Ladies and gentlemen, good day and welcome to the Q4 and FY 2026 Earnings Conference Call, Mushtaq Part and Embassy Developments Limited. As a reminder, all participants lines are in listen-only mode. There will be the opportunity for you to ask questions as the presentation concludes. To begin as a guest on today's conference call, please signal to an operator by pressing star then zero on your touch-tone phone. I now have the conference over to Mr. Aditya Virwani from Mushtaq Part and Managing Director from Embassy Developments Limited. Thank you and over to you, sir.
Good morning, everyone, and welcome to Embassy Developments Limited Q4 and FY 2026 Earnings Conference Call. I am joined today by Sachin Shah, our CEO and Executive Director, and Rajesh Kaimal, our CFO and Executive Director. Our investor presentation has been uploaded to the stock exchanges and is available on our company website. FY 2026 has been a landmark year for Embassy Developments Limited, operationally, strategically and institutionally. It marked the first full year of the merge platform following the integration of NAM Estates and the erstwhile Indiabulls Real Estate Limited with the unified Embassy Developments Brand. I am pleased to report that Q4 FY 2026 was the strongest quarter in our company's history. Q4 pre-sales stood at INR 2,632 crores, up 89% quarter-on-quarter. FY 2026 pre-sales increased to INR 4,631 crores, up 128% year-on-year.
Q4 FY 2026 collections stood at INR 577 crores, reflecting a 39% quarter-on-quarter growth, and FY 2026 collection from operations were INR 1,673 crores. During FY 2026, we launched projects with a cumulative GDV of approximately INR 16,300 crores across six different launches. We achieved approximately 93% of our FY 2026 pre-sales guidance of INR 5,000 crores. The marginal shortfall was attributable to approval delays of one planned project in Bangalore that has now shifted to Q1 FY 2027. I will now talk about the two launches we had in Q4. The two launches which were Embassy Citadel and Embassy Verde Phase 2 were the two launches that drove the Q4 performance, and one launch called Embassy Eden in Q3.
Embassy Citadel, our entry into South Mumbai luxury segment, a 1 million sq ft development with an estimated GDV of over INR 8,800 crores. The pre-launch achieved in Q4 was INR 797 crores at roughly 8% of inventory absorbed, validating that both the product positioning and the pricing strategy in what is one of India's most competitive luxury markets. And just to note, we only brought this product out in mid-February, giving us only 45 days to clock almost INR 800 crores for this project. Embassy Verde Phase 2 at Embassy Springs delivered an 87% absorption within the quarter, generating Q4 pre-sales of INR 588 crores. Together, these two projects contributed to INR 1,385 crores to approximately 53% of Q4 pre-sales.
Additionally, our Bangalore luxury portfolio led by Embassy Eden, our luxury villa development at Embassy, established a clear category leadership position. Our Bangalore launches in the INR 10 crore ticket size accounted for over 65% of all FY 2026 sales in Bangalore in that segment, which was roughly INR 2,000 crores. This really showcases Embassy's strength in the luxury segment in Bangalore. On the legal and regulatory front, the company seeks out favorable outcomes in two significant legal and regulatory matters. First, the Honorable NCLT, by order dated May 4, 2026, set aside the earlier NCLT admission order in the Section 7 application filed by Canara Bank, thereby squashing the CIRP proceedings in entirety. The NCLT held inter alia that no deed of guarantee existed, and that the application was barred under Section 10A of the IBC.
Following this, the company exited the ASM framework and resumed normal trading on both BSE and NSE effective May 6, 2026. Second, the Honorable High Court of Karnataka set aside the KIADB assumption order relating to 78 acres at Kadugodi, Bangalore, held by Embassy's business park, based on the company's undertaking to comply with the lease terms and obtain KIADB's NOC prior to any third party interest creation. Both rulings were delivered on merits, reinforcing the company's legal position and governance framework. Our reported P&L for FY 2026 reflects an accounting loss of INR 872 crore at the PAT level. I would like to provide context for these numbers as they are structural in nature rather than operational. This is largely a function of real estate revenue recognition accounting policy under which income is recognized only on project completion and handover, and reflects past project performance.
Given that most of our projects will have target OCs from FY 2028 onwards, revenue recognition from these projects will flow primarily through 2028 onwards as construction progresses meaningfully. What you are thereby seeing in FY 2026 is a cost structure peak ahead of the revenue curve. We expect this profile to progressively normalize as projects move towards completion and revenue recognition accelerates. On the FY 2027 outlook, based on our launch pipeline, ongoing inventory sales and market momentum, we are providing the following FY 2027 guidance. Pre-sales of INR 6,000 crores from our own projects, representing a 30% year-on-year growth, along with an additional INR 2,000 crores from the DM projects, totaling INR 8,000 crores. Collections of approximately INR 3,000 crores reflecting around 75% year-on-year growth driven by the milestone link inflows from existing launches and ongoing projects.
