Ladies and gentlemen, good afternoon, and welcome to the Lodha Developers Q3 FY 2026 earnings conference call. As a reminder, all participant lines will remain 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 the operator by pressing star then zero on your touchtone telephone. Please note that this conference is being recorded. I will now hand the conference over to Mr. Chintan Parekh, Co-Head of Investor Relations, for opening remarks. Thank you, and over to you.
Thank you, Ran, and good afternoon, everyone. Welcome to Lodha Developers Q3 FY26 conference call. Today, we have with us Mr. Abhishek Lodha, MD and CEO; Mr. Sushil Kumar Modi, Executive Director of Finance; Mr. Sanjay Chauhan, CFO; and Mr. Shaishav Dharia, Whole-Time Director and CEO for Extended Eastern Suburbs, Thane and Annuity Assets. Now, I would like to invite Abhishek to make his opening remarks. Over to you, Abhishek.
Thank you, Chintan. Good afternoon, everyone. Wishing all of you a very happy new year. Thank you for joining us today. Before I get into company-specific overview, a quick context of where we are in terms of the Indian economy and the industry. Over the last few months, we've seen a clear focus from the Indian government to improve the economic outlook, whether it is worth the GST cuts or at many other measures, including the recently signed trade deal with the EU. The Indian government is focused on ensuring higher levels of economic growth and job creation in our country. This is an important and positive development, both for the larger economy as well as, in particular, the real estate sector.
This is reflected, of course, in terms of the GDP growth numbers that we've seen from India in the course of the last few quarters, and also the outlook that various important institutions are suggesting for India's GDP growth going forward. A modest area of concern is the fact that inflation is quite low, and therefore nominal GDP growth has been much lower than in previous years. However, we believe that as the overall economic momentum picks up, demand impulses will also strengthen in the economy, and inflation will find a reasonable level going forward. We look forward to the union budget, which will happen this weekend, and are hopeful that there will be further impetus given to India's growth journey.
In context of the housing market in India, we continue to see in the markets that we are predominantly operating in, i.e., Mumbai, Pune, and Bangalore, that the demand from end users for good quality product from the top brand continues to remain robust. We see that the economic activity in terms of job creation, as well as likely wage growth in this for the upcoming fiscal year, is also likely to remain quite strong. Overall, while there are some challenges of being in the fifth year of a growth spurt in the real estate market, we find that the overall outlook continues to remain constructive. Now, coming to the highlights of the quarter from the company's perspective. We achieved our best ever quarterly pre-sales performance in this quarter, with INR 56 billion growing more than 25% year-on-year.
With this, our nine-month pre-sale stands at about INR 146 billion, which is 70% of our full year guidance, and we remain on track to deliver our pre-sales guidance of INR 210 billion for the year. It is important to highlight that this is the first time that the company has crossed INR 50 billion in quarterly pre-sales, and also highlight that the performance in Q1, Q2 and Q3 has been the best ever for those respective quarters. That shows the underlying strength of the brand, as well as of the markets that we are operating in. The embedded EBITDA margin for the quarter was approximately 32%. This has been achieved in spite of very modest contribution from land sales in this quarter, which reflects the strong underlying profitability of the business.
So far, for the nine months of the fiscal year, we've delivered 4% price growth on a YTD basis, and we are on track to deliver the 5%-6% price growth for the full year. Which is in line with our strategy to have disciplined price growth below wage growth and to keep making sure that affordability is strong and getting better. Based on the embedded EBITDA margin, our pro forma PAT for the quarter is approximately INR 12 billion, and that implies a PAT margin of approximately 21% and a ROE of approximately 20% on a TTM basis. It very much in line with our medium-term outlook of approximately 20% ROE...
I would like to highlight that this quarter, we added about INR 340 billion worth of GDV through business development of new projects, including two projects in our pilot phase in NCR. With this, we are approximately reaching almost INR 600 billion of GDV added this year, and that gives us significant long-term visibility of growth. Our overall pipeline of projects, which we can develop in the next five years, is now approaching more than INR 2 lakh crore, and this is in addition to the significant land bank that would be developed post five years in Palava and Upper Thane.
