Please note that this conference is being recorded. I now hand the conference over to Mr. Kshitij Jain from Godrej Properties. Thank you, and over to you.
Thank you. Good afternoon, everyone, and thank you for joining us on Godrej Properties Q1 FY 2025 Results Conference Call. We have with us Mr. Pirojsha Godrej, Executive Chairperson, Mr. Gaurav Pandey, Managing Director and CEO, and Mr. Rajendra Khetawat, CFO of the company. Before we begin this call, I would like to point out that some statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the results presentation. I would now like to invite Mr. Godrej to make his opening remarks. Over to you, sir.
Good afternoon, everyone. Thank you for joining us for Godrej Properties' First Quarter Financial Year 2025 Conference Call. I'll begin by discussing the highlights of the quarter, and we then look forward to taking your questions and suggestions. I'm happy to share that Godrej Properties delivered a robust quarter, registering a multi-fold growth in booking, operating cash flow, and earnings. GPL achieved its highest-ever net profit in the quarter of INR 520 crore. The residential real estate sector in India has been strong over the past three years, and we believe the sectoral tailwinds will continue over the next few years as well. The significant levels of business development we executed in previous years at favorable terms continue to allow us to scale our bookings and margins, which in turn will lead to strong earnings growth in the years ahead.
GPL achieved the highest quarterly booking value and volume across listed developers in India for the second consecutive quarter. Booking value grew by 283% to INR 8,637 crore. Booking volume of 8.99 million sq ft of area is the highest volume sold by any listed developer in India, surpassing GPL's previous best of 8.17 million sq ft in Q4 FY 2024. This strong growth can be attributed to an extremely strong customer response to some of our new launches during the quarter. Godrej Woodscape, Bengaluru, achieved a booking value of INR 3,156 crore from 3.4 million sq ft of area sold, and Godrej Jardinia, Noida, achieved a booking value of INR 2,377 crore from 1.6 million sq ft of area sold. Both these projects were GPL's most successful projects in their respective markets.
With these two projects, GPL has now achieved a booking value of over INR 2,000 crore in six projects in the last four quarters. GPL's net operating cash flow grew 737% to INR 988 crore, led by a 54% increase in collections to INR 3,012 crore in Q1. This was also supported by deliveries of 2.7 million sq ft. From a business development perspective, I'm happy to announce that Godrej Properties added two group housing projects across Pune and Bengaluru, with an estimated booking value of INR 3,000 crore in the first quarter. The pipeline for business development is looking very strong, and we expect Q2 to be another good quarter for business development additions. GPL also recorded its highest-ever reported PAT numbers on a quarterly basis. Our total income for the first quarter increased by 25% and stood at INR 1,638 crore.
Our EBITDA increased by 237% to INR 774 crore, and net profit increased by 316% to INR 520 crore. These were all benefited by a revaluation of our commercial building, Godrej Two, here in Mumbai. We started financial year 2025 on a strong note and hope to build on this momentum through the launch of a large number of exciting new projects combined with strong customer intake. While reported cash flow and earnings growth have been strong, we believe these parameters will see a sharp upward trajectory in the quarters and years ahead based on the high bookings combined with GPL's increased economic interest in these projects. On that note, I conclude my remarks. Thank you all for joining us on the call. We'd now be happy to discuss any questions, comments, or suggestions you may have.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone 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. We have a first question from the line of Kunal from Bank of America. Please go ahead.
Sure, thank you. Pirojsha, my first question is on your margins/profitability. I know last quarter you gave your imputed margins for fiscal 2024, which showed quite a bit of an upward move. I wanted to check, given what you've seen in Q1 and the way pricing has been behaving more recently, would you expect us to anchor our FY 2025 and 2026 expectations around FY 2024 levels? Would you suggest an upward bias to that?
Thanks,Kunal . Of course, the effort will be to continue to improve margins, and we'll continue to provide that pro forma P&L information on an annual basis. In Q1, I think we're very happy with the kind of numbers we've seen. There's a similar but slight uptick in margin over FY 2024 levels, and I think given the high booking value, we think the imputed return metrics are at a very attractive level. But certainly, we will continue to provide that on an annual basis. And I think FY 2024 is probably a reasonably. I think it'll be reasonably close to FY 2024 levels this year as well, but hopefully we can improve it a little bit.
