Ladies and gentlemen, good day and welcome to the Brigade Enterprises Limited Q2 FY23 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an 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 touchtone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. M. R. Jaishankar, Executive Chairman. Thank you, and over to you, sir.
Good afternoon. It's my pleasure to welcome you all to the Brigade Enterprises Q2 FY 23 earnings call. I'm joined by our newly elevated Managing Director, Ms. Pavitra Shankar, and Joint Managing Director, Ms. Nirupa Shankar. Our executive directors, Mr. Roshin Mathew, the senior management team, Amar Mysore, Executive Director, Mr. Atul Goyal, CFO, Mr. Vineet Verma, CEO, Hospitality, Mr. P. Om Prakash, company secretary, and Mr. Pradyumna Krishna Kumar, Chief Business Development Officer, have also joined. We also have Mr. Ravi S. Ahuja, our newly appointed office COO. He brings to the table a deep understanding of the commercial office market and joins the team to focus on leasing. Keeping with overall well-thought-out succession strategy for the group, we recently announced the internal elevation of Pavitra and Nirupa as MD and Joint MD respectively.
Both have independently played lead roles in the expansion and growth story of Brigade over the last decade or more. With their future-oriented thinking, clear vision, their passion for advanced technologies and sustainable growth, I am confident Brigade will continue to rise to even greater heights under their leadership. I wish them both the very best in their new role, and I'm confident that they will excel with the support of the executive directors and senior management. As executive chairman, I will continue to be closely involved in the company and its strategic direction. With regards to the results, I'm happy to report that H1 FY23 has been extremely positive with a strong increase across our financial numbers. Our real estate business vertical continued to lead the growth with contributions from all other verticals, including retail and hospitality.
We expect to sustain and grow the momentum in the coming quarters with a good pipeline of new residential projects, leasing business and continued growth in the hospitality business in H2 FY 2023. Coming to our residential segment, residential business. Our residential segment continues to exhibit a strong track record with net new bookings of 1.15 million sq ft with a value of INR 761 crore in Q2 FY 2023. Buoyed by our strong sales performance and pace of construction, the collection trend has also been very healthy with a net value of INR 987 crore, which is a 14% increase over the previous quarter. Overall, for H1, we have increased our net sales by 12%, revenue by 18% and collections by 45% on a year-on-year basis.
The reception from customers have been encouraging for our new projects like Emerald Block at Brigade El Dorado and also Brigade Nanda Heights, located in North and South Bangalore respectively. We have some exciting new projects lined up for Q3, which should carry forward this momentum. As regards office segment, leasing of our office business was at 0.55 million sq ft in Q2 FY23, 50% of which was towards our investor share and project mentor sale. We saw higher demand for our East and North Bangalore office premises. Automobile, IT, co-working operators and BFSI sector were seen leasing space last quarter. Our efforts will be focused on Brigade Zenith in Bangalore North, Brigade Tech Gardens and WTC Chennai. Brigade Tech Gardens in Bangalore East and WTC Chennai.
We are hopeful that the upcoming DESH Bill, acronym for Development of Enterprises and Services Hub bill, will catalyze our leasing efforts in our SEZs. Collection remains stable at 99%, and outlook for the next quarters look positive. We hopefully recover 1 million sq ft across all properties. As regards retail segment, retail sales consumption showed 38% growth during H1 FY 2023. Footwear, bags and accessories saw a 50% growth over pre-COVID levels. Family entertainment saw a 47% increase. F&B saw a 40% increase. Electronics saw 36% increase over pre-COVID levels, whereas multiplexes achieved an 83% of their pre-COVID sales. New lease rentals saw an average growth of 33% for fresh deals. Hospitality segment continues to grow with an all-round improvement in our numbers. With both our top line and bottom line registering higher than pre-COVID levels.
Our occupancies reached 103% of the pre-COVID performance. Our revenues touched 121% and our AGOP, adjusted gross operating profit, reached 143% of the pre-COVID levels for the same period. Even average room rate have shown an upward growth of 12% over the pre-COVID level. Our primary demand segments such as room, F&B, and MICE business continue to grow mostly through domestic channels. This brings me to the end of our business highlights. Thank you for listening. I now request Atul Goyal, our CFO, to take you through the financial highlights. Take care and stay safe. Thank you.
Thank you, sir. After business update, which has been put by the chairman. Good afternoon, everybody. On behalf of the company, we would like to welcome you to the earnings call for Q2 FY 2023. To start with consolidated financial performance for Q2 FY 2023, the consolidated revenue for Q2 FY 2023 stood at INR 912 crore versus INR 776 crore for the same quarter last financial year, an increase of 18%. The consolidated EBITDA for Q2 FY 2023 stood at INR 249 crore versus INR 216 crore in Q2 FY 2022, an increase of 16%. EBITDA margin for Q2 stood at 27%. Consolidated PAT stood at INR 52 crore compared to a loss of INR 14 crore for the same quarter last financial year.
