Ladies and gentlemen, good day, and welcome to Q2 FY 2024 earnings conference call of Brigade Enterprises Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be no opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that the conference is being recorded. I now hand the conference over to Mr. M.R. Jaishankar, Executive Chairman of the company. Thank you, and over to you, sir.
Thank you. Good afternoon, ladies and gentlemen. I welcome you all to the Brigade Enterprises Q2 FY 2024 earnings call. I'm joined by our Managing Director, Ms. Pavitra Shankar, Joint Managing Director, Ms. Nirupa Shankar, our Executive Directors, Amar Mysore, Roshin Mathew, Mr. Pradyumna Krishnak umar, and Senior Management Team, Mr. Atul Goyal, CFO, and Mr. Om Prakash, Company Secretary. I'm happy to share the following highlights. We've been focused on business development, given the strong demand on the residential sector, we believe will sustain for the medium term, at least. During Q2, we added approximately 42 acres of land across Bangalore, Hyderabad, and Chennai, with a development potential of 7 million sq ft and a gross development value of INR 7,700 crore. We are working towards launching these projects as quickly as possible, given the strong market demand.
In the next four quarters, we expect to launch almost 13 million sq ft. Out of this, 11 million sq ft will be residential, with a gross development value of INR 11,000 crore. Moving to our operational highlights of last quarter, I'm happy to report that all our businesses contributed significantly to the growth of the company in Q2 of FY 2024. With a robust pipeline of launches in Bangalore, Hyderabad, and Chennai, the future continues to look promising, and we are confident that we will sustain the momentum. Coming to the residential sector, the residential outlook remains strong, with new sales of 1.66 million sq ft and collections of INR 992 crore, which were our best ever figures for the second quarter of a year.
It is a 14% growth in sales over the performance of the previous quarter and 19% in collection. The new registration platform, launched earlier this year in Karnataka in June, has also stabilized and is helping with faster execution of registrations. We have shown good registrations this quarter, despite increased guidance values. Quarter two also witnessed the 16th edition of our annual sales event, called Brigade Showcase, and it underscored the strong demand from the market, despite price increases and higher interest rates than a year ago. We are advancing launches wherever possible and taking up prices across the entire portfolio. We have 11 million sq ft launches planned for the residential sector in the next four quarters, of which 6.5 million sq ft launches is planned before the end of this financial year.
Under the Brigade Plus brand, in addition to home interiors, we have also launched rentals and resale services for our residential customers, which is seeing positive responses, especially across projects getting handed over. As regards to the office SBU, Brigade has leased 300,000 sq ft in the quarter, recording a 5x quarter-on-quarter growth, with 90% of the demand led by technology, engineering and manufacturing companies. September and October 2023 saw an increase in tenant inquiries and it is also indicative of the occupiers' improved sentiments. There is an increased momentum in leading inquiries, and we have an active pipeline of 500,000 sq ft of office space in Bangalore and Chennai.
As regards retail SBU, during quarter 2 financial year 2024, there was a 15% growth in consolidated mall retail sales consumption as compared to Q2 of the previous FY 2023 across the mall retail SBU. Consumption growth for Q2 FY 2024 had a 7% growth over Q1 FY 2024 on consolidated basis for all our malls. Our multiplex was a star. Multiplex operators have had a star-performing category across all three malls, that yielded a 60% growth consumption year-on-year. This led to a ripple effect of 23% year-on-year growth in F&B consumption as well across all our malls. The two new family entertainment centers positions in our large destination and neighborhood malls contributed a significant consumption growth in this category by more than 90% year-on-year....
Almost 62,000 sq ft of area, comprising of 18 new brands ranging from TDID, supermarket, and fashion lifestyle are under various stages of fit-out. Coming to the hospitality sector, in Q2 of FY 2024, the hospitality SBU has continued to show growth. We have seen overall improvements in various aspects of our performance, with both our revenue and profit surpassing the numbers of Q2 of FY 2023. Revenues have increased by 17%, and ARRs have demonstrated a 9% increase, and occupancy has risen by 7% over Q2 of FY 2023. We are witnessing encouraging growth in our primary revenue streams, particularly in F&B revenues, which includes a steep rise in corporate and social banquet events.