New launch GDV of approximately INR 19,400 crores across 11 own projects and along two DM projects, Juhu and Sky Terraces in Bangalore. The combined GDV of DM projects is approximately INR 6,100 crores. This launch pipeline, together with sustained demand for Embassy Citadel and our Bangalore portfolio, underpins our FY 2027 outlook. To sum up, FY 2026 has been a transformational year. We have delivered record quarterly pre-sales and built a launch pipeline that we believe is industry-leading for our scale. Another significant milestone undertaken was our brand evolution, shifting from a legacy-led identity to a more forward-looking brand with renewed philosophies, values and visual identity. Our priority for FY 2027 are clear. Deliver on the launch pipeline, accelerate construction progress to drive collections, and reduce financing costs through refinancing. With that, I will hand over to Sachin, who will take you through the operational performance in detail.
Thank you, Aditya. FY 2026 was a year of clear sequential ramp-up in operating performance as we accelerated launches and increased pre-sales and collections over the quarters. To provide perspective on this trajectory, quarterly pre-sales increased from INR 198 crores to INR 409 crores to INR 1,392 crores over the first three quarters of the fiscal year before we finally closed at an impressive INR 2,632 crores in Q4. Quarterly collections increased steadily from INR 322 crores in Q1 to INR 577 crores in Q4. The area sold increased from 206,000 sq ft in Q1 to 1.78 million sq ft in Q4. As construction milestones progress on these projects, we expect a meaningful contribution in operating cash flow generation in FY 2027 and 2028.
Construction spend during FY 2026 stood at INR 1,182 crores, representing approximately 71% of collections, reflecting a capital deployment that is disciplined. During Q4, we made progress on delivering our projects as well. We submitted the OC application for Embassy One 09 Phase 1 in Gurgaon, and we received partial OC for Golf City Panvel Phase 1. Our OC received portfolio is now 98% sold, with FY 2026 pre-sales of INR 573 crores, collections of INR 645 crores from this portfolio, reflecting a healthy monetization of completed inventory. Across our ongoing projects, construction and delivery timelines remain broadly on track. Embassy Paradiso at Embassy Springs is 100% sold, 50% complete with target OC in FY 2027. Embassy East Avenue in Whitefield, Bangalore, 34% sold, 73% complete with target OC in FY 2028.
Embassy Verde at Embassy Springs in North Bengaluru, 90% sold, 70% complete with a target OC in FY 2029. Embassy Edge at Embassy Springs, 74% sold, 66% complete with a target OC in FY 2028. Embassy Park in Panvel, 74% sold, 41% complete. Target OCs in between FY 2028 and FY 2030. Embassy Greenshore at Embassy Springs, 63% sold, 8% complete. Target OC in FY 2031. And lastly, Embassy Eden, 49% sold with a target OC in FY 2031. Across the launch and under construction portfolio, FY 2026 pre-sales aggregated to INR 4,058 crores, 27.5% of the unsold inventory value of INR 14,728 crores, allowing for sustenance sales to continue into the fiscal year and providing substantial visibility for future monetization. Looking ahead, our FY 2027 launch program consists of nine projects which are owned with a cumulative GDV of INR 13,300 crores.
This is supplemented by two JDA projects, taking our total launch GDV to approximately INR 19,400 crores. The key headline launches over the coming months include Embassy One North Tower in Bengaluru, adjacent to the Four Seasons Hotel, where we have 400,000 sq ft to sell and a GDV of approximately INR 1,400 crores. Embassy Knowledge Park Villas and Apartments in North Bangalore, with a combined GDV of approximately INR 4,500 crores and strategically located adjacent to the Embassy International Riding School in North Bengaluru. Front Parcel Villas and Apartments at Embassy Springs, where we have 1.7 million sq ft in area to sell and a GDV of INR 1,900 crores. And our newly acquired Whitefield JDA project, where we have 1.2 million sq ft and a GDV of INR 2,000 crores where Embassy has a 68.5% share.
Plot A at Embassy Hub in Hebbal, Bengaluru, where we have 1.2 million sq ft to sell and a GDV of approximately INR 2,100 crores, where Embassy's share is 91%. Lastly, 109 Commercial in Gurgaon, where we have a GDV of INR 800 crores across half a million square feet. Two JDAs with a total GDV of INR 6,000 crores are in addition, where this year we plan to launch our super exclusive and ultra-luxury Juhu project, where we expect to receive our IOD shortly, and Sky Terraces in Bangalore, where we expect to have a robust demand at launch. This pipeline is geographically balanced across our three core markets, Bangalore, MMR, and NCR, and is weighted towards product categories where we have demonstrated strong absorption, which is luxury residences and villas, premium apartments, and lifestyle second homes.