This gives us not just visibility of where growth will come from and the fact that the growth is visible across the different markets, but it also gives us the ability to significantly improve our cash generation over the next few years, because the incremental land investment that we may need to do may be much more modest. Our performance in this business development suggests and underscores the ongoing consolidation within the sector, not just on the demand side, but also on the supply side. Especially in terms of joint development, landowners today are far more discerning in their choice of partners, prioritizing transparency, integrity, execution capability, and speed of monetization.
In spite of this very significant investment in business development land, our net debt stood at about INR 61.7 billion, which is 0.28 x equity, well below our ceiling of 0.5x. Our average cost of funds for the quarter stood at approximately 7.9%, down 10 basis points for the quarter. For this quarter, I'd also like to reflect on our expansion into the NCR, the National Capital Region of Delhi, Gurgaon, Noida, and surrounding areas. As we've noted in the past, our entry into any new market follows a two-step process. The first stage being the pilot stage, wherein we focus on starting a limited number of projects, ideally on a capital-light joint development model.
Learning about the marketplace, building a strong independent team on the ground, and showcasing the product differentiation and service differentiation that are the hallmarks of the Lodha way of real estate. Once we are able to do this and establish that the market is right for us, both from a brand as well as a profitability perspective, we can then scale up in what we call growth phase. We saw this in Bangalore over the last three years, wherein we were in pilot phase for approximately two and a half years. And now, in the first year of growth phase, we expect that full year sales from Bangalore will be in excess of INR 25 billion, and that showcases how scale-up can happen pretty quickly in a new market once we lay the initial grounds in the pilot phase.
Since the pilot phase in Bangalore has been completed and now we are in growth phase, we are now starting the pilot phase in NCR. We have signed up 2 locations with a total GDV of about INR 33 billion, and we expect to start the sales of this project over the next 12 months. With this, we are able to reach about 80% of the home sales by value, by being in the four markets of the Mumbai metropolitan region, Bangalore, Pune, and NCR. As we scale up and the business continues to perform well, we equally continue to remain focused on the do- good part of our Do Good, Do Well philosophy. We, in this quarter, made a number of contributions in further giving back to society through the Lodha Foundation. We have intensified our decarbonization efforts across the board, including materials, energy, and design.
We hosted, in this quarter, a steel decarbonization convening in collaboration with RMI India and BMTPC to mobilize a Buyers Coalition and assess market readiness for low carbon steel. In parallel, we launched a pilot program to evaluate battery energy storage systems aimed at maximizing the efficiency and reliability of our renewable energy power supply. We published a comparative study on embodied carbon across building heights, establishing a critical benchmark to inform low carbon choices in the Indian real estate sector. This quarter, we were once again ranked amongst the top 100 great places to work in the nation, with more than 2,000 companies participating, and this was the highest ranking amongst the real estate companies.
Under our Lodha Genius initiative, we launched a new collaboration with IISER in Pune, which again focuses on identifying strong talent, especially around STEM, and grooming them to achieve their fullest potential. For 75 slots, there were more than 2,000 applicants, which showcases the desirability of this program that has been built up over the last three years. Through our Unnati Program, we continued to partner with the most needy families across the communities that we operate in, and more than 2,000 families currently receive support from under the Unnati Program to improve their livelihood.... The Lodha Mathematical Sciences Institute successfully concluded its inaugural thematic program with more than 50 researchers from across the world. The program was led by Fields Medalist, Dr. Manjul Bhargava, and the institute is led by Dr. Kumar Murty, who was formerly director of the Fields Institute.
Finally, we now manage over 60 million sq ft of green certified buildings and have renewable PPAs exceeding 10 MW. In terms of additional performance updates, our collections for the quarter came in at about INR 35.6 billion, which is down by 17%. This reflects the fact that in the same quarter last year, we had significant proceeds from sale of land, and therefore we had higher collections in the last quarter. We remain focused now to further significantly improve our collections profile, and you are likely to see a significant pickup in collections over the next 12 to over the next 12 months.