Furthermore, the number of domestic air passengers growing nearly 23% year-on-year bodes well for the room demand, which is visible in the rising occupancies and ARRs. Additionally, there is an increase in travel from international corporate clients and partners. This brings me to the end of our operational highlights. Atul Goyal, our CFO, will now take you through the financial highlights. Thanks to all.
Thank you, and good afternoon. On behalf of the company, we welcome you to the earnings call of Q2 FY 2024. While chairman has already shared the operational highlights, I'll be sharing key financial highlights for the quarter. During the quarter, we had closure of Brigade Utopia Serene and Brigade Deccan, and healthy registrations, which helped us to achieve real estate revenue of INR 106 crores. Sales and collection in residential segment has helped us stay with 0 debt in the residential segment. As for the company financials of Q2, all verticals of the company continued to do a steady performance in Q2 FY 2024. The real estate segment clocked a turnover of INR 1,063 crores, whereas the same Q2 FY 2023 is INR 2.632 crores.
EBITDA stood at INR 155 crore, which is a growth of 86% over Q2 FY 2023. The leasing segment clocked a turnover of INR 231 crore, whereas the same Q2 FY 2023 stood at INR 192 crore. EBITDA stood at INR 170 crore, 74% of leasing revenue. The hospitality segment clocked a turnover of INR 114 crore, an increase of 25% from the same quarter last financial year, with EBITDA of INR 14 crore. EBITDA margin stood at 35% in Q2 FY 2024. Consolidated revenue for Q2 FY 2024 stood at INR 1,408 crore, as against INR 912 crore in Q2 FY 2023, with an EBITDA of INR 366 crore. EBITDA margin stood at 26%. Consolidated debt after minority interest for Q2 FY 2024 is INR 1.4 crore.
Total collections in Q2 FY 2024 stood at INR 1,439 crores. Cash flow from operating activities stood at INR 452 crores during Q2 FY 2024. Coming to debt position, we continue to have adequate liquidity and undrawn credit lines from the financial institutions. Our average cost of debt has been contained at 8.72%, an increase of 107 basis points, though the repo rate has increased by 250 basis points. Gross debt of the entity stood at INR 4,097 crores. The cash and cash equivalent was INR 1,570 crores as on 30th September 2023. Consequently, the company's net debt outstanding was INR 2,527 crores, out of which BEL's share was INR 1,592 crores. Almost 77% of the debt pertains to the commercial portion, which is backed by rental income.
Net equity ratio stood at 0.63 as on September 2023. I now hand over to the moderator for questions.
Thank you. Ladies and gentlemen, we will now begin with the question and answer session. Anyone wishing to ask a question, please press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants, press to mute your handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is on the line of Aditya from ICICI Securities. Please go ahead.
Good afternoon. Thank you for the opportunity. The first question is on the launches for the second half. If I heard correctly, the quantum is around 64 million sq ft, right? And does this include the Chennai luxury one on Mount Road, and where are we on the approvals for that? That is my first question.
Yes, thank you, Aditya. It includes Chennai. We have received 80% of the plus approvals. It is in the final stage of the balance of, you know, 20% approval and RERA approval. As soon as that is done, we hope to... We are fairly confident of launching in Q4.
... Okay, so launch number is correct, 6.5 million is what we're aiming to launch in the rest of the financial year, next quarter. Assuming all the approvals are on track and come through.
Okay. So the indicative GD would be INR 6,000 crore+, right? For these launches. So now is on an average,
INR 500 crore. Yeah.
Yeah, yeah. Okay. Second question is on the land payments. So we have paid everything in by September for Hyderabad, or if there is some things to take down post-September as well?
Yeah, we are, we are fully paid. We are fully paid.
Okay, so the outstanding land payment is after fully paying for the Hyderabad land, right? Whatever is outstanding has to be billed for land as of September.
Correct, correct.
Okay. Sir, and just a last question on the Twin Towers project. So what is the leasing status, and when do we see the rentals start to flow in over there? Yeah, this is the last one question.