Our planned project pipeline beyond FY 2027 carries a further 20.4 million sq ft with an estimated GDV of approximately INR 23,500 crores. Combined with our 3,250-acre fully paid land bank, it gives us a multiyear revenue visibility and the flexibility to pace launches in line with market conditions. In summary, FY 2026 has been a year of growth, solidifying our operations, integrating and building our teams, and executing in a disciplined manner while managing cash flows effectively. This has led to sales velocity and accelerated launches in the second half of the year. We enter fiscal 2027 with strong momentum and a healthy inventory pipeline across ongoing projects. With that, I will hand it over to Rajesh, who will walk you through the financial performance and the balance sheet position. Thank you.
Thank you, Sachin, and good morning, everyone. I will take you through the financial performance for the quarter for the full year ending March 31st, 2026. The reported P&L for FY 2026 reflects a timing mismatch inherent to the development business model and additionally carries accounting consequences of the reverse merger treatment from the NAM-IBREL combination. Reporting numbers for FY 2026. Revenue from operations stood at INR 1,736 crore versus INR 2,150 crore in FY 2025. Profit income of INR 1,905 crore versus INR 2,547 crore in FY 2025. EBITDA of negative INR 300 crore versus INR 331 crore positive in FY 2025. PAT negative INR 872 crore versus a positive INR 194 crore in FY 2025. As Aditya mentioned earlier, the reported numbers must be read in context of the following points. First, the real estate revenue for RERA-registered projects under Ind AS 115 is recognized on completed contract basis.
The revenue from sale of residential units is recognized only on receipt of OC and offer for possession to customers and not at the point of pre-sale. 80% of our FY 2026 pre-sales were concentrated in H2, predominantly from launches such as Embassy Citadel, Embassy Greenshore, Embassy Eden, and Embassy Verde Phase 2. These projects have target OC dates ranging from FY 2028 through FY 2032. Revenue from these projects will be recognized from FY 2028 onwards in the respective years when the OCs for these projects are received. Accordingly, the FY 2026 P&L reflects a fixed cost structure that will be incurred ahead of the revenue recognition curve. As we receive OCs for the projects launched, we expect the revenue recognition profile to progressively normalize and accounting profit margins to improve over the years.
Second, as a reverse merger accounting treatment Ind AS 103, existing shareholders of NAM were the largest shareholders of the company, and the transaction was accordingly treated as a reverse merger, with NAM as the accounting acquirer and Indiabulls Real Estate Limited as the accounting acquired. As this fair value inventory is sold over time, the company profit margin reported in the consolidated P&L is reduced to the extent of the differential between historical cost and the fair value spread. Importantly, this does not impact the underlying cash flows from these assets. Cash flow for FY 2026. On the cash flow side, the year was characterized by a ramp-up in operating cash flows, disciplined investing activity, and a positive financing inflow driven by warrant conversions. Though 80% of FY 2026 pre-sales concentrated in H2, corresponding milestone-linked collections will largely flow through FY 2027 and FY 2028.
This is the principal reason why FY 2026 collections of INR 1,653 crore were marginally lower than FY 2025 collections of INR 1,854 crore, even as pre-sales grew 128% year-on-year. Pre-sales to collection conversion is a structural lag and not a rotational issue. We expect FY 2027 collections to grow approximately 75% to around INR 3,000 crore as construction milestones are achieved in H2 FY 2026 launches. Debt position. As of March FY 2026, our gross institutional debt stood at approximately INR 4,100 crore, with cash and cash equivalents of around INR 1,100 crore, resulting in net institutional debt of approximately INR 3,000 crore. Our net debt/EBITDA ratio is at 0.3x while gross debt/EBITDA is at 0.4x. In addition, we carry shareholder debt of approximately INR 1,121 crore. Upcoming launches and strategic partnerships are expected to generate meaningful cash flow surpluses, supporting a structured reduction in institutional debt while also funding future growth.
In closing, FY 2026 has been a transition year marked by integration of the merged entity, an accelerated launch program, and the resolution of legal overhangs. The reported P&L reflects a mismatch of revenue recognition timing and merger accounting, with underlying operating fundamentals tying to a platform with strong fundamental visibility and cash flow generation. We enter FY 2027 with confidence in the strength of our launch pipeline, a strong balance sheet positioned to support our INR 6,000 crore pre-sale guidance and a INR 3,000 crore collection target. With that, we would be happy to take questions.
Thank you. We will now begin with the question and answer session. Anyone who wishes to ask a question, press star and one on their personal telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use answers while asking a question. Please adjust. We will wait for a moment while the question queue assembles. The first question comes from the line of Mohit Agrawal with IIFL Capital. Please go ahead.