Understood. Okay. My second question is that from an area perspective, you're actually doing a pretty big number now on a quarterly basis in terms of sales. So I wanted to check if there's any tinkering you think you would need to do on the delivery side just to make sure that project completions, , et cetera, would keep up pace over the next two or three years.
Thanks, Kunal. Thanks for the question. Essentially, you're right. Our scale has multiplied, and what we've been doing is a lot of investments have been given on the capability side. You would appreciate we always had a zone structure where we had strong execution teams. In fact, we're the only company which has a cycled operating model, just something like a bank branching model where you have a self-sufficient unit to lead scale. But over the last 9-12 months, what we've done is we've kind of invested in building up capabilities on certain engineering and execution sites in various zones as well as in HO because we could clearly see this as a lead indicator for the future. And coupled with that, we've also managed to bring some very good contractors in projects which we've seen sort of a sold-out, like the Godrej Reserve.
We've got L&T in it, a very prominent contractor. So yes, this is something that has been on the radar for a good last 12 months, and now we're almost ready to execute the strategy.
Got it. Then my final question is your progress in NCR and Bengaluru has been there for everyone to see. Specifically on Mumbai and Pune, I think the presentation shows that by and large, you sort of converted 10% of your launch pipeline to actual launches in Q1. How are you sort of thinking about your ability to push through the rest of the stuff in the pipe, also noting that Maharashtra could have elections towards the end of Q2, start of Q3?
You know, I could see if I take a step back and give you sort of a background and then maybe give you a year in pictures. Mumbai's zone has been a very strong turnaround we've seen in the last two, three years. It used to be about INR 1,500 crore-INR 1,600 crore in FY 2022. In FY 2023, it doubled to about INR 3,000 crore. The last year, it became the second largest zone in GPL and did about INR 6,500+ crore. And the good thing is all the great work of BD in the preceding, say, 18-odd months has given us a strong pipeline, which is getting into launch.
So coming to your specific question on the very short term, which is three months to next six months, we have a series of projects which are coming in launch, and some of which we've almost secured the approvals, and some of which are almost last leg of road, which hopefully will be coming on time. And to give you a sense, we will have a new tower launch coming up in Godrej Reserve. There's been the highest-selling project for not just Godrej Properties but entire Mumbai market. So I'm hoping that will be a very good launch. We have something coming up in Bhandup and Khalapur as plotting launch. So yeah, we have a robust short-term sort of a pipeline. Again, similar trend we are noticing in Pune as well.
We have a series of launches planned in Q2, and some may move to Q3, but looks to be very much within the quarter. To give you a sort of sense, we have sort of a large important cluster launch in Mahalunge and looks to be more or less secure from approval. Last stage of approval in process, Manjari. And then there is a low probability to medium probability of some retail in one of the Koregaon projects that we had acquired. So yeah, I mean, we've been very confident, Kunal, that we will see. Agnostic to these two zones, I would say generally in our business, we would appreciate if the combination of approval timeline and if the approvals are advanced stages, either certain launches happen in this or the other quarter, but more or less kind of secured.
Got it. Very useful. Thank you.
Thank you.
Thank you. We have our next question from the line of Puneet from HSBC. Please go ahead.
Yeah, thank you so much, and congratulations on great numbers once again. My first question is just continuation of what Kunal also asked. Do you see any risk of delays in approvals in Pune and Mumbai given the upcoming elections?
Yeah, I mean, internally, we have, frankly, a larger set of approvals that we continue to do that, and we do see in any approvals there is that risk. But the ones that I talked to you right now about were most likely high probability kind of cases. Yes, there is always going to be that risk, but it seems very likely that these should come in. More or less 80% of these will come in.
Okay. That's interesting. Thank you so much. And secondly, if you can talk a bit about the projects which we've been waiting for a while, Ashok Vihar, Worli, what is the progress there?
Yeah, so I think that unfortunately continues to be a bit delayed. The essential issue there is the trees on the sites and how they are to be treated. NCR, unfortunately, over the last 12, 18 months, there's been a huge focus on tree removal and there's several matters in the court. So it is taking longer than we expected to get that approval. We're, of course, working full steam on it, but I think visibility in terms of exact timeline, frankly, is not currently available, and it's not likely to be a kind of this quarter-next quarter launch. But we're hoping to do it by Q4 if possible. But to be perfectly frank, that has moved slower than we'd have liked.