In this quarter, we launched new projects with estimated GDV of about INR 96 billion and have a strong launch profile of over INR 120 billion of launches for Q4. I'd like to now highlight about our large land holdings, what we call our extended eastern suburbs portfolio of the townships at Palava and Upper Thane, which represent a key strand of value creation for our organization. The infrastructure connectivity at both these locations is now approaching full completion, and we expect operationalization for the Palava-Airoli- Mulund freeway to happen in the next three to four months. And similarly, the Mumbai-Nashik highway, which connects Upper Thane, will also, the last leg of that will also be likely to be operational in the next four to five months. With this, we see a significant upgradation in the connectivity profile of these locations.
Given the other strengths of the quality of development, social infrastructure, and various other measures, we expect that the next 12-18 months will see significant uptick in both perception as well as sales in Palava and Upper Thane. The recent inauguration of the Navi Mumbai International Airport will be another reason why Palava will further move up in the context of Mumbai's most desirable suburbs. The bullet train project, which connects Palava to BKC, is rapidly progressing, and we expect that the connectivity from BKC to Palava, a single stop, will be less than 20 minutes before the end of this decade once the bullet train is operational.
In context of these infrastructure upgrades and the large landholding of about 4,000 acres that we hold in these locations, we have been focusing on the residential side on consciously premiumizing the locations. We have launched various projects, including landed villas as well as mid-rises and high-rises, which are at a price premium of up to 50% compared to the existing mid-income locations. We expect this upper mid-income and premium segment to contribute almost 50% of sales in Palava by the end of the decade, compared to about 20% in fiscal 2025, which will both lead to expansion in value, but also expansion in the underlying margins. At Palava, we continue to progress in a significant manner on building one of India's largest and most significant data center parks.
With almost 400 acres of land and about 3 GW of power earmarked for it, an MOU with the Government of Maharashtra under its Green Data Center Policy, which leads to significant benefits for occupiers in this location. And given the overall demand growth for high-quality data centers, especially in the Mumbai region, which is the financial services hub of the country, and also hosts most of the large corporates, we find that demand for data centers is growing and accelerating. We already have two anchor customers, Amazon Web Services ( AWS), as well as STT, which is a Temasek subsidiary, who are progressing work on their data centers at this location.
We expect that we will have additional colo or hyperscaler players sign up for this location over the next 12 to 18 months. Additionally, as part of our strategy, we also expect that we will be starting build- to- suit construction of build- to- suit boxes for end users and have that to generate long-term rental income for our company in the years to come. In terms of the underlying land value, while the last transaction for the data center land happened at about INR 21 crore per acre, we now expect that land values will move up in a gradual but consistent manner. Over the next three-odd years, we expect the number to be reaching as high as INR 50 crore-INR 60 crore per acre.
My colleague, Shaishav Dharia, will provide a deeper dive into this opportunity later in this call. Coming to our fa-
... Ladies and gentlemen, ladies and gentlemen, ladies and gentlemen, ladies and gentlemen, please stay connected while I reconnect the management. Thank you. Ladies and gentlemen, we have the management reconnected. Sir, you may proceed.
See, thank you. It appears that there was a loss, we were not audible for the last couple of minutes. I'll just repeat my remarks around data center, that our 400 acres, approximately 3 GW of power, is rapidly gaining prominence as one of India's most important data center locations. In addition to Amazon Web Services and STT, which is a Temasek subsidiary, we are seeing increasing interest from a number of other colo and hyperscalers to set up their parks here, and we expect some firm signings happening in the course of the next few quarters.
In terms of land value, while the last transaction happened at about INR 21 crore per acre, we expect a significant and consistent growth in value, reaching INR 50 crore-INR 60 crore per acre over the next three years. We have started also in parallel, the company will be starting to provide build-to-suit boxes for end users, yeah, on a powered shell model, which will enable the company to leverage its current capabilities around basic construction and the land holding that we have, and generate significant rental income in the years to come. My colleague, Shaishav Dharia, will provide more detailed overview of this opportunity later in this call. Before I conclude, I'll just highlight the on the pen.