Consolidated PAT and after MI stood at INR 78 crore compared to INR 12 crore in Q2 FY 2022, an increase by six times. The real estate segment clocked a turnover of INR 632 crore, an EBITDA of 13% in Q2 FY 2023. Real estate collections for Q2 FY 2023 was INR 1,036 crore versus INR 881 crore in Q1 FY 2023, an increase of 18%. The leasing segment clocked a turnover of INR 189 crore, an EBITDA of 72% in Q2 FY 2023. The hospitality segment clocked a turnover of INR 91 crore and an EBITDA of 31% in Q2 FY 2023. Overall collection for Q2 FY 2023 was INR 1,422 crore versus INR 1,210 crore in Q1 FY 2023, an increase of 18%.
With respect to consolidated financials for H1 FY 2023, the consolidated revenue for H1 FY 2023 stood at INR 1,832 crores versus INR 1,168 crores in the same half year ending of last financial, an increase of 57%. The real estate segment clocked a turnover of INR 1,286 crores and EBITDA of 13% in H1 FY 2023 versus a turnover of INR 858 crore and an EBITDA of 18% in H1 FY 2022. Real estate collection increased by 45% to INR 1,917 crores in H1 FY 2023 from INR 1,319 crores in H1 FY 2022. The leasing segment clocked a turnover of INR 365 crores and EBITDA of 75% in H1 FY 2023 versus a turnover of INR 248 crores and EBITDA of 73% in H1 FY 2022.
The hospitality segment clocked a turnover of INR 181 crore and EBITDA of 32% in H1 FY 2023 versus a turnover of INR 61 crore and EBITDA of 7% in H1 FY 2022. The consolidated EBITDA, including other income for H1 FY 2023 stood at INR 500 crore versus INR 336 crore in H1 FY 2022, an increase of 49%. EBITDA margin, including other income, stood at 27%. Overall collection for H1 FY 2023 was INR 2,633 crore versus INR 1,654 crore in Q1 FY 2023, an increase of 59%. Coming to debt position, gross debt of the company stood at INR 4,015 crore as on 30th September 2022. There was a reduction of INR 59 crore in real estate debt in Q2 FY 2023 because of good collections and repayments.
Reduction in residential debt has continued since last year. The cash and cash equivalent stood at INR 1,789 crores as on September 30, 2022. Consequently, the company's net debt outstanding as on September 30, 2022 is INR 2,226 crores, out of which BL share is INR 1,491 crores. Cash flow from operating activities stood at INR 731 crores in H1 FY 2023 and as compared to INR 369 crores in H1, an increase of 98%. The average cost of debt has increased by 44 basis points as compared to increase of repo rate by 190 basis points since March 2022. Our debt equity stood at 0.60, lower than last quarter.
We have a credit rating of A + Stable, which has been assigned by both CRISIL and ICRA, which will increase lender and investors' confidence. The company has strong liquidity position and means to meet operational and expansion plans. I will now hand over the mic to the moderator for questions and answers.
Thank you.
Thank you.
Thank you very much, sir. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. 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. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Thank you.
The first question is from the line of Adhidev Chattopadhyay from ICICI Securities. Please go ahead.
Yeah. Good afternoon, everyone. Thank you for the opportunity. First question is on the leasing pipeline, they got 1.5 million sq ft of vacant space and 1 million sq ft of leasing pipeline. Considering what you have mentioned on the DESH Bill, which is awaited, now when do you expect to now fully lease this out? What is the fresh target, because I believe you were earlier looking to do it by March or June of next year. Does the target remain same, or is there any change to that? Thank you. That is the first question.
Sure. This is Ravi Ahuja. The target of course remains the same. While there has been a visible slowdown in the overall market and the DESH Bill is proposed to be tabled in the winter session. Having said that, apart from all this, we are focusing on building a heavy pipeline, about 1 million sq ft of pipeline, which is visibly here for us to deal with and convert over the next one or two quarters. We are hopeful that this pipeline will see some conversions going forward in the next three to four months.
You alluded to some significant slowdown in leasing. Like, you are referring to which period exactly?
That is, if you were to refer to the market reports of the IPCs, visibly, if you were to compare, quarter two to quarter one of FY 2023, there is a 30% slowdown reported by them. Having said that, the green shoot is that there's a 30% growth when you compare quarter two FY 2022 to quarter two FY 2023, if you compare it with last financial year. Of course, COVID had some role to play, but, that shows a healthy comeback, compared to last year. This slowdown, of course, will be moderated and, will pick up given the pipeline which we have, and I'm sure that's demonstrated, by the market sentiments as well.