Yeah. So the leasing is still in all RSP stages, et cetera. There is a likelihood, you know, the project, the total project completion also will be in Q1 of FY25, project completion. It is in the nearing completion stages. And there is a likelihood, part of it, we may also, you know, sell, try to sell part of the thing. And a part of it, one block, it has got two blocks. One block, we, we may sell also. It is under various, I would say, strategy discussions.
Okay. So we, after that, you would like to commence the leasing for the tower, right? Is that the planning, right? Is that the right sentence?
Yes. Yeah, you can probably say so.
Okay, fine. So, yeah, I'll come back and discuss with you. Thank you, and happy Diwali.
The next question is in the line of Rakesh Wadhwani from Monarch AIF. Please go ahead.
Hi, I'm Rakesh. Hello. Hi, sir. Thank you very much for the opportunity. Sir, I have one question related to residential business segment. It's got, like, look at the realization over a period of last 18 quarters.
Hello? You're not very-
Yeah. Okay. Sir, is this better? Is this better?
Mr. Wadhwani, can you use the handset mode while speaking and not the speaker phone?
Sure, sure. Is this better?
It's slightly better.
Okay. So, sir, when you look at the residential business segment, we have achieved—we have done the highest realization of INR 7,500 crore approximately. But when I look at the gross margin segment for the residential, it is still very low, 33%-34%. Any reason for that? Because in the past you were doing gross margin of 28%-30%.
Yeah, gross margin continues to be at that level. It's only that because of the Ind AS adjustments for the landowners, where there is a JDA, you have to recognize the revenue of 5%. So the percentage has come down. So and as and when there'll be JDA, JDA project, it will get recognized, this problem is there, but it's interesting. Otherwise, as a project perspective, we are still doing the same margins.
63%-65%. Is that correct understanding?
Yeah, yeah, sure. It will be right.
Sir, regarding the next project, that project that we are going to launch in the second quarter, that project GDV and we will be launching the project in a basis.
No, I want to clarify, only that project GDV is not that much. It was part of that overall number that I mentioned. So totally 6.5 million that we're planning to launch in the second half, the GDV of that will be, six thousand five hundred crores. This is one of the projects that we will be launching in the, in the H2.
Okay. Thank you, madam, for the clarification. One last question from my side. So we have around INR 700 crore remain towards the land payments that are coming quarter. So are we looking to find that, from the issuance? Because now-
So, on our... Atul will clarify, CFO, but on that, I must say, even pertaining to the previous question of Aditya, we said for the Chennai, for the Hyderabad, auction property, I said we have fully paid. Yes, we have fully paid, but about INR 227 crore was paid in the first week of October. So as on the thirtieth September, result, it may be indicated as to be paid, but it is paid in the first week, which is also one month ahead of schedule.
Yeah, as far as land payments are concerned, yes, we have internal accruals right now, and of course, we have loan eligibility also from INR 1,600 crore. So we'll see as to how we have to do the cash flow, and we'll pay it as per that. And of course, our residential sales is doing very, very well and cash flow is getting generated from them. So it will depend as to how much cash is available, but definitely it will be from accrual then apart from the loan.
... That's it from my side. Thank you very much, and wishing you happy Diwali and thank you.
Thank you.
Thank you. Reminder to the participants, anyone wishing to ask a question, please press star two one. Next question from the line of Ritesh Singh from Motilal Oswal. Please go ahead.
Yeah, thanks for your opportunity, and congrats on, you know, good numbers despite absence of any major launches. First, we know just on the project additions that we did this quarter, I think you mentioned that the initial part of commentary, but I somehow missed out. Can you, you know, probably just mention how much was the project addition this quarter and the GDV? And if you can, you know, help us understand, you know, where we have added these projects, especially I'm seeing commercial, there is 3 million sq ft of additional land that we have tied up. You know, so just your comments on that.
Hi, yes. So just to repeat, we said we added 42 acres, which has a developable area of around 7.7 million sq ft. The GDV for that will be around INR 7,600 crore. Predominantly, the land that we've added is in Chennai and in Hyderabad. Hyderabad, of course, as everyone knows, this project, which was we won through the auction, that is a big part of it. We've also acquired the rest of it within Chennai in two different properties.
This includes commercial as well. So both the properties in Chennai were commercial? Because I see 3 million sq ft of addition in the commercial segment piece.