Yeah. Good morning, everyone, and thanks for the opportunity. My first question is on the launch pipeline, and if you could give some color around the launch timelines. Let's say some larger projects like Embassy One, Knowledge Park, the Whitefield and the Embassy Springs project. Yeah, that was my first question.
Hi, Mohit, good morning. These are the projects that you referred to?
Yeah. No, I am saying the larger ones, like the Knowledge Park, Villas and Apartments, Embassy Springs, the Whitefield projects and Embassy One North. These are the larger projects. What will be, if you look at it in quarters, which quarter do you expect to get launched?
Sure. I will just give you a flavor. The pipeline that we have of roughly 11 projects, INR 19,000+ crores in GDV, is pretty scattered across the entire year. Embassy One North Tower, we actually already got our building plans, so we are going to launch this project this quarter. Embassy Knowledge Park, which is part of that project, would probably be towards the end of this quarter or might spill over to Q2. Juhu will be Q2. Sky Terraces will be end of Q1 or Q2. I will just name the White Embassy Springs One parcel will be probably Q2 or maybe Q3.
Most of the launches seems to be in the first half or probably the early second half. Is my understanding correct?
That is right.
Okay. On your guidance of around INR 6,000 crores pre-sales next year, I just wanted to understand this as a two-part question. Firstly, if you could share your thoughts on what has been the response in the Worli project and Juhu project. Because obviously these numbers, four quarter numbers, obviously is towards pre-sales, so it does not reflect the momentum. Could you explain how is the momentum been? And also in your INR 6,000 crores of pre-sales number, what is the implied assumption, let us say, for this year? What is the kind of expectation you have for this year's pre-sales for Worli project?
Yeah. If you look at our unsold inventory, including the Worli project, we roughly have INR 12,000 odd crores of GDV. If you take out the commercial asset, because that is an asset that we would like to build out and monetize towards closer to OC, I would say we have close to INR 10,000 crores of unsold inventory.
We are factoring in around INR 2,000 crores of the INR 10,000 that we will sell out of the INR 6,000 guidance we are giving and INR 4,000 on the new launches. Embassy Citadel has been received pretty well and given that we only had 45 days in Q4 to launch this project and collect our sales, to do INR 800 crores then is quite commendable. We are quite proud about it. We feel Q1 as well, we already have some decent momentum on it. We believe that City Sales should contribute to INR 1,000 crores of the INR 2,000 from the existing stock.
Understood. My last question is on this entire cash flows and net debt number. This year, FY 2027, you will see a marked improvement in your collections at about INR 3,000 crores. How do you see the construction cost and then resulting impact on leverage levels? Would we start to see the leverage levels coming down? What is the timeline for the leverage levels, if you could give some color on that?
Hi Mohit. It is Sachin here. While we are expecting collections of roughly INR 3,000 odd crores this year, we also want to spend approximately INR 2,500 odd crores on construction. We want to really use our collections to keep pushing construction, get those milestone link payments to keep coming in. We might not see a huge reduction in debt for this year. What you will see, you will see the company in a much stronger position by the end of this year as we move forward, to be able to receive more inflow next year and then pay down debt probably over the course of the next 24 months.
Okay. Is there a comfortable level of net debt, let us say INR 3,000 crores, where do you see the net debt levels comfortable at? Or let us say like three years you want to go net debt free. Any targets internally around that?
Mohit, this is Rajesh here. We want to keep our net debt levels 2.5x or less. As Aditya said, this year, we want to spend all the collections or most of the collections on construction, so not a great reduction in the net debt numbers. But starting from the next financial year, we have a progressive reduction in the net debt levels, and we are comfortable with net debt levels of 0.3x because we want to spend on construction as well as spend on new projects over these two to three years. I would say that in the short term, 0.3x net debt is a comfortable number for us.
Okay. Great. Those were my questions. Thanks a lot.
Thank you.
Thank you, Mohit.
Next question comes from the line from Roshan. Operator, if you could unmute, please go ahead.
Yeah. Hi, good morning. Firstly, I am trying to simply understand this revenue recognition across the different key different subsidiaries in Embassy. You have the legacy Indiabulls, that seems to be on the completion and handover basis, and then you have this development management, which will be more on a percentage of completion method, right? I want to understand, did you just mention that the newer Bangalore and Mumbai projects would be How would the revenue be recognized, and I am just trying to understand when will that start reflecting in the P&L?