Okay. The second question is on this, on the land payments. Obviously, our residential debt has come down quarter-on-quarter. This is a question for Atul. What would be the expected pending land payment we'll be doing in the second half of the year, especially towards the Mount Road, Chennai and KIADB land in Bangalore. Accordingly, how much should the debt, or the net debt rather go up by the second half of the year if you factor that in? Thank you.
We have around INR 1,000 crores of land used, and I think in next two quarters we should incur around INR 600 crores-INR 700 crores, which the land payments will happen. We don't need to take any debt because adequate cash is there in the balance sheet. We'll see. If required, we'll take. Otherwise, the cash is there, even QIP cash is there. That will all be used for the repayment, for the payment of the land.
Okay. Sir, so just to clarify, this Mount Road channel will be fully paid and we can look forward to a launch sometime towards the end of this year, or, that is again to be done in tranches?
No. I think by Q4 we'll launch Mount Road. The approvals are also going on parallelly, and we are targeting fourth quarter we should launch that. Of course, residential will be launched first.
Launch will happen in second half of FY 2024. Is it correct way of assessing?
I'll let Pavitra Shankar try.
Yeah. As Atul mentioned, Mount Road will be a mixed-use project. We're going to lead with the residential portion, which is around 60% of the total 1 million sq ft that we are aiming to build. We are in the process of design and approvals that generally takes a little bit of time in Chennai. We are anticipating. It's actually part of our next rolling four quarters estimate of when it will launch. Potentially in 2Q of FY 2024 is what we're looking at.
Okay. Second quarter, FY 2024. Did I hear it correctly?
Yeah.
Okay, fine. I'll come back in the queue with more questions. Yeah. Thank you.
Thank you. The next question is from the line of, Parikshit Kandpal from HDFC Securities. Please go ahead.
Yeah. Hello. Hi. Hi, team, for the good quarter. My first question is that if I see the launches, hardly about 2 million sq ft of launches have happened in the first half, and almost more than 50% is from the existing projects' new phases. We have a very strong pipeline of 15 million sq ft in the second half. If I have to look at this from the perspective that first half could be largely driven by sustenance sales. If you can give some more granularity on the second half launches, especially the big ones, that'll be helpful.
Sure. Let me just give some context. At the beginning of the financial year, we had basically indicated around 10 million sq ft of launches, eight of which was from residential. As you indicated and as we have done in Q1 and Q2, 2 million of that is already launched. Of the remaining 6 million, 2 million of that is plotted development. We have good visibility for that to happen in Q3 and mostly Q3, those launches should be happening. The remaining projects will also come into Q4. We actually have pretty good confidence that most of the large projects that we were expecting to happen this financial year will happen. Some of it which we had liked to see in Q3, it is subject to the final RERA approval.
We're all in terms of the design approvals on that front. We're pushing very hard. We should be reaching what we had mentioned in terms of the overall launch plan for this financial year. Now, every quarter we give a rolling four quarters. Now in this quarter, as you've seen, it's increased to 13 because we've included some of the additional launches that we expect in Chennai coming up in Q1 and Q2 of FY 2024.
Okay. My second question is on these INR 1,000 crore which Atul mentioned needs to be made towards the land payment. Is the potential of gross development value added in this 15 million sq ft, or this will be over and above that?
It will be above.
Yeah, it'll be over and above that because the land bank that the INR 1,000 crore remaining to be paid, that is not all going to be launched within the next four quarters. It is over the span of the next, we usually have, like, a five-year outlook. A lot of that is not necessarily gonna be launched right away. The timing also of the payments will go accordingly.
This 1,000 crores of land, so large part of that would be the Mount Road, right? I think more than INR 500 crore, the loan will be from Mount Road.
Yeah, the Mount Road is a big portion of it.
Yeah. It is a big portion, but definitely we have also paid around INR 100 crores already in the Mount Road. It will be INR 400 crores, but there are lot of JDs which are there for which we'll make the payment for INR 1,000 crores. As and when other purchases of the land will come, it will get added to that.
My question to Atul then, how much of gross development value we have added? If I understand correctly, about 1 million sq ft will be coming from Mount Road, right? Half of that will be residential.
Okay, got it.
Yeah. Let me answer that. Basically, for the pipeline that we have, for the next four quarters, we are looking at around INR 13 million, so around, you know, INR 15 million or so total project value. Of course, some of it will be phased in terms of the launch. Which is why I'm telling you the GDV will be around INR 15 million.
For land bank it will be around 4.5 to five and 13 what we are launching.