So, of that, about 2 million sq ft is in Hyderabad, and the balance will be in Bangalore and Chennai.
Okay, so our first commercial project in Hyderabad, is it? Okay, great. Second, in terms of your we know Brigade Tech Gardens, where we have now 600,000 sq ft roughly vacant in terms of leasing. And I last heard that, you know, there was one tenant which was there who is ready to take full tower. So just status on overall how the leasing segment looks in Brigade Tech Gardens. Can we assume that it would be leased out within this quarter itself?
Yeah. So, Nirupa here. So yes, we have about 585,000 sq ft left in Brigade Tech Gardens. The idea is to obviously lease it out within this fiscal year. This coming quarter in Q3, we're targeting to lease at least 50% of that. The client that you mentioned, nothing has been given in writing, so unable to comment on that.
Orally.
But orally, there is discussion for the full tower, but there could be a hard option element. So we just have to see how this will go.
Sure, sure. That sounds good. And lastly, on, you know, usually, you provide collections breakup between residential and commercial. If you can help me with that number for this quarter.
Yeah, sure. Collections for residential for Q2 is INR 992 crores. Commercial sale is INR 37 crores. Commercial lease is INR 163 crores. Retail is INR 54 crores. Hospitality is INR 156 crores, and facility management is around INR 57 crores. Total, INR 1,439 crores.
Sure. Thanks. That's it from my side. All the best, and wishing you all a very happy Diwali.
Yeah, thank you, and same to you all. Happy Diwali.
Thank you. The next question is in the line of Parvez Qazi from Nuvama Group. Please go ahead.
Hi, good afternoon. Thanks for taking my question, and congratulations on the good set of numbers. So my first question is on the business development. Over the last one year or so, we clearly have stepped up our activity. Where do things stand now? Are we okay? Do we want to take a kind of pause in the near to medium term, or are we still looking for more land parties?
See, it is... Thank you, Parvez. It's always, we are on the lookout for the right opportunities. It is not, you know, acquiring something for the sake of acquiring. It is based on opportunities, and we try our best to acquire at the right price, at the right location.
Secondly, in terms of pricing, you mentioned that we have taken prices upwards. So on a like-to-like basis, what could have been the kind of price to, let's say, upwards the same period last year?
Yes, so it is, it is 9% from the last quarter. I'd say, just give me one second. It is probably around 15% from the last year.
Well, that's a pretty healthy price update that we have seen. Lastly, just a couple of data points. What would have been the contribution from launches, this quarter, I mean, the products that we launched this quarter to pre-sale?
Yeah. So in this quarter, some new launches, we have done around 35% by area and around 50% by revenue. But if you look at the full H1, that would come close to around 40%. But as I mentioned earlier, that we've not done any launches. We actually did launch 1.3 million sq ft in the first half. Both of those were in Bangalore.
... Thanks. All the best for future. Thank you.
Thank you. The next question is on the line from ICICI Securities. Please go ahead.
Thank you. First is on the hospitality, now the trend from October onwards. Obviously, we know that overall demand is good. Can you give us idea on room rates and overall revenue basis, how much it will be trending so far on a year-on-year basis compared to high base of last year? I'm calling for a broad range, not an exact number.
The last line is not okay.
We can't hear you.
Yeah, I'm saying I'm asking for a broad range, not a specific number.
Just a broad perspective.
Yeah. Yeah.
So I think, the Q3 is generally a very healthy quarter, so I think we can expect some increase in the ARRs. But I would say the portfolio is anyway trending around 70% plus occupancy, and I think occupancies will be, maybe around the same. We can look at perhaps a slight increase in ARRs. And for the whole year, I think, the way Q2 and the H1 has happened, I think we can look at approximately doubling that up for the full year, for the EBITDA, in terms of EBITDA.
No, doubling, you mean year-on-year, so overall or-
H1 numbers are. We can look at approximately doubling that for the full year is what I'm saying.
Okay. Okay. So that is pretty slow. Okay. So second question is, in the last call, I think we alluded on a longer term goal of getting to 10 million sq ft of, I think, aspiration volumes annually. So where are we in the journey, and have you reviewed, like, what you need to do to get there, and how does the current land availability come into that?
