years. We are talking only about the projects which we will be able to launch in less than nine to 12 months. Eight to nine months or nine to 12 months, I would say. While talking about Vasind, we are talking Vasind also to launch in less than nine to 10 months. All these projects what we are talking, whether it is Vasind, Vasai, the phase 3 of Naigaon, and well as the tower 2 of the Fourth Avenue, the next tower of the Fourth Avenue.
Which we are seeing that the approvals are going at a very advanced stage, and we are looking to launch all these four projects in less than 12 months. These are the pipeline which we can see we can launch next 9-12 months.
Prem, regarding the commercials of Vasind, we are expecting about INR 1,200 crore to be the top line of the project. Our share is about 80%, which translates to about INR 950 crore. The project cost we estimated to be about INR 550 crore. The gross surplus is expected to be INR 400 crore, which we hope to realize over the project time cycle of about four odd years. Those are the commercials for Vasind.
Thank you, Parvez. Prem, sorry.
Thank you. We have next question from the line of Rohan Koshi from New Horizon. Please go ahead.
Hi, Mr. Khetan. I just had one question. Could you give us some idea on FY 2022 and 2023, what sort of pre-sales target you're setting up for yourself?
Good evening, Rohan. It will be wrong on my part to give you a forward-looking statement, very frankly. I can say that in spite of this pandemic, and as we are seeing the sales are picking up in real estate, especially in residential. I can only say that you'll see a good result. You'll see good numbers.
Okay, sir. Second question really was on the debt. Where do you see it going from this level over the next couple of years, and what's the plan?
Rohan, we are very clear that we have been always very disciplined in terms of debt. In the context, we have always tried to restrict our debt to not more than 0.3, 0.35, and whereas not compromising any acquisitions or further group story. That is one thing very clear. We don't see ourself crossing the debt level of 0.3, 0.35 like those kind. At the same time, we will continue to aggressively keep doing acquisitions. As you saw in last two quarters, we have done already two acquisitions, Vasai and Vasind, and there are many more news, quarterly you will be hearing going forward.
Okay. All the very best. Thank you.
Thank you.
Thank you. We have next question from the line of Aditya Mehta from ZM Investments. Please go ahead.
Yeah, thank you for the opportunity, sir. My question is on Vasind project. We have acquired 50 acres of land over there, am I right?
Yes.
Around 50 acres of land were acquired in Vasai also. The developable area in Vasind is quite less, approximately half of that in Vasai. Could you please explain how that works out?
Aditya, obviously there is a FSI difference. Obviously, how much you can construct in Vasai is obviously much more than the same 50 acres in Mumbai would construct much more than what we are constructing in Vasai. Like Vasai, we construct much more than what we will be constructing in Vasind. It's local authority norms. Obviously, we can't construct more than what is allowed, what FSI is allowed. It is because of that. The difference is because of that.
Okay, got it, sir. Sir, next question is, you mentioned that you have a ready plus ongoing plus upcoming inventory of around INR 9,000 crore, excluding projects which are not launched. Upcoming will obviously include the projects which are not launched by us. What do you mean to say by that it doesn't include not launched projects?
I'll let Prashant explain that.
Aditya, Prashant this side. For upcoming projects, what you have to understand is that upcoming projects are projects where we believe all the approvals are almost in place, and we can launch it. There is a difference between upcoming and planned projects. In our upcoming projects, like we have projects like Sunteck MaxXWorld Phase 2, we have the Tower 2 of Sunteck City 4th Avenue, ODC, we have the Vasai project. These are projects where the visibility is very high from our side. Like Tower 1 of Sunteck City 4th Avenue is already launched. From that perspective, we talk about these projects, and even if you exclude the upcoming projects, still we are sitting on close to around INR 5,000 crores of operating surplus. From that perspective, the company is sitting on a solid foundation.
Thank you, Aditya.
Thank you. We have next question from the line of Yash Mandawewala from Mandawewala Family Trust. Please go ahead.
Hi. Thanks for taking my question. The first question is on the pricing. Have you taken any pricing action this quarter across any of your properties, if we can also provide some sort of outlook on prices going forward?
Yash, pricing means very frankly, we have not given any discount. We are selling at the similar same levels as we have been selling. I don't see there is any problem of pricing and since the velocity of the sales is good and decent, so we don't see any upward movement of price, whereas the downward revision of the price. Going forward, if this trend continues, we can only see that the prices will be firmer and firmer going forward. That's the trend which is going right now, the way the sales velocity is going, I feel the price is moving only towards north, nowhere else.
Got it. The sales we've done this quarter, the realization would have been closer to what we did last year or on last quarter. There's not been any decline this quarter?
No. I don't see. We have given the numbers, I think pre-sales numbers, in the starting also and the results also, and you can compare that obviously. In fact, from the last quarter it has doubled this quarter.
Got it. My next question is on BKC Residential. It's been a few quarters now since we saw a sale there. Any update on that and what is the feedback that you're receiving there?
Yeah. For last, in fact, two quarters, unfortunately, we have not been able to do one deal. One quarter we did one deal, but that we had to write back one deal. We are seeing now because of, in fact, post this COVID-19, we are seeing now very firm inquiries for the BKC project. Hopefully, we may see something good in coming quarter.
Thank you very much, sir. Ladies and gentlemen, that was the last question, and I'd like to hand the conference over to the Chairman and Managing Director, Mr. Khetan, for closing comments. Over to you, sir.
Thank you all for taking out the time from your busy schedule today. In case if any of your queries have been left unanswered, you can get in touch with me or my team. We look forward to your continued support. Thank you once again for joining us today, and please be safe. Thank you. Thank you once again.
Thank you very much, sir. Ladies and gentlemen, on behalf of Sunteck Realty, that concludes this conference call. Thank you for joining with us, and you may now disconnect your lines.