This INR 1,000 crore will have about 4.5-5 million sq ft of sellable area. In terms of GDV, this will be how much? Like, INR 3,000 crore +?
It will be INR 3,000 crores +. You are right.
Got it. My last question is on commercial pipeline. The SEZ leasing. Is it contingent on DESH Bill, this INR 0.85 million which is residual in Tech Gardens? Is it largely contingent on DESH Bill or besides that we also have a backup plan of leasing it out over the next three, four months?
Hi, this is Ravi again. Clearly this is not contingent on the DESH Bill. We already have a pipeline today which is not relying on DESH Bill. should DESH Bill happen, I think the traction will only improve and incrementally from here.
Okay. This is the last one if I may squeeze in on the GDV business development. What was the total gross development value added in the first half? And in the second half, how much we are looking to add?
To the land bank or what we have launched?
No, no, Pavitra, I'm asking how much is the new land tie-ups or JDAs, JVs, outright, which we have done in the first half, and how much we are targeting as a year as a whole to build our land business pipeline. I want the gross development value of that.
On the exact value, I'll have to get that. Recently we have just added around 3-4 million sq ft in the last two quarters.
Okay.
In terms of new projects.
Got it. A similar number you're looking for the second half? Or.
We have a number of things working on it right now. When we are able to disclose, we'll be able to let you know.
Okay, Pavitra. Thank you. Those were my questions.
Thank you. The next question is from the line of Pritesh Sheth from Motilal Oswal. Please go ahead.
Hi. Thanks for the opportunity. Firstly, congrats to Pavitra and Nirupa on the elevation of your respective roles. My question is firstly on, you know, Twin Towers. We have seen a muted spending for those. Since now we have a, you know, clear leasing pipeline, what is the expected timeline that, you know, we could, you know, complete this project?
This is Nirupa here. I'll just take that question. We are expecting to complete it by in the next year or so. By January or March 2024 is when we are planning to complete it.
Okay, got it. Secondly, in terms of you know, residential margins which have been tapered since last two to three quarters. Obviously, I can understand the timing and you know, maybe few of the legacy projects that might have started recognition. What is you know, the trajectory that we expect going forward? Should we expect to get back to that 18%-20% margin that we used to generate anytime near soon?
I just like to clarify, revenue is growing as per Ind AS 115. Overall, if its sales is around INR 800 crores and our revenue recognition grows. If you take a gross profit of around 20%-25%, and if you convert it into INR 800 crores of revenue on rolling quarter, it will come to around 20%. That is the difference because we are not able to realize the revenue as per Ind AS 115, on, based on what we are doing the actual sales, pre-sales, actually.
Sure. This should continue probably for next two, three quarters, since, and after that we start recognizing whatever we have seen sold in last couple of years?
There are two projects which will start coming up for handover and revenue recognition. Those are two of the blocks in Brigade Cornerstone Utopia and two more blocks in Brigade El Dorado. We see an increased revenue recognition over the next potentially next two to three quarters, we should be able to see that coming.
Sure. Got it. Very much clear. Lastly, just a break-up of collections, if you can provide across residential, commercial leasing and hospitality.
You want for Q2 or H1?
For Q2.
Q2, residential is INR 987 crores.
Commercial sale is INR 49 crore. Lease, commercial lease is INR 150 crore. Retail is INR 52 crore. Hospitality, INR 119 crore. Maintenance PMS, which is, INR 66 crore. Total is INR 1,422 crore.
Sure. Got it. Thanks. All the best.
Thank you.
Thank you. The next question is from the line of Rakesh Wadhwani from Monarch Networth. Please go ahead.
Hi, thank you for the opportunity. Sir, I have a one data point question. In commercial leasing business, you provide a P&L separately. The EBITDA margin has come down from 75%-72%. Any particular reason? Because the leasing has increased, I think EBITDA margins will increase.
It is a combination of three revenue streams that go into our leasing business. One is office, one is retail, and one is PMS, which is our maintenance business. There has been some wavering of margins in maintenance business because of which it has increased. Leasing business margins have been intact. We have taken Tandem also, one of the associate company also now. We are now overall and we are trying to improve its performance also. That's the difference. Over the quarter, you will see that it will iron out to 75%.
Okay. Thank you. Sir, second question on the residential part. We have given a guidance of 10-15 or 10, 12-15 million new launches coming in the next 12 months. This is very, very good and encouraging. Just want to understand from the long-term perspective, what is the pipeline that you want to launch every year? I do not want a particular number, but what is your management thought process? Because the more the inventory we have, the chances of more selling. In our competitor also coming up with more launches. Just wanted your thought process on that.