Of course, I think given the number of projects we've added, both NCR and elsewhere, we are quite confident of our ability to be able to make up for any gap in short-term sales by the delay of that launch.
Has it impacted your underlying IRRs given that there is a delay on the other side? There could possibly have been an appreciation on the property price as well. How do you think about the IRR change if it were to get delayed to next year?
I think the delays have also had quite a lot of benefits in terms of price appreciation. So I'm not sure the IRR would be negatively impacted, but we'd have to work out the exact numbers. But certainly, the absolute profit and equity multiple would be sharply increased. And just as a reminder, the land payments for Ashok Vihar are being paid in tranches, so we're not sitting on a full capital outgo on that one, which would, of course, dampen the IRR even further. So actually, to be honest, the returns in Ashok Vihar are looking very exciting. And if anything, the delay has enhanced them quite a bit because of the price appreciation that the market has seen. But the challenge is just obviously making sure we're able to launch that while market conditions are as favorable as they are currently.
That's helpful. Thank you. Lastly, if you can talk a bit about your experience in Hyderabad market. You named it out as the fifth city. Also, if you think there could be potential to enter into tier two cities as well, given that property prices there have been so mature. Do you see a progress in a developer-led model there versus a self-build, especially for tier two cities?
So the interesting thing that will probably surprise a lot of people about Hyderabad, I think last financial year different reports looked differently, but really all reports were indicating that Hyderabad's residential market, which used to be a lag to Bengaluru, has actually exceeded Bengaluru in terms of its market size. And if you see some institutional reputed pan-India sort of developer, there's hardly much of need. So I think there is a huge opportunity to kind of tap into. We are, of course, taking one step at a time, so we have been very selective on the micro market we wanted to be in. And the two transactions that we've announced are in some of the most talked-about places where launches have been blockbuster by competition or have the most aspirational from a pricing and positioning point of view.
So I think, and that's where we want to see how this moves up. These are all planned for immediate launches . The design is going very well in terms of progress, so it gives us very high hope in terms of our opportunity to unlock it. On the question of the other cities per se, frankly, we're not really looking at because the markets where we're operating, we see a great headroom to improve our percentage of market share, and we are selling faster than frankly we had underwritten them. So there's no point of getting deflected into newer cities. But the only thing that we would see that we do opportunistic deals in plotting where we see there is a good capital churn available to turn around getting in, get out kind of a strategy.
That is what we will, of course, keep on evaluating, but certainly on the gross housing side.
Understood. That's helpful. Thank you so much, and all the best.
Thank you.
Thank you. Before we take the next question, we'd like to remind participants to press star and one to ask a question. Next question is from the line of Praveen Choudhary from Morgan Stanley. Please go ahead.
Thank you. Thanks for taking my question. Obviously, congratulations on such a good result, especially the pre-sales. I have two questions. First one is on gearing. Your gearing level is 71%. What's the plan, whether we want to take it down with equity offering or we think that the cash flow and collection will take care of it itself? The second question is, and I could be wrong here, but it seemed that your other income number was very high for this quarter. May I check, other than interest income, what drove that number? Because the margin is high for the reported number, not the pre-sales number. Just to clarify, did you say that first quarter embedded margin was higher than FY 2024 or similar to FY 2024? Thank you.
Yeah, thanks for that, Praveen. I think the embedded margin, I did say, was slightly higher than financial year 2024, but broadly comparable, and we'll release more detailed guidance on that on an annual basis. The change in other income was largely the revaluation of Godrej T wo, a commercial building we have here in Mumbai. And the first question was?
Gearing.
Gearing. Yeah. So I think we've guided typically so we'd like to be in a gearing range of 0.5:1. So we're kind of towards the middle end of that range and quite comfortable. We are seeing a lot of opportunities on the business development side, and I think, frankly, we're selling faster than we expected on the existing launches. So I think it's an interesting position that we're in. The sales are very fast. I think business development opportunities are also very good. We do expect operating cash flows through the rest of the year to be very strong. We guided to about INR 15,000 crore of collections for the year. We did about INR 3,000 crore in the first quarter, but are confident of meeting and hopefully exceeding by a bit the annual guidance.