We have, since April 2023, been on the percentage completion methodology of revenue recognition, and we expect over the next 12 months that we would have fully transitioned to the percentage completion methodology of revenue recognition. In terms of our performance for this quarter, our revenue from operations came in at about INR 46.6 billion, which is a growth of approximately 29% year-on-year. This excludes any impact of the lumpy land sales which happened in Q3 of fiscal 2025. Our adjusted EBITDA came in at INR 14.9 billion, which is a growth of approximately 23%. The adjusted EBITDA was approximately 32% for the quarter, and the PAT for the quarter was approximately INR 9.5 billion.
In terms of our guidance for the rest of the fiscal, as I mentioned earlier, we remain on track to achieve our guidance of approximately INR 210 billion of pre-sales for the full year, with an embedded EBITDA margin of approximately 33%, and therefore, an ROE on a pro forma basis of approximately 20%. We've already met well and well exceeded our business development targets for the year, and therefore, that gives us a lot more bargaining power as we evaluate other opportunities and also gives us the opportunity to further strengthen our balance sheet in the next few quarters.
On net debt, we of course continue to remain very disciplined at about 0, to remain well below our ceiling of 0.5 x net debt to equity, and we are hopeful that we will further moderate this ratio in the coming few quarters. With this, I now hand over to my colleague, Shaishav Dharia, Whole-Time Director and CEO of our Extended Eastern Suburbs Business and the Annuity Assets, to speak about the data center opportunity in greater detail. Thank you.
All right. Thanks, Abhishek. Can everyone hear me?
Yes, please go ahead.
Yeah. So I think as Abhishek said, this has become a very significant opportunity for us. We had started work, as we've described earlier, almost five years ago, to where we have reached today, where we've earmarked 400 acres of land with approvals already in place, and believe based on all the work and effort we've been able to put in, we have probably the most reliable infrastructure for an AI data center in the country today. Around three critical elements: One, land with approvals. Second is the most reliable power network. Most locations struggle with power or the quality of power. Here, the ability to provide 3 GW of power from five different circuits is probably the only such location in the country, providing significant reliability, almost at a Tier 4 DC level, which is the highest in the world.
Thirdly, a critical element of a data center is how do you get sufficient amount of water for the cooling towers, which cannot be potable? We have already advanced progress to secure almost 100 million liters of water from a nearby industrial park, which dramatically reduces the cost and improves efficiency of cooling for any AI data center. And lastly, more than five optic fiber routes, which can scale up to potentially 10. So all of this has made this infrastructure of the data center park amongst the most reliable. Last year, in September, we signed the Green DC Park MOU with the state of Maharashtra, which gave us significant benefits.
Based on the progress we were making and in alignment with the vision of the state, we were comfortable to expand it, as Abhishek explained, to from INR 30,000 crore to an incremental INR 100,000 crore. So totally INR 130,000 crore between Lodha and all the clients and their own equipment within the data center park. But with this, we obviously got significant fiscal and monetary benefits that Abhishek talked about. So potentially, clients today can see a CapEx reduction in setting up a data center by up to 15%. So if you take what we call a turnkey data center, which is basically a powered building with just the cooling towers and the chillers, forget the chips and the servers.
What globally costs about $8 million-$12 millio/MW , we can probably now, in Palava, get it down all, all the way to $6 million. Secondly, the operating cost, which is primarily driven by electricity, because of this MOU and the Green DC policy, we can reduce operating costs by up to 30% for clients, and more importantly, they can now source 90% of their power from green, renewable sources. So the two negatives of a data center being not environmentally friendly, both in water as well as in power, we've taken care. More importantly, power cost can be approximately $0.06/kW , compared to $0.10-$0.12/ kW currently in the U.S. So all of this was already... was, a lot of this was actually after we signed our first two clients, Amazon Web Services and Singapore Telecom.