Yeah. Hi. Thank you. Yes, we do have an aggressive pipeline visibility for it over the next four quarters. We intend to keep growing at this pace of 15%-20% is what we've always communicated. Given the headwinds, sorry, the tailwinds for the residential sector as we can see so far, to be confident that this is possible and feasible with our land bank. While certain projects move from the land bank into the pipeline and then launch, we're looking at adding new projects. Chennai has also been a very good market for us. We're looking to make it a very strong second market to Bangalore. As we've communicated earlier, our focus is going to markets.
Given all of this, we plan to basically cement our leadership position in these three markets in South India and focus on residential and these. Plus supported by smaller markets where we have a presence like Mysore.
Just reiterating your point, can we assume 10-12 million new launches in the coming years also? Not for the next one year. Do we have that much pipeline with us?
As I mentioned the numbers earlier, we have around INR 13 million over the next four quarters on a rolling basis. Of the 13, 2 of that is from and the rest is from residential.
Okay. Okay. Thank you. That was from my side. Thank you.
Thank you. The next question is from the line of Dilip Agrawal, An Individual Investor. Please go ahead.
Yes. Hi. Thank you for the opportunity. My question was similar, which was already asked around the EBITDA margin on the residential space, which is, if I see the historical investor presentations, it's just talking about 20% in FY2020 which is now gone to 13%. That was answered by Atul. Thanks.
Sorry, I just want to clarify on the previous question. It is actually INR 13 million for residential only.
Sure.
INR 13 million for residential only, + INR 2 million for the commercial. It's a INR 15 million outlook for the next four quarters.
Mr. Dilip Agrawal, you can go with your question, please.
Yeah, yeah. My question was already answered, because it was similar to this EBITDA margin of 13%, which is coming in the real estate.
Thank you. The next question is from the line of Siddhant Dand from Goodwill. Please go ahead.
Yeah. Hi, Nitish. Hello, can you hear me?
Yeah, your voice is not clear.
Yeah. Hi. You said you commented that you still have some QIP cash available. So my understanding was why did you dilute equity at like these lower valuations instead of, you know, monetizing our hotel and office assets? Clearly office asset deals were happening at that time. Just wanted a comment around that.
Yeah.
Future strategy regarding, you know, equity dilution.
Sure. While it is tough to sort of how it was maybe, four to six quarters ago, at that point in time, the outlook for office, retail, and hospitality was quite poor. We strongly believe in the quality of our portfolio, and we did not want to dilute at that stage. At the time, we took a call to basically do an equity dilution. Of course, since then the stock has done extremely well, so that's been a great thing for our investors. That's basically why we did not want to actually dilute in terms of the asset portfolio itself, since we were not in a market to look for any kind of distressed valuation.
Okay. What's the future strategy regarding, you know, equity dilution or something, or we are not looking at it anytime, you know, in the medium or long term?
No.
Okay.
Yeah.
Okay. Thank you.
Thank you. The next question is from the line of Parvez Qazi from Edelweiss Securities. Please go ahead.
Yeah. Thanks for taking my question. So couple of questions from my side, first to Pavitra. What is the outlook on the housing demand side? Have we seen any impact of the increase in mortgage rates or the slowdown Ravi talked about that we are seeing on the tech sector as far as housing demand is concerned?
Hi, Parvez. So far, actually, we've not seen any real impact. Even though the interest rates have been increasing, we haven't seen that impact the number of people who come forward for mortgages as well. Roughly that's been around 55%-60% of our customers who tend to opt for home loans. We haven't seen really a drop-off in terms of how many of those customers actually ask for the sanction letters and so on. I think it's because historically speaking, these are still decent rates. I think maybe we're all pegged to what was the historical low in the past two years. Relatively speaking, it's still a decent rate.
In fact, in 2019, 2018 and earlier, the rates were more like 9%-11% and those were the years where we did some of our best numbers, prior to COVID. I don't think this is gonna impact. That said, we're keeping a close eye on it in terms of our future pipeline, in terms of sizing, how we want to size things, how we want to price and keep an eye in terms of how ticket prices may also increase and affordability. We are keeping an eye overall in terms of being flexible in terms of what the portfolio is going to be going forward. Yes, most of our customers come from the IT sector and related tech sector.
In the markets of Bangalore, Chennai, Hyderabad, there does not seem to be any impact at all, or any reduction in, not just the bookings, but also in the flow of walk-ins and inquiries happening digitally.
Sure. What, in your view, would be the outlook on the pricing side? I know we had taken two rounds of price hikes over the last one year, but how do you see things pan out in future?
I think we are in a position to continually drive the pricing. What we've learned over the past few years is that the consolidation has allowed good brands to actually be aggressive with their pricing. Also because this is markets where we operate, they're generally not you know markets where there is huge margin. So we do need to try to look at pricing and see wherever we can you know push it up where the market is going to allow that to happen. I think the strength of the brand, the ability to deliver quality and on time and also figure out what the customer is looking for is what has helped Brigade in the past.