Yeah. So the legacy projects, this is Rajesh here. The legacy projects of the erstwhile Indiabulls Real Estate is coming up to completion and as we get OC, they get recognized as revenue. This is not only true for legacy projects, but legacy projects of NAM Estates as well as Embassy Developments . In current launches, where we just started construction, most of the projects were launched in Q3 and Q4 of last financial year. So something that will get recognized will be based on as we obtain OC, we will hand it to our customers and do some financial collection. That can be recognized for revenue with the corresponding cost. The DM projects is only a fee income that will be recognized over a period of construction as we progress in construction and as we collect the fees, that revenue will be recognized at that point in time.
Okay. Maybe is there any update on the revenue guidance in FY 2027, 2028 or could it be more like to the same?
We would refrain from giving revenue guidance. We have already given a pre-sale guidance and collection. I think we will stick to that at this moment.
Fair enough. Just a few questions on the land. We built some primary acres in the north, but this year, we all know, very dominantly a few large sales. Have you considered maybe monetizing that land as valuation comes along? It just would have helped the P&L and balance sheet, and also what do you expect the market value of this land to be?
Right. This is Sachin. Look, of course, every time when we get an offer for a land parcel that is not core and strategic to us, we always consider whether we should monetize it or not. As you have seen in our balance sheet and in our P&L for the last two years, we have been doing that. And wherever we have land parcels which are not mutated or scattered or the aggregation was not done by the Embassy Coin levels, we are definitely looking at monetizing that. We do have 500+ acres in north on Sohna Road. A lot of this land today sits as forest land. You could probably develop 75 acres of that land. Yes, we are looking at seeing if someone comes along looking at a different type of development out there. Of course, we would look at monetizing that.
We do not have an estimate of market value for it as of now yet.
Okay, fair enough. I have a question on the SEZ. Could you give us an update on what is happening there? Is there any development plans for the next 12-18 months, and what are the projects that you are envisioning? If you could just guide us on the SEZ a bit.
The SEZ, as you know, we had a scheduled issue going on with Maharashtra Industrial Development Corporation on which we have received a stay. The next hearing date is on June 12th. At the same time, I would love to say that we have approached the authorities, and we are trying to find a suitable date that we can settle this between us and them so we can develop this land. The most likely use of this land will be small and mid-market kind of industrial use. Part of it is well-suited for SEZ use, and now it is well-suited for warehousing. Again, industrial product play that you would get through this transaction once we have settled our issues with the government.
Okay. Thank you.
Next question comes from the line of Nikhil Kothari with Antara Capital. Please go ahead.
Hello. Good morning. Thank you so much for the opportunity. My questions are regarding the Embassy Citadel project. For the Citadel project, as I can see in the presentation, the completion date has been moved from 2022- 2035. What is the reason for such a delay?
That is just for our RERA filings. Our target date is 2031 or 2032. But we like to keep a little bit of a buffer also, given that this is a large tower, our first large asset in Mumbai. Actually, it is also in line with the market norms. If you look at most 300-meter towers, they give a generous buffer on their RERA dates.
Okay. There is nothing as such, there is lack of interest, right? Interest is really good, right, in this project?
It is really good, and honestly, if I have to tell you about Worli and all the supply there, we are positioned as a value proposition there. Also, given that the ticket size is intentionally smaller, and from a pricing point of view, we are coming in much lower than where I think the top developers are. We are just being a little bit humble about it, that we are conscious we need to build our brand, build the same luxury moat that we have in Bangalore, in Mumbai. That will take some time. Therefore, we are not shying away from discounts. I really think that this is an outlier product in Worli. I am also happy to say that we have more or less closed on closing Leighton as our contractor. I think Leighton is the best contractor in the country, probably a notch even higher up than L&T.
We have just engaged them, and we feel comfortable about the timelines that we have.
Okay. We have not officially launched the project yet, right?
We have launched the project. Excavation is going on and it is well underway.
Okay. Understood. Just one last question. What is the construction spend in such huge project? In the luxurious project.
Yeah. The total spend in Citadel, including all approvals, FSI, everything, is INR 3,000 crores. We have a generous INR 5,000-INR 6,000 crore plus surplus in this project.
Okay. Understood. That is it for me. Thanks so much.
The next question comes from the line of Sanjay Shah with Alpha line Wealth. Please go ahead.
Yeah. Good morning, gentlemen. Thanks for the opportunity. My main question was to really understand our company. What are the top three milestones investors should track over the next 12- 18 months, whether Embassy transformation is succeeding or not?
Yeah. I think the top milestones that investors should focus on is the pre-sale, is also the backed by collections, and is the eventual reduction of cost of capital will eventually come down. When we borrow this money to launch all these projects, and I hope everyone appreciates that we launched 16,000 crore last year. We are launching close to 20,000 crore this year. All that pipeline is on comparable terms of the largest listed developers in the country. To do that, we needed a decent amount of equity to do it. The raising of financing at slightly higher rates were what I term as a one and done exercise, and that will start graduating to cheaper financing and less debt as we start selling, as banks start seeing receivables.