So of course, because of all of this part, we've started seeing even more significant demand, both for, what Abhishek said, land, powered land or a build-to-suit solution. Because in many cases, clients want to accelerate their development. And we believe getting up to that INR 50-60 lakh, INR 50-60 crore per acre over the next three years is very much possible on the land side, and creating a very sizable business through the powered shells on rent can be another significant income creator for us. So let me stop there and see if there are further questions.
Sir, should we begin with the Q&A session?
Yes.
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 their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Ladies and gentlemen, a reminder, if you wish to ask a question, please press star and one. We take the first question from the line of Akash Gupta from Nomura. Please go ahead.
Hi, Am I audible?
Akash, your audio is not clear. Could you please use your handset and proceed with your question?
Hi. Am I audible now?
Yes, please go ahead.
Yes. Yeah. Hi, sir. Congratulations on a great performance and thank you for taking my question. So my question is primarily related to your thoughts around the demand in Mumbai. How are you seeing the footfalls and conversions right now? And h as that view changed from the beginning of the year when you were thinking about footfalls and conversions? That's my first question.
Hi, Akash. Thanks for your question. In terms of where we see the demand environment in Mumbai and in terms of footfalls and conversions, let me sort of split demand into its two component portions, because I think your question is related to both, which is supply as well as demand. On the demand side, we see footfalls and conversions remaining steady through the course of the last few quarters and in line with what we would have expected at the start of the year. On the reasoning for it, because one hears about the fact that there is in pockets of Mumbai lots of redevelopment happening, and therefore, the fact that oversupply could be happening in pockets.
I think it really is underlining the fact that our sales performance as well as these walk-ins and conversions are all driven by the strength of the brand and the execution capability to deliver good quality product on time. We believe that while there is, there are pockets of oversupply in Mumbai, the demand for the kind of product that we do and the lifestyle standards that we offer is really strong. And we expect that this consolidation in the marketplace of the better-quality product and the best brands winning out is likely to continue.
Thank you. Understood. So from, like, a two-year perspective, I think we have been doing roughly 20% kind of pre-sale growth over the last two to three years. Considering we have done very strong business development of roughly INR 600 billion- Hi, sir. Am I audible? Hello?
Akash, please go ahead.
I think you have a network issue.
Yeah.
Your voice is breaking.
Okay, I just wanted to... So my second question was on the growth expectation for the next two years. We have done very strong roughly INR 600 billion, along with an inventory of roughly INR 450 billion. Is it reasonable to expect the similar level of growth rate of roughly 20% CAGR over the next two years, similar to the past year? Hello?
Hi, Ran, can you hear the question? We, at our end, we are seeing the voice breaking.
Akash, I would request you to please join back the queue, as your audio is not clear to the management.
Understood. Thank you.
We take the next question from the line of Puneet Gulati from HSBC.
Please speak little bit clearer, as the audio is not clear.
Sure, sir. We take the next question from the line of Puneet Gulati from HSBC. Please go ahead.
Yeah, can you hear me? Hello, can you hear me?
Yes, Puneet, please go ahead.
Okay, great.
Yeah.
Thank you so much for the opportunity. My first question is, you know, given that the scale of business is improving and-
Hi, Puneet.
other developers. Hi. Yeah, so given that the scale of business is increasing and other developers are also ramping up construction, how are you managing your construction-related risks so that projects get completed on time? Are you employing new technologies or new methods of construction?
Sorry, sorry,
Yeah.
Hello? Puneet, I would request, please stay patient. Ladies and gentlemen, we have lost the line of the management. Please stay connected while I reconnect the management. Thank you. Thank you for your patience, ladies and gentlemen. We have the management reconnected. Puneet, if you could please repeat your question for the management.
Yeah, sure. Yeah, so thank you so much for the opportunity. My first question is, if you can talk a bit about, you know, how are you thinking about potential construction-related, you know, issues, given that everybody's ramping up construction and there is noise around slowness in construction activity. What are you doing in terms of technology or any new construction methodologies that you're looking to employ?