We will look at continually trying to push the pricing and of course look at ways in which we can keep costs under control as well.
A couple of data-specific questions for Ravi sir. First, what was the rental contribution from BTG and WTC this quarter?
This quarter from BPPL, that is Tech Gardens was INR 36 crores. Revenue from WTC Chennai was INR 32 crores.
Okay. What would have been the contribution and a ballpark figure would suffice to pre-sales from our launches during this quarter?
Please, I couldn't get you.
What was the contribution of launches to pre-sales this quarter? I mean, the four projects that we launched this quarter, how much did they contribute to pre-sales?
Yeah. In terms of how much the new launches contributed, it was around 50%. 5-0.
Sure. Lastly, what would have been the non-Bangalore sales this quarter?
Sorry, the non?
Bangalore.
Oh, non-Bangalore. Over the last couple of quarters, it's reduced. This last quarter is around 80% from Bangalore. .
Again, this should increase as our launches from Chennai start to pick up and some of the launches we have planned for Hyderabad as well.
Thanks, and all the best to you.
Thank you.
Thank you, Parvez.
Thank you. The next question is from the line of, Vipul Daburma from Antique Stock Broking. Please go ahead.
Good afternoon to everyone, and congratulations to Pavitra and Nirupa. My first question is on the DESH Bill. Sir, just briefly, what's the DESH Bill, and how it's going to help Brigade office portfolio?
This is a bill where government is trying to enable the SEZ to utilize some of their spaces as non-SEZ, where they are asking that okay, you can lease some of the spaces without having a net foreign exchange earner and without reversing your GST or other benefits which you have used. Yes, of course, there will be some equalization levy which government will put. We are waiting for that. Right now, if you have to convert an SEZ into non-SEZ, you have to demarcate that property separately and of course, you have to return all the GST or other benefits which you have taken.
This is a DESH Bill and this they are tabling in this winter parliament in the winter session. If it happens, it will definitely help SEZ all over India because then they can partially do a SEZ as well as a non-SEZ.
Okay. Thank you. Thank you, sir, for that. Second question is on your commentary, in one of the commentaries mentioned that there is a bit of slowdown in office space overall based on the IPCs reports. In Brigade's experience, did you see any slowdown or kind of interest going down or kind of timeline of negotiation getting stressed? How is your experience in terms of inquiry and pipeline in office? Do you see any change?
Yeah, so-
Perceptible change in the last, say, one, two quarters? Clients are inordinately delaying the negotiations or the interest has gone down or the negotiation hard on the rental. Any change in client attitudes?
Yeah. The numbers with us in quarter one and quarter two do show a slight slowdown impact even for our transactions, but they're not due to any transaction falling through. It is postponement of decision primarily. Therefore, we are hopeful that given the delay in quarter two, you know, booking of these deals, these will essentially happen before the end of 2023. Having said that, and just to point out the answer to your question, there has been a small visible slowdown. Our quarter one, we reported 400,000 sq ft of office take up, while quarter two we've reported close to 300,000 sq ft of office take up.
Okay. One final question, if I may. You know, there are a few big players there which are entering Bangalore market and also existing non-Bangalore players are increasing their footprints. Yes, the market is very robust, I know. With the changing competitive landscape, how do you see, you know, in terms of supply, you know, now many people would be chasing the same deal maybe. Maybe many people are chasing a few deals and buyers have a lot of choices. Sir, in the changing competitive environment, definitely Bangalore is a good market. Have you seen any perceptible change, any you know increasing competition in terms of customers, or in terms of deals?
Have you seen anything on the ground, sir? That's my final question.
Yeah, certainly it's getting more competitive, obviously, because Bangalore is a good market. Those who do not have a presence in Bangalore look to it as maybe a potential driver for their own portfolio. Brigade of course has always maintained a leadership position. We've grown it over the past 36 years, and it is our top market, and we intend to maintain our leadership position. In terms of looking at land, it is more competitive. That said, there are still only very few actually do outright purchases, who can actually close the at the way we would. I would say we continue to be very selective in terms of the kind of deals that Brigade closes. Number one, we are extremely focused on the quality of titles, the location, the quality of our most important.
While there is competition and maybe other deals out there, it's very clear the kind of new lands that we will take up. I think this is something and in future it'll actually the kind of projects that we take up and the timeframe in which we can deliver without any issues to the customers.
Thank you. That's all.
Thank you. The next question is from the line of Rakesh Wadhwani from Monarch Networth. Please go ahead.