So I think certainly a moderate level of business development to support reasonable growth, I think we have more than well enough capitalized to do. If we see opportunities beyond that, we wouldn't rule out an equity range if valuations are also in an attractive range. But for now, I think the focus is on making sure we generate a lot of operating cash flow, bring a lot of the new projects we've already added to launch, and close some of the exciting business development opportunities we're seeing in the pipeline.
Very clear. Thank you so much, and congratulations again.
Thank you.
Thank you. We have a next question from the line of Abhinav Sinha from Jefferies India. Please go ahead.
Hi. Congrats to the team on the strong numbers for the quarter. A few questions. So firstly, on the pace of operational cash flow and project delivery, are we expecting these numbers to largely sustain at the current levels, or we can still see some on-and-off quarters?
So I think, Abhinav, in this industry, we always see some quarterly movement. But I would say overall, we're very confident of meeting or exceeding all our guidance for the year. So from a booking perspective, it's at INR 27,000 crore. I think we're well on track to do that given the strong start in Q1. And actually, we're very happy with the strong start in Q1. Typically, UPL had a little bit of a sluggish start in the first quarter after everyone goes all out in Q4. So quite happy to set the right tone at the start of the year this year. I think our collection average will certainly move up for the rest of the year. We've guided to INR 15,000 crore for the full year, which requires quarterly collections on average of INR 3,750 crore.
We think there will be a little bit of a skew towards the second half in that, but we will see a big ramp-up in both collections, which should lead to also strong operating cash flow growth over the rest of the year. I think the question to ask is, how do we want to look at free cash flow given the opportunity on the business development side, which is the path that is a little less certain. But certainly, visibility on deal flow remains very strong, and Q2 looks like it will be a big quarter for business development.
Great. And Pirojsha, since you're mentioning that, what are the focus areas for BD near term?
So I think the primary focus, as Gaurav was also saying, remains on these top four markets of Mumbai, NCR, Bengaluru, and Pune. We've added a couple of projects in Hyderabad. We'll probably now wait to launch those. We're fully confident that everything there is on track before we add more on the group housing side. Plotting developments, we're adding across a wide range of markets as per the strategy we've laid out. But within these four cities, I think it's more about where we see opportunities and what specific deals look attractive to us. But I would expect good additions across all four.
Right. Lastly, we'd also like to hear from Gaurav perhaps on this. In Gurugram market, we have come across some bit of wobble from market participants in terms of demand. You guys have a large launch there, which is ongoing. Just wanted to hear your thoughts and how that market is positioned. Can we still see price and volumes to sustain at high levels?
Thanks. Thanks for the demo. Actually, quite the opposite. If you see, when we were building the Gurugram portfolio from acquisitions, right, just to give you some context, we did a series of acquisitions from Golf Extension Road, a project called Godrej Aristocrat. Then we bought something in Sector 103, which, as you rightly said, is going in launch in this quarter. Then we bought something in Sector 89, which is called Godrej Zenith. And we, of course, have two land parcels we had bought in auction from the authority in Golf Course Road. And very frankly, when we were doing these acquisitions, the idea was to ramp up the portfolio and look at a three year sort of a model for this to sustain. But as a good problem had been, we saw Aristocrat selling like INR 2,700 crore back in the launch with a great price appreciation.
Similar questions were there in the market even when we were launching last quarter. The project called Godrej Zenith, we did about INR 3,000 crore. But this was quarter four, sorry. But in the previous quarter, a number we were frankly not very sure we were to go through some price appreciation. We had taken in Zenith, we sold about INR 800 crore, right? So now I think for us specifically, we are seeing inventory moving through the roof. Actually, if you ask me at the time, I had one or two projects I would like to manage inventory and increase price more. And we are seeing good offtake. So it's about balancing, right? That if you have a residual inventory is not very large, how much do you want to select what price? So I don't see pricing pressure at the moment.
Yes, there is a bit of consolidation that in the initial first 6 to 18 months of NCR offtake, especially in Gurugram, there was like everyone was practically able to push inventory. I think somewhere that consolidation and need for better brands will happen, and I'm sure we would be beneficiary of that, especially in the later part of the quarters when we'll have our luxury launches coming in Golf Course Road. So yeah, I mean, when I suggest that the only risk, if you frankly ask me, how do we balance the offtake with good inventory management, still the time more really gets added.
Great. All the best to the team.
Thanks for the demo.