I would say the top three are pre-sales, collections, and cost of debt and debt in general coming down over the next 12- 18 months.
My next question was regarding we have entered when really there is a rise in construction cost, finance cost, and the sale of real estate are getting a bit slower. That is what the market updates we get. How do we highlight upon that?
To be honest with you, we are not seeing that yet. There is a lot of noise about real estate slowing down, and we appreciate that this is a cyclical industry. If you just look at the Q4 launches, Verde, which sold out 80%-plus. Embassy Eden, which in Bangalore is a INR 20 crore-plus ticket size. INR 20 crore in Bangalore is as high as you can get. We have sold 48% in six months. Actually, we still think pretty robust traction on ground, and I think the top developers just stay on top of that funnel. While the market slows down, that consolidation only happens more. We are actually coming back into this whole residential game in a big way, where our consolidation is eat up market share. We are coming off lows. This brand is very, very strong, especially in Bangalore.
We're going to bring that same strength into Mumbai, and I think that's going to help us have some tailwinds to continue eating market share. Even as the market slows down and contracts a bit, I still feel we will be a bit of an outlier and grow market share. We feel pretty good. Also, if you look at the FY 2027 pipeline, it's actually a great balance between the luxury, the ultra-luxury, where we have Juhu, Sky Terraces, and Embassy One. Beyond that, it's actually a very fast-moving mid-segment product, which we feel is a perfect hedge to have as well, going into this stage of the cycle. So we feel pretty good. Costs have gone up a little bit. We do feel they will come down. We have a great procurement strategy where we've delayed non-crucial items, but at the same time, not stopping construction.
Because we are pretty paid up front and high gross margins in all our projects, we hardly have any JDAs. I think we actually benefit the most from this because our pressure will sustain the most. Most other developers who have land costs, a JDA ratio that they have to share, will find the cost increase hurting them a lot more. I think we are actually on a very comfortable place, even if costs go up a little bit. And real estate is a hedge on inflation. We obviously price it in. So the market should catch up to that. Maybe it will catch up, but eventually it will catch up to the pricing that the country will face given the energy shocks.
Really helpful, and thanks for your confidence. Good luck to you, sir. Thanks very much.
Thank you.
The next question comes from the line of Kevin Gandhi with CapGrow. Go ahead.
Hello. Thank you, sir, for taking my question. Sir, just a quick question. Right now, what is the cost of debt currently for the company? And second one, at this price level, are the promoters thinking of increasing their stake by buying from the open market?
Current cost of debt is around 14.8%, and Sachin mentioned our endeavor is in the next 12 months- 18 months, bringing this cost of debt down as all our projects start kicking in and cash flows start coming up. Sorry, the second question, I think I forgot.
Yeah. My question was that at this price level, are the promoters thinking of increasing their stake in the company by buying from the open market?
The price of shares today is low, and we have a shareholder debt today along with Blackstone. We have a shareholder debt of INR 1,100 crores, which we will convert to equity over a period of time. We are waiting for the market to correct, both the market to correct as well as our share price to correct, which will take a few more months maybe. Then we will up our equity in the company along with Blackstone.
Sir, just my last question of the cost of debt. How much decrease are we expecting from current levels across 24 months?
Our expectation is to bring it to 10% over a period of time. This will be a gradual decrease over the next 12 to 18 months.
Okay, sir. Got it. Those were my questions. Thank you.
Next question comes from the line of Kapil Agarwal, Sidakuan Associates. Go ahead.
My question is regarding the land purchase in Sohna. Whether that is located within Mushtaq Part area or it is outside Mushtaq Part? Why did it take time to purchase that land?
As I was mentioning before, the land is in Aravalli, closer to Sohna, closer to the Aravalli Hills. Part of the land is forest land. Part of the land can be cultivated and redeveloped. We believe approximately 75 acres can be developed of this land. We are working towards that, and we are putting a plan together on how we do that. But right now, we would just like to, in our investor deck, we have just shown it as land, because we are focusing on other high-priority projects right now.
I just asked because the Sohna market is doing very well right now. It is quite easy, the rates and everything, demand, everything is good. Why we are not, we can say, picking up this project? Can you explain the reasons for the same?
Even on the 75 acres, we have to do actually three seasons of cultivation before we can actually develop farmhouses. There is a whole process. It is not being ignored. It is just a little bit of a lapse in over time.
Sir, we have started the land conversion process. That is underway. As Sachin said, it does take some time for this to get done. It is on the back of our mind, but to be completely honest, the pipeline that we have launched and will launch this year and what we have actually for FY 2027 is very exciting. It does take a little bit of a priority.