Hi. Thank you. Thank you for the follow-up opportunity. I have one question regarding the leasing. In the last quarters, we have given a guidance that we will be reaching the 100% or 95% of the occupancy in the next 12 months. I mean, do you think we'll be able to do it?
Yes. As suggested earlier, our target doesn't change. The slowdown that we spoke about is hopefully going to culminate into these postponed deals which were not falling through. Should they culminate, we will certainly be on target.
Okay, thank you. I just have one last question. Any update on the hotel portfolio? There was a discussion that the company might sell a stake in that. I just wanted to understand the strategy. What is the view of the management, whether they'll be selling the majority stake or the 25-30% stake? And what will the funds be used for in the business or in the hospitality business? Thank you.
Nirupa here. I'll take that. Basically maybe prior to COVID we were in a very close discussion to close a private equity partner. Of course, post-COVID and during COVID, things changed. Now again, the hotel business has started to do very well and it is not a bad time to restart some of the discussions. We are. You know, there are a couple of discussions and interest levels coming in. We're at preliminary stages, so I don't want, can't report anything much. Now since the hotels have started to do well and they're slated to do well, unless of course there is some major macroeconomic issue, we think it's a good time to actually start discussions again.
If we do sort of find an equity partner, then some of the funds will remain with the BHVL company so that we can grow the business. Partially we might have a primary and a secondary component to whatever investment we get.
Okay. That was very helpful, ma'am. Thank you.
Thank you.
Thank you. Reminder to the participants to ask a question, you may please press star and one. The next question is from the line of Adhidev Chattopadhyay from ICICI Securities. Please go ahead.
Yeah. Thanks for taking my follow-up. The first question is on the residential sales guidance for this year. Earlier you mentioned that we could do up to INR 4,000 crore on the higher side. Any update on that? Any fresh numbers or does that remain intact?
Yeah. No fresh numbers. I think we'll stick with that as a higher side.
Lower end crores, right? That.
Sorry. It cut out there.
Excuse me, this is the operator. Mr. Adhidev Chattopadhyay, there's some disturbance from your line. Can you please check?
It's going now.
Yeah. I think the lower end around INR 3,500 crore for the year.
Yeah. That should be okay on the.
Okay. On the hotels now we have seen it, hotel doing quite well. Almost INR 60 crores of EBITDA in the first half. Considered many of the newer hotels are opened just prior to COVID. Over the medium term, what do you think is the EBITDA potential for your hotel portfolio? Let's say maybe a couple of years out once all the new hotels, newer hotels, sorry, have also stabilized their operations. Thank you.
I think the EBITDA potential for all the hotels when they stabilize should be in the range of INR 175-200 crores going forward. This year we may close EBITDA numbers. We are not supposed to give guidance but it can, it will be a very healthy EBITDA with a healthy PBT this year.
To go with that.
Hello?
Mr. Chattopadhyay, you're cutting off. Can you please check your line and then repeat your question?
Hello.
Sir, we request you to please rejoin the queue. We're unable to hear you clearly. Participants, if you have a question, you may please press star and one on your touchtone telephone. The next question is from the line of Pritesh Sheth from Motilal Oswal. Please go ahead.
Hi. Thanks for the follow-up opportunity. Just one question on the launches that we are planning for second half, that is 2 million sq ft plotted and another 4 million sq ft from your residential segment. What should be the gross development value of those launches that we are planning?
Just one second.
Sure.
Yeah. Probably if I'm looking at the entire project value around INR 3,600 crore. Of course, when we launch the project it could be done in phases. There are phases as well, but mostly we have the full sanctions and everything. Beyond that we don't expect any delay in further phased launches. Around INR 3,600 crore-INR 3,900 crore.
Okay. That will be released at probably one go, right? As you are saying.
No. Like I said, a couple of the launches. They are fresh launches and they're not new phases in existing township projects. For those, we would be phasing them out as well.
Oh, oh. Yeah. Thank you. That's it from my side.
There is no approval risk for that matter. Once it gets launched, there is no approval risk for subsequent redev phases.
Sure. Thanks. That's it from my side.
Thank you. Participants, to ask a question you may please press star and one on your touchtone telephone. The next question is from the line of, Vipul Daburma from Antique Stock Broking. Please go ahead.
Ma'am, just two questions. One is, you know, in the next four quarters, you mentioned 13.5 million sq ft. Are this new acquisition including Mount Road project included in that 13.5 million sq ft or this new acquisition would be incremental to that 13.5 million sq ft?
Yeah. As I said, it's actually INR 15 million total. INR 13.5 million was for residential.
Okay.
In the residential, we are looking at launches of Chennai projects to come in towards basically mid of FY 2024. We are giving a rolling four quarters projection.
Okay.
which means the Mount Road project will most likely come into Q2 of FY 2024. That's sort of what we're aiming at right now.