Thank you. We have a next question from the line of Pritesh Sheth from Motilal Oswal Financial Services. Please go ahead.
Yeah. Thanks for the opportunity. So just taking forward the previous question, right, from demand and environment perspective, with the kind of response that you're getting, just want to understand what's exactly working for you guys. Is it just the product and the right ticket size you are bringing in those certain markets, or it's equally strong across the segment in terms of demand? So just if you can elaborate on the kind of demand that you are seeing.
Actually, that's a great question. Essentially, we are a very product-opted company. We don't, when we buy a land, there's some of the research we do, even if we are very strongly and dominantly present in the market. But even after buying the land, our process to design the project is very, very quantitative and qualitative research led. So we do a lot of primary research surveys. We use data and try and define what is the right concept. So we typically do three concept designs, and then we go back to the market, do some concept testing with prospective customers, take feedback, and finally decide a concept. Thereafter, we do a lot of analysis and analytics in terms of our previous inventory, competitive inventory, and do assessments on what is the right sweet spot from a product mix point of view.
We tend to be very biased towards end users purely because that gives you countercyclical opportunity than just riding through a cycle. So that's the sort of a DNA in terms of thought process that designs something for end users and be very optimal product. I think that piece for us fortunately has worked exceedingly well across markets. And that, I think, is the probably long-term approach to build up an institutional framework of building up the scale. And on top of it, while we don't really share publicly numbers, what is even heartening is we do these sales not just by great booking value. Our cost of sales is extraordinarily low when we see competition. We don't do these typically back-ended schemes. Our 99% of last quarter was all front-ended sales, 1% because the tag of some project is OC, which gets access PLP.
So just focusing on great products and attracting the right customer and not really following the narrative of the pressure to sell more, I think that's the DNA we've built. I think incidentally, we're lucky. I think that customers are able to find value in it, and we are selling in bulk volume. But I think agnostic to that, just seeing product obsession leads to long-term sustainable growth. That's the kind of approach and strategy we have.
Sure. And just follow up on that. So kind of price growth that a couple of your markets have seen, especially NCR and to an extent Bangalore as well, right, with those price increases coming to a certain ticket size, getting too pricey in terms of affordability, or if you have a good product to back that, there is enough demand for those higher ticket sizes as well?
I think it depends, right? I mean, it depends on you have to always have feet on the ground to assess the opportunity to increase prices. Big picture, if you ask me, pan-India, there are some markets which have not really taken from a price appreciation story like if you look at Pune, I think that is going to be a market which should start surprising people towards Q3, Q4, early Q1 next year across developers. But yeah, I think, yes, you have to be careful in terms of pricing your product. So if your underwriting is conservative, your ability to maximize price without the pressure is there. And without the reason that, yes, you have to intentionally just overstimulate the market, that also is not there. I think having a balanced one is there.
The opportunity for Godrej Properties that is in markets, we see that we have lower inventory. We take a punch on increasing the price slightly higher than we would ideally want just to actually just slow the sales enough that the launch is successful, but our margin profile increases. And when we see we have good inventory lined up, then we make the pricing slightly more attractive. So that's more like portfolio management strategy we use. But yes, overall macro, there is a clear circular trend of price growth, and we are continuously enjoying that for the moment.
Sure. That's pretty helpful. Second, on launches, so we had a very strong start for the year. How does Q2 look in terms of launches? I mean, obviously, it's a little short term, but if you can guide us on that. And secondly, there were certain projects in terms of the size that was launched in Q1 was definitely probably higher than what you would have initially estimated for. So any revision in terms of your launch guidance that we can expect maybe a year or two down the line, or you will still stick to that kind of number?
I think first of all, it's a very short-term quarter two. We, of course, don't give guidance. But I think directly, if you ask me, it looks to be a good probable number that we'll hit, which is when we do estimation internally. Very important, like a must-have is delivering the annual guidance and, of course, exceeding the annual guidance. And we do typically run rate of what is a quarterly run rate. And that's like the bare minimum we anyways have to achieve. That's the way our mindset is. And then there is, of course, strategy put in place that what are the other projects that we can push numbers, and if certain approvals come late, how do we compensate for that? And sometimes when all of this comes up in place, you see a blockbuster quarter.