At the same time, we are evaluating options of even disposing this land because only 75 acres of 12 portion that we can do, only suits really a resort or some type of a farmhouse bungalow. There is not a whole lot of FSI we can consume here. While the land size is high, management does not feel that there is a whole lot of value attributed to it. But we just want to reaffirm that we are not saying that there is no work happening. We are moving along the conversions and entertaining any offer that come around.
Okay. We have a very INR 550 crore in this financial year. It should not be capitalized into this. Why we have expensed something which P&L?
Whatever we could capitalize for the projects, we have capitalized. This is the cost that is taken to P&L because these are OC receipt projects which we have deployed on OC receipts projects. As we said in the previous earnings call, our priority in the first six to eight months was complete the legacy projects, make our customers happy. So we deployed capital to complete all legacy projects, sorted all the issues of all the legacy projects. And because it is OC receipt, we couldn't capitalize.
Actually, our total borrowing is in the range of INR 1,000 crores. If we can process that, then we can say interest for the year should be INR 700 crores. Out of which you're saying INR 550 is from OC receipt.
Yes. Most of it has been deployed in OC projects and in corporate expenses. Whatever we could capitalize, we have already capitalized.
Okay.
Also the INR 5,000 crore debt is including shareholder debts. Institutional debt is only INR 4,100 odd crores.
That is why I was surprised that on INR 4,000 crores, like you said, that is for the OC project. There is no such business project. I think it is interest which you are saying it should be INR 550 crores a year. This entire amount we have expensed out in the P&L. This is which I wanted to check.
So actually, maybe clarify that a little bit. While we borrow sometimes against our OC projects, so the money becomes kind of our GCP funds. We, for example, have used that to pay for the premium approval charges for Blue. What happens is that allows our Blu project to get going. So it is really kind of, maybe not, like how you said, an apples to apples comparison. But whatever we could capitalize, we capitalize, the rest has been expensed.
Okay. Thank you.
Thank you. Next question comes from the line of Rohit Chaudhary from Integrity Capital. Please go ahead.
Yeah. I have a question regarding your court case with KIADB, which says that the lease from KIADB Agreement ends in June 6, 2029. A year back, you actually sold 25 acres portion land to Lam Research from the same entity. What happens to this lease if the lease is not extended? Do we end up losing that revenue?
Firstly, we didn't sell land to Lam Research. We subleased a portion of the land, 25 acres to them. Just to clarify that. Mutually, we will go and seek an extension, which is very normal in KIADB. In fact, we have seeked extensions before on the same land. Lam Research is well aware that the current term ends in 2029. If the project is not done by then, and they are investing over USD 1 billion into a very high-end R&D fab. If it's not executed in that timeline, we will mutually seek an extension from the KIADB, which is common practice.
Okay. I have a second question for you. I'd like to pick up that question that you just answered that you will convert your shares from Blackstone at a future time. Does that mean you still feel that the share price is overvalued? I didn't understand your comment on that.
No, we actually think it's undervalued, which is why us and Blackstone would not like to convert our shareholding now because it will be diluted. We feel what's happened in the last few months has been a factor of two legal overhangs that the company has had. Now that those two overhangs are gone, the company has performed really well in that time. The overall market, yes, has corrected, especially the realty market. We feel that given a few months that the stock should come back and maybe we will revisit this conversation with Blackstone for the share conversion at the appropriate time.
Okay. Thank you so much.
The next question comes from the line of Amish Kanani from Knowise Investment Managers. Please go ahead.
Hi, sir. Sir, couple of questions on the launch that you did. The question is on the EBITDA margins that you hit. I understand that we will recognize the revenue when OC is received. My question is, sir, given that 5.9 surplus is looking like more than 50% of the GDV. On a steady state, say from October 2023 onwards, sir, how do we look at EBITDA margin, if possible? Some range, because right now it's negative and last year it was 21%. A good realistic company has given EBITDA margin in the range of anywhere between 55%-60%. Sir, if you can give us some range on a steady state EBITDA margin given the kind of premium launches you have.
Yeah. So look, I'd like to again, EBITDA is a P&L item. Again, it depends on what your revenue for that quarter or the year might be, which is again, based on revenue recognition and as projects get built. I'd like you to change your focus a little bit to the net cash flow margin that we will produce, so net surplus margin that we'll produce from our projects that we've launched and as we go into the future over the next two years. We expect that to be close to 50% over the course of the next several years as these projects get delivered. We're really focusing on that kind of cash coming into our system that will eventually help us to do more projects, do more BD, as well as kind of service our debt.
You are saying cash flow at some stage should reflect that kind of a number, is what you are saying?
Yes. Our net surplus margins will reflect that sort of a number.