Yeah, definitely, the, you know, goal is to reach 10 million sq ft per annum as early as possible. I think we are in the right direction. We have tied up a sufficient number of projects, and we'll be tying up a few more in the this quarter and the next. I, I think, sooner than later, we should reach within on the next two financial years, if not earlier.
Next two, you mean FY 26, right?
Yes.
Yeah.
FY twenty...
27. Okay, FY 27. Okay, fine. Okay, that sounds good. Yeah, all the best. Thank you.
Thank you. The next question is on the line of Akul Broachwala from IIFL Securities. Please go ahead.
Yeah, thanks for the opportunity. Just, can you just spell out, from our existing land parcels at Bangalore, what could be the potential, you know, development area that can be possible, from whatever other vacant land parcels that we have?
Just a minute.
Yeah. 25 point...
This is Pradyumna here. From Bangalore, we have about 33 million sq ft as from the existing land bank.
Got it. And, you know, like in the past, we've spelled out that our endeavor is to maintain market share of 10% in new launches. So then one assumes that, you know, going forward, on an annual basis, at least 5-6 million sq ft is what you would aspire to launch in Bangalore market going forward as well?
Yeah.
Yeah.
That would be the case. Yes.
Right. Got it. And, how do you expect pricing to move? Like, you've already mentioned that, you know, in terms of gross development value, that, the pricing is definitely going to be higher than what we've anticipated in the past. So do you expect this to probably sustain over the medium term, or, do you still believe that we still have, enough room to upgrade our, launches in terms of, higher categories, or what's the exact strategy out here?
See, the general market has moved up due to various factors: land costs, construction costs, improved margins. It is, you know, a factor of all these aspects. And, you know, whether we'll continue to increase the prices in this fashion depends on the market conditions and what the market is willing to bear. You know, based on the overall trend, I think the demand supply scenarios plays a huge role in the pricing. And I think it is based on that. There will be, you know, price increases year on year to take care of the inflation and more.
Got it. That's it from my end. Thank you.
Thank you. Next question is on the line of Prasanth Gopal from Spark Asia Impact Managers. Please go ahead.
Hi, sir. So does the Q2 or H1 numbers include any plotted development? And if so, can you give the residential realization based plotted development?
In Q2 and H1, we don't have any plotted area that was sold. We are expecting that to come in, hopefully in the next couple of quarters, so we can launch.
What would be the realization there in %?
... like you were talking about pricing increase and so on, it's a fairly dynamic environment. So I think as at the time of launch, we will have to see what the pricing is at that point. We've been seeing a movement approximately, INR 5,500 or so. This is for that specific location, but yeah.
Oh, thanks. Thank you very much.
Thank you. A reminder to the participants, if anyone wishing to ask a question, please press star and one. Participants, if you wish to ask a question, you may please press star and one. The next question is from the line of Pritesh Sh eth from Motilal Oswal. Please go ahead.
Yeah, thanks for the follow-up opportunity. Just one question. You know, after the acquisition that we have done recently, what would be the GDV pipeline in Chennai and Hyderabad? You know, if you can split it up, that's good, or, you know, in total, if you can mention, that also would be great. So what's the GDV pipeline that we have right now, in Chennai and Hyderabad?
In the entire land bank, or this is just-
Yes. No, entire land bank, entire land bank.
Just one moment.
You know, in Hyderabad, it's about, you can say we are close to INR 3,000 crore. INR 3,000 crore in Hyderabad, because we also have 2 million sq ft of commercial, which we will be retailing. And the residential, from residential sales, it's about INR 3,000 crore, you know, when the project is launched. And in the Chennai market, it will be-
Yeah. So, so totally, we're looking at about, from our land bank, about INR 20,000 crore between these two markets, Prateek.
Awesome. So, so basically now, in the next couple of years, at least these markets should contribute INR 2,500 crore-INR 3,000 crore to our pre-sales once these projects come up for launching, right?
Yeah, quite possible. Yes. Yeah.
Okay. Okay. Sure. Thanks. That's it from my side. Thank you.
Thank you. The next question is from the line of Uday Slavi from Nuvama Group. Please go ahead.