Sometimes one or two slips happen, then you see the next quarter being exceedingly well. I think quarter one, we saw extremely well because some of these were being tracked for even quarter four, which caused the slip over to quarter one so we could kind of maximize on it. I think this is going to be that year where our brand will probably look at full potential if last years are only indication. This seems to be a very exciting year. Yes, we do see there's an upward bias and upward risk of beating our own estimate, but I think it's too early to really comment on it. We would rather always stick to our guidance, but fingers crossed we might surprise you.
Sure. That's it from my side and from the best.
Thank you.
Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone. Next question is from the line of Mohit Agrawal from IIFL. Please go ahead.
Yeah. Thanks for the opportunity. So my question is, given that you have such a large scale now, why would collections on a quarterly basis, the customer collections, continue to remain volatile, especially fourth quarter seeing a sharp jump, and then the next quarter we see normalization? My assumption was that with such large volume of ongoing projects, shouldn't collections be more like a stable number with kind of a more predictable growth and some impact, obviously, coming in from launches or completions? So just would love to have your thoughts there.
So I mean, see, if you go back and see, typically, the collection quarterly run rate that we've always had, quarter one usually is a little slow because collections also link to late-stage payments. So when you have later part of the year, when you have a lot of these OCs to start kicking in, you do see a jump of collections run rate. But this was frankly a bit of a different year where our last year, if I remember, collections were something around near about INR 2,000 crore. This year, we're about INR 3,000 crore. And yes, I mean, ideally, I would have wanted us to do more, but exactly on our internal estimate. Just to share with you some numbers, we track something called as collection efficiency, which is basically how many customers tend to pay you within 30 days of raising invoice, right?
The industry median will be about between 60%-70%. Last quarter for Godrej Properties was 94%. And if I look at some advances of some customers pre-paying and paying us on time, it's actually crossed 100%, which is very unheard of in the industry. So I think collection run rate is very well. I think the real important thing for us would be that the H2 of the year, which looks to be quite important from our calendar and all, if we are able to do that, we will surely meet our guidance. There is, in fact, slight opportunity to improve that as well.
So to add to that, I think the basic thing we want to keep in mind is that these years, couple of years, bookings are likely to reflect as collections. So the last two years, booking growth has been 84% last year and 55% the year before. So you are likely to see very sharp collections growth when you have a base like that. And a very rule of thumb way of estimating it, I don't expect it to be fully accurate by any means, but it is something we track with kind of a rule of thumb. Approximate collections for the current financial year should be something like the previous two financial years' average booking. So we would be the last two, three years, if you check, our collections would be within kind of a 10% range of the average of the previous two years' booking.
Hopefully, we can do that this year as well. We are extremely confident of meeting or surpassing our INR 15,000 crore collections guidance for the year. Very clearly, I think in a very rapid growth phase, such as the one we're in, there will be a lag between bookings and collections just because of how the customer contracts are where you're selling at launch and then collecting as you construct over the next couple of years.
Okay. Understood. My second question is on business development. Should we now understand that essentially you are looking to add projects to replenish your sales plus a growth element, or are you still looking to build a pipeline? So in which case, it could be substantially higher than while we know your guidance, but it could still be much higher than that if you get opportunity. Or are you just now looking at replenishing your sales and then looking at a growth number on that? So yeah. And in that context, how do we see the land spend also stabilizing, basically to 10%-15% of that BD target?
Well, there's a little bit of both of those things. I think we had made a disproportionate scale of investments a few years ago based on the equity we raised and our reading of the market being at the early stages. I think while we fully expected the market to improve, frankly, the visibility on sales has been even stronger than we had ourselves expected. So some of these projects, like our Bengaluru project, where we sold a very large percentage of the project at launch last quarter, we would have expected sales to be a little bit more staggered there. So I think the importance of replenishing that is now kind of a little bit more urgent in the sense that the inventory is moving faster than we expected. And also, the growth rates are much faster than we expected.
So again, we expected rapid growth, but 84% last year. And on that base, at least 20% this year, but hopefully, we can do quite a bit better than that. Does mean that BD is going to also have to keep pace to some extent. And our overall reading of the market is still that we are at a good stage in the market, but there are several years to run in this cyclical upturn where we remain confident of kind of the valuations being attractive at current levels. So while we are focused largely on kind of replenishment and growth, I think the requirement for that has increased given the kind of scale of growth we're seeing. And if we feel that the scale of growth can be maintained, we would like to pursue that.