Sure, sir. Sir, if you can explain us one, you have done quite a bit of detailed presentation and explanation by DM projects and launch date with CC and all. Only thing, in the DM projects, at least we will start to kind of recognize the revenue and profits upfront. I think one of the reason why the share price is affected is because of the losses and the current thing. The point is, if you can give us some sense of how those DM projects will get executed, where probably revenue and EBITDA will be recognized upfront, that will be helpful. Maybe for future presentation, that is a suggestion. Second, explain us how was the receivables sold being. It is a combination.
How does that initially get treated with the receivables sold being converted into debt and at some of position, how does it get? If you can explain that will be helpful. It is long, maybe I can take it offline, but very briefly if you can.
Yeah. I will try and explain that. So, as far as DM projects are concerned, as and when the project sells and we progress in construction, this billing will be raised on a quarterly basis and the revenue and the cost will be recognized in that particular year. So you are right, it is upfront, and we do not have to wait for OC for these projects to recognize revenue in a DM project. That will show a reduction in the losses and an uptick in the revenue over the next two to three years, both for Juhu project and the Sky Terraces project. We will show the construction is over the next three to four years. This revenue will come in periodically every quarter over the next three to four years. That is the first part of the question.
As far as sold receivable is concerned, while if it is an OC received project, which are few today, this will go into revenue, as we hand over possession. If it is still an OC to be received project, this will continue to stay as liability as an advance received from customer. And once the OC is received is when we recognize this as revenue. But this cash flow surplus, collection which we will do over a period of time, over the next two, three, four years, as we do milestone completion and we keep collecting from the customer, this will be used, A, for construction and second, will be to service the debt. So it does not have to wait for OC received or something like that to basically pay down debt.
Sure. That clarifies some further. And sir, one last question was, if possible, the promoter's leverage, sir, I think is one of the reason why probably share price is affected. If you can give us some sense of if at all there is some plan of how to slowly reduce promoter's pledge. I know it is not a company-related question, promoter-related question, but if you can give us some clarity, that will be really, really helpful, sir.
On the promoter pledge, I will give a broad perspective. See, promoter pledge had pledged about 47% of the promoter's shares as pledge before this entire NCLAT matter came up. And because the share price dipped, we had increased that 47% pledge -68% pledge. And no additional debt was taken. Mind you, the promoter had not taken any additional debt. It was only because the share price fell that additional shares were pledged. And now that the share price is moving up, this will come back to old levels, to 48%. And then what we understand from the promoter is this, they plan to pay off this debt over a period of time. Maybe in the next two to three years, this pledge will keep reducing and these shares will completely unpledged.
Sure. That's helpful. Thanks a lot and all the best.
Thank you.
Next comes from the line of Raghav with VIRA Equities. Please go ahead.
Hello.
Hello.
Am I audible?
Yeah.
Yeah. Congratulations on the set of results and positive legal outcomes. My question is regarding the Nashik SEZ residence land for which the case is going on. If there is a positive outcome of the land, then how we are going to monetize the property?
One thing would obviously to have a positive outcome with MIDC and the government on this. The second thing that we are in the process of doing is basically doing a debonding exercise. So converting the land from SEZ to not having an SEZ status out here. We are already underway in that process. This will take several months to complete, but we expect to hopefully get that done during this fiscal year. Then the idea would be to look at maybe doing industrial plotted out here for small and medium-sized manufacturing companies. We think there is a lot of demand out there in that Sinnar belt for companies that are looking for land to do light manufacturing, to put it to industrial use. So we actually do believe there is quite a bit of demand out there, but not as SEZ status.
We do have to remove that to be able to sell the land.
Okay. Thank you for the answer. One more question was regarding this NCLT issue. Are there any legacy regulatory agreements which are not closed yet? So in case any future similar things happen, like for Indiabulls Group. Are those old agreements closed from this?
We don't know of anything else that's out there today that can harm the company and harm the stock. It did catch us a little bit by surprise, but I think we've overcome and we're looking forward out here. I don't think there's anything else out here.
Okay, thanks for the answer.
Thank you. Ladies and gentlemen, we would like to thank you. This was the last question today. We now hand over the call to management for closing remarks.
In closing, FY 2026 has been a transition year marked by the integration of the merged entities, an accelerated launch program, and the resolution of legal overhangs. The reported P&L reflects a mismatch of revenue recognition, timing, and merger accounting. The underlying operating fundamentals point to a platform with strong forward visibility and cash flow generation. We enter FY 2027 with confidence in the strength of our launch pipeline and a strong balance sheet position to support our INR 6,000 crores pre-sales guidance and our INR 3,000 crores collection target. With that, I'd like to close today's call. Thank you.
Thank you. On behalf of Embassy Developments Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.