Hi. Thanks for the follow-up. So, as far as our hospitality portfolio is concerned, we have one under construction now in Mysore. Beyond that, what is our thought process regarding this portfolio, strictly on the scale-up side, and something similar on the retail side as well? Thank you.
So, basically for hospitality and retail, I'll start with hospitality first. We are looking to have some hotels in our larger mixed-use developments and townships, because we find that it enhances the overall value of the project and the residential component as well. So most of our mixed-use developments will have some hospitality component. And I think in the presentation, it's mentioned that we've recently purchased a property on ECR in Chennai. So that will be-
On lease.
Sorry, on lease. That will be our resort property, beachfront resort property in Chennai. In terms of retail, again, like I said, so large mixed-use township. So, okay, going back to hospitality, there is a Fairfield in Brigade Valencia. There's also a Fairfield that we will be doing near the Bangalore International Airport. And then there'll be the Marriott in the World Trade Center Chennai project. So about 45 rooms will be in the SEZ area, and another 60 odd or so will be in the serviced apartment category as part of the larger WTC township. In terms of retail, again, we will be adding retail components to the larger projects that we have. So for instance, in Neopolis, in the in Neopolis Site, we will be adding a retail component as well.
Sure. So I mean, compared to, let's say, 1,500 kind of keys that we have in our portfolio, do we have some target? What will be our, let's say, aspiration three or five years down the line in terms of number of keys?
See, I think with the way the hotel division has been doing and the entire hospitality sector has been doing, again, we are looking at opportunistic areas where we can develop our hospitality projects. Based on how the market is looking, we do have, I think we can add another 1,300 keys or so. So the existing portfolio has about 1,474 keys. We have... We think there's a good opportunity to add another 1,300.
Sure. One question for sir. Sir, what was the contribution from BTG and WTC in this quarter?
Yeah, sure. The rental for was this quarter was INR 74 crore and in it was INR 392.
... I'm sorry, I asked for WTC Chennai this quarter.
Only WTC Chennai should be in the range of INR 60 crore-INR 62 crore.
Thank you, sir.
Thank you. Reminder to the participants, anyone wishing to ask a question, please press star and one. Participants, if you wish to ask a question, you may please press star and one. As there are no further questions, I now hand the conference over to Ms. Nirupa Shankar, Managing Director, for closing comments.
Good afternoon, everyone. Before we close, we just wanted to share a few other highlights. Our Brigade Foundation, the not-for-profit trust of the Brigade Group, signed an MoU with the Department of Archaeology, Museums and Heritage to renovate the renowned Venkatappa Art Gallery in Bangalore. A way to significantly contribute to enhancing the existing rich history of art and culture in Karnataka. In celebration of two decades of unwavering commitment, the Brigade Foundation held two events, FitFe st Run Walkathon and Splash at Brigade, a mega carnival hosted at the three Brigade schools. This was to raise funds and awareness of the education and health of underprivileged children. PropTech accelerator Brigade REAP, alongside RealtyNXT , organized a PropTech mixer, a first of its kind in India, bringing together VCs and PropTech founders.a
Nirupa Shankar represented Brigade REAP and the Brigade Group at PropTech Connect in London in early September. PropTech Connect is Europe's largest PropTech event that brings together 3,000+ global real estate leaders, startups, and professionals. Brigade received an award for World Trade Center Chennai, Best Commercial Project of the Year at the FICCI REISA Awards 2023. Brigade was also recognized as one of India's top builders and one of India's top challengers at the CW Architects and at the Construction World Architects and Builders Awards 2023. The Indian Music Experience Museum recently organized Jackfruit 2023 in partnership with Bhoomija Trust . Vidushi Shubha Mudgalji curated this year's edition, which featured an exciting lineup of workshops and performances held by phenomenal young practitioners and stalwarts from different genres of music. With that, we now wrap up our Q2 FY24 analyst call.
Thank you all for taking the time to hear from us today. Wishing everyone and your families a happy Diwali!
Thank you all, and wishing everyone a happy Diwali and season's greetings.
Thank you, members of the management team. Ladies and gentlemen, on behalf of Brigade Enterprises Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.