Okay. And my last question is, again, on business development, has the threshold on, let's say, a minimum GDP per project evolved or changed over the last few years, considering that you have a much bigger scale now? And in that context, would you be open to looking at, let's say, redevelopment projects in Mumbai? Yeah. So your thoughts there.
I think broadly, several years ago, we said we don't want the very small projects. So we, for example, don't think we can create at least INR 100 crore of post-tax profits on a project. We prefer to avoid those because at the scale, they don't really move the needle and kind of add operational complexity. But we are a little reluctant to go the opposite end of the spectrum as well, where we only want to do very large projects because those have their own drawbacks in terms of kind of timelines for approvals, kind of timelines to execute. So I think mid-size projects where we feel confident we can generate at least INR 100 crore net profit, we'd still be open to.
Though I think overall, our average project size and profitability expectations have inched up, but we've not made a bare minimum threshold that is higher than we had a few years ago, which is up to INR 100 crore.
Perfect. Thanks a lot for answering my questions. All the best.
Thank you.
Thank you. We'll take our next question from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Hi, team. Congratulations on a great quarter. My first question is, so we have seen the pace of acceleration and the pre-sales has been outperforming.
Can you use your handset mode, please?
Yeah. I'm using handset only. Is it better now? Hello?
Can you speak louder?
Yeah. Is it better now? Can you hear me now?
A little better, yeah.
Yeah. So I've seen that the pre-sales has been; there's a huge outperformance, which we have seen in Godrej related to pre-sales. We just wanted to pick your brains on, in terms of deliveries and execution on the back end. So what kind of measures you have taken on the contractor ecosystem on deliveries, on execution? So on the entire supply chain, are you seeing any challenges there? Because now we see significant ramp-up in your deliveries in coming years. So what kind of steps you have taken?
Thanks, Parikshit, for the question. In a combination, we started the journey a few years back where some large procurement items we had started standardizing and also procuring centrally just to get economies of scale right. This was a bit ahead of the curve a couple of years back, but now it's coming very timely. It's that tiles, faucets, all of this are centrally procured. We have also got into a bit of lifts and trying to standardize that as well from vendors. These are high-ticket items. Second is, from suppliers' point of view, things like R&D and vendors on steel and cement, we again have longer ties to do that. On the third part, which is the actual execution contractor ecosystem, we have a combination of models, right?
So for projects which are blockbuster, almost fully sold out, or more or less sold out launches, we are trying to get the top-of-the-line contractors and give it single contracts of core and shell and maybe separately look at finishing contracts. But projects which are slightly mid-size and all, or we've done phase launch where we tend to work with contractors who have delivered well for us and have got great relationships with us, but it's sort of a mix of, say, two, three contractors in a single project so that they can aptly execute to the scale that they have the capability to it. So I think it's a combination of these frameworks, procurement strategy, and vendor strategy, which is kind of coming very handy for us right now.
Okay. So my second question is on, so when I see your guidance on pre-sales and when I see the mix, so you have added a new geography. So your entry is basically Indore . So I just wanted to get some sense. Do you have any clear thoughts in mind on what kind of numbers or what percentage of plotted sales will contribute to your overall pre-sales or in the near- to mid-term? So how big can this be as an opportunity for you?
I think, frankly, it depends, right? I mean, plotted is never going to be the dominant part of our business. Something we even said a couple of quarters back as well. I don't think so. In the very near term, we see this from a top line going beyond 10%-15%. But yes, plotted also gives you a great opportunity to, one, address the market need. It's a very quick turnaround. And profit distribution is also a little faster. So yes, it is going to be a minority part of our business, but yes, it does add value. So to the extent of 10%-15% here and there is what we like to pursue, but not like it's a very dominant strategy and we get obsessed about it and want to build a huge value on it.
Okay. Any comment you'd like to make on the project Reserve? Any update there regards to some issues which had come up on approvals and also on the commercial project where we've seen that OC has been revoked? So if any color on that would be helpful.
Yeah. So on Reserve, we have not received any notice from any government agency. There has been, of course, as was reported, a little bit of to and fro between these agencies. As of now, the project continues in full swing. We are in full compliance with all the laws. We have all our approvals in place. And to be honest, some of these we believe not very practical because if you look at these kind of parameters from such areas, lots of Mumbai would end up getting covered by these. So as of now, everything's fully on track there, and there's no challenge there. We'll, of course, keep you posted if anything changes on that. Similarly, in Chandigarh, we were a little surprised to get this notice. It's a project that was delivered almost 10 years ago.