That means it has been included. Okay. Second thing is about.
Yes.
Your Chennai portfolio. You have a pipeline, and you said that non-Bangalore portfolio would increase as well. Just trying to understand Chennai market. My, you know, our understanding Chennai market is a kind of stagnant market, but you have been doing very well in Chennai. Can you give us some insight? How is the market? Is it the market growing or you are doing well within that market? You are increasing your market share. How is the market or it is staying redundant as we have seen strong momentum in other key markets of India?
I'll say it's a bit of both. Yes, Chennai did seem to be a little slow. Back in 2016, 2017 when we had launched our first township project, Brigade Xanadu there, we actually found it a little slow in terms of, you know, uptake from buyers. That said, during COVID and beyond, once we started launching next phases of Brigade Xanadu, once we launched our residences at the World Trade Center, Chennai project, we actually saw a dramatic improvement in terms of absorption in the Chennai residential market. I think it's due to a couple of things. One is, of course, the quality of Brigade as a brand, our ability to show our strength in terms of mixed-use and residential township development, which is why both these extremely well.
The second is that Chennai market itself, I would say does not have local players. While there are some, there aren't as many local players who have scaled up as much as say, you know, other market entrants like Brigade into the market. We have actually seen a lot of opportunity in the Chennai market as a result, and we've continued to acquire new land parcels in Chennai for JD and outright. Yeah. Then the areas that are doing well are actually where we are located, which is West Mogappair, Old Mahabalipuram Road. We continue to look for good land parcels in these areas and beyond.
Thank you, ma'am.
Thank you. Ladies and gentlemen, we take the last question for today from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Thanks for the follow-up. Pavitra, I want you to focus on the Mount Road project. How is the structure now? You did mention that revenue will be first. How much is the total residential development in gross development value, and what will be the commercial portion?
As of now, we are looking at a total development size of 1 million sq ft. We are planning for 60%, around 60% to be residential, and the remainder will be office and retail.
This 50% will be having how much? Like 0.5 million will be like INR 1,000 crores of gross development value or I think last time you mentioned about INR 1,500, if I remember correctly.
Yeah.
1,500.
About INR 1,500 crore of GDV for the residential side.
Okay. Thank you, Pavitra, and congratulations for your listing at Tanea Renovation. I hope Brigade goes to newer heights under your leadership. Thank you.
Thank you so much. Thanks.
Thank you. With this I now hand the conference over to Pavitra Shankar, Managing Director, for closing comments. Over to you, ma'am.
Thank you. Good afternoon, everyone. Thanks for taking the time to hear from us today. We have a few other highlights that we'd like to share with you all. We are happy and proud to share that our chairman, Mr. M.R. Jaishankar, was conferred the prestigious Bharat Ratna Sir M. Visvesvaraya Memorial Award 2022 by the Federation of Karnataka Chambers of Commerce and Industry, FKCCI. Mr. Jaishankar was recognized for his outstanding contribution to construction and building sector, as well as in the fields of education, health, community development, social and philanthropic works. Another incredibly noteworthy achievement is his awe-inspiring professional journey. We were also recognized by Construction World Global Awards for showing significant growth and resilience despite changes due to the impact of the pandemic.
Our IT and digital team also won the Best Information Technology Department of the Year in real estate at the Tech Excellence Awards 2022. This kind of recognition and awards received from experts and institutions along the way are testament to our commitment and hard work towards being an organization with world-class performance and processes. Brigade REAP, our real estate tech accelerator program, continues its thought leadership journey in PropTech with Propagate 2022 and events to address the rapid urbanization in our cities by presenting clean tech and sustainability solutions so that development can happen in a more responsible manner. This event will be held in Bangalore on November 29th with founders and the startup community. It will be an event that will bring together key influencers and startups to inspire and propose smart solutions.
At the Indian Music Experience Museum, will be conducting its next big event in partnership with the Manchester Museum, United Kingdom. The event, called Rhythm Exchange, will be held between the 25th and 27th of November. It's a collaborative project that promotes connections between India and the U.K. through rhythm traditions. Brigade has been a staunch supporter of sport through multiple avenues, but especially women in sport. In line with these efforts, Brigade Foundation supported the Women in Sport initiative, a Bangalore-based platform for health and fitness, by sponsoring 30 women at Ironman 70.3 Goa. We strongly believe that by encouraging women in sport, women to pursue their dreams and achieve great heights. We've also sponsored a concurrent program where deserving women cricketers are being trained to compete at the highest level. With that, it's a wrap for this quarter.
We look forward to speaking to you again soon. Thank you, everyone.
Thank you, ma'am. Thank you, members of the management. Ladies and gentlemen, on behalf of Brigade Enterprises Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.