We believe there's a misinterpretation of what exactly the law said, and we are in full compliance, and we're confident of having this issue fully resolved either directly with the department or through the courts. So that also, we are anticipating, hopefully, bringing to a suitable solution over the next few months.
Okay. And just the last question, Pirojsha, on the capital allocation bit. So I just wanted to understand if you have to take a single location exposure, say, a large land parcel comes. So what kind of capital allocation do you think you could make? I mean, if, say, it's INR 1,000 crore or INR 2,000 crore, so what could be a comfortable limit where you would see that we can write a big check?
Yeah. I think we wouldn't have any predetermined size in mind. Depends on the opportunity. Obviously, the bigger the check, the more confident one would want to be on the returns. The higher returns, one would hopefully want. But I think one of the advantages is that probably only a handful of developers who in any given market can write checks of the size we can. So happy to look at those opportunities as and when suitable. But we are not necessarily of the view that it is better to only do these very large projects. We see a lot of opportunities in projects that can be turned around more quickly that can be then reinvested into new projects.
So I think the broad indication of what kind of business development we'd like to do is probably what we've actually done over the last few years, which is we have been pushing to get into more premium markets. And I think that one of the questions is how our launches are doing so well. I think a lot of it is the fantastic work that Gaurav and the team have been leading. We've gotten much sharper in our capabilities, I think, on design, planning, market research. But certainly, we've also gotten much sharper in our ability to pick the right sites, be more centrally located, be where customers are really excited with the location of the project in addition to us as a developer or the product they're buying. So I think that has been one concerted effort to focus on high-quality locations.
From a size perspective, we think we can create very strong products in this 10 acre, 15 acre kind of parcels that would be the typical of what we do. Of course, we are looking at larger parcels for plotted development given the nature of those developments.
Okay. Sure. Thank you. Those were my questions.
Thank you. We have a next question from the line of Yash from Stallion Asset. Please go ahead.
Hi. Thank you for the opportunity. I just wanted to understand your slightly longer-term view, let's say, four to five years. I mean, given the strong uptrend we've seen in real estate for the past at least 2 years and all the players in the sector are reporting really good results, do you think that we can sort of grow our bookings by at least 28% CAGR for the next four to five years? Or what's your long-term sense on the industry and for your company?
Well, I think the long-term prospects of the industry, we think, are extremely exciting. If you look at the kind of stage of growth the country's in, we're already the fastest-growing major economy in the world. I think most economists project that to continue over the next couple of decades. What typically happens at this stage of economic growth, as we've seen in China and other countries, is rapid urbanization, of which obviously the real estate sector and particularly the residential real estate sector is a large beneficiary. So we think from a structural perspective, over the next couple of decades, there will be strong growth, strong opportunities for a company like Godrej Properties to both participate in that sectoral growth as well as benefit from the opportunities for market consolidation by gaining market share. Within that, of course, there will continue to be real estate cycles.
We're currently in probably the early to mid stages of an up cycle. But within the four or five year timeline you indicated, it's quite likely that the cycle will cool off and start moving in the other direction. So I think it's important to be able to take full advantage of the structural growth story, but also to pay attention to where you are in the cycle and try to make appropriate decisions from a business development and capital strategy perspective based on where you see the cycle moving. So I think that's what we've tried to do in the past. I think Godrej Properties was perhaps one of the only real estate developers in the country who was able to consistently grow even in the down cycle. So I think last year was our seventh or eighth year of growing our annual sales.
Many of those years were while the market itself was declining. And we were also, I think, able to, at the right time, raise capital and invest into business development, the benefits of which we are seeing now. So I think practically, we'll have to be very agile and flexible on our views. But overall, I think certainly from a structural perspective, we think the opportunity is huge and growing.
Got it. Okay. Thank you.
Thank you. Ladies and gentlemen, we'll take that as last question for today. I would now like to hand the conference over to the management team for closing comments. Over to you.
I hope we've been able to answer all your questions. If you have any further questions or would like any additional information, please do reach out. We'd be happy to be of assistance. On behalf of the management, thank you once again for taking the time to join us today.
Thank you, sir. Ladies and gentlemen, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.