Hi, Puneet. That's an important question and one which we are very much focused on. While, you know, technologies, the use of not just construction technologies, but also digital technologies, as well as also use of AI are all, you know, kinds of things that one does. It really fundamentally goes down to having a base of vendors and contractors who are aligned to support your growth plans, because we you have good, strong relationships with them and their willingness and ability to pay the labor force the fair wages. On these two areas is where our most, most of our focus is on, and that enables us to make sure that we are delivering our projects within the timelines as we have specified in our agreement.
Sometimes with delay of a few months, but always very close to the timeline stated in the agreement. So we measure our success in terms of the percentage of units which are delivered within six months of our agreement stated timeline, and we are able to do a very, very high percentage in that timeline, which really is the end proof of the construction capabilities.
Okay, that's helpful. And secondly, in your opening comments, you talked about, you know, increase in collections into next few quarters. Can you talk a bit about what's really changing, which will allow you to increase the pace of collections?
Yes. I think the sales momentum for this year, as you know, has been sort of more concentrated in the second half. And as a consequence, the overall collections for the full year will be lower than our initial estimate. Because obviously the collections follow a cycle of from when the sales is done. I think the combination of the scale, the sales step up this year, but more importantly, the significant focus that we put on construction, starting from on improving our construction efficiency, will drive the pickup in sales. In the last nine to 12 months, we had a significant impact from the environmental clearance issues, which held up as our collection.
With that issue now having been closed and resolved, we are quite focused on making sure that we make up for some of that lost time, and therefore, also the collections step up as the construction speeds up.
Okay, that's very helpful. Thank you so much. And lastly, on your Palava in Upper Thane, you've talked about potential 4,000 acres, of which you now want to allocate 400 acres for data center. Would it be fair to assume the rest is now for residential, or do you also have plans for warehouses and office space there?
So, Puneet, we have land which is zoned for multiple uses based on, and we therefore allocate basis the market's demand and the best value use. Currently, the two best value use are residential, including ancillaries. So residential includes things like retail or healthcare or even office space, which we all sort of see as urbanization, which is residential-led. And the second significant use case is data centers. So those are the two that we are most focused on. Other than the warehousing part, which is already under development, we don't expect to do more warehousing at this location, just given the underlying land values are not supportive of warehousing at this location.
That's very helpful. That's it. Thank you so much, and all the best.
Thank you.
Ladies and gentlemen, in the interest of time and fairness to others, we request you to restrict to two questions per participant. We take the next question from the line of Kunal Tayal from Bank of America. Please go ahead.
Great. Thank you. A couple of questions from me. First one, Abhishek, an often asked question these days has been that, you know, as you're looking at some cooling off in, you know, the pace of price increase in the sector, but the land values have probably stayed stubborn.
Kunal, are you there? Kunal?
Hi, I just want to know, am I audible now?
Yes, please go ahead.
Okay, great. So just to repeat my first question, Abhishek, and this has been an often-asked question. We've seen that as the pricing trajectory in the sector has faded somewhat, and land prices have arguably stayed stubborn, you know, could the next set of projects that are being signed up have lower profitability versus the last three years? So do you see any truth in that, in that sort of an assumption? And second associated question is, is it comfortable to assume that your intended pricing strategy of four to five years, you know, should continue into the next few years as well?
Hi, Kunal. Very important questions regarding the industry's economics. As we've often stated, our focus has been on having modest price growth below wage growth, and therefore, you know, this 5%-7% price growth level, that is a deceleration for many other of our peers, is really the price growth that we've targeted and have delivered over the last few years. In terms of the value and the profitability of lands, we, on the contrary, believe that, you know, given the land business development that we've already done and the very disciplined model of underwriting for land that we follow, which is driven by our target return metrics, not driven by trying to aggregate GDV or anything like that.
We actually believe that going forward, the land market will turn more favorable to us, given our scale, our balance sheet, as well as our ability to command a premium in the marketplace. So obviously, as the market was getting sort of, you know, good for everybody in 2023 and 2024 and part of 2025, you had a lot more competition for land. We maintained our discipline. We did what we had to do, but always at the margins that we target. And now, as some of this froth is let off, we'll probably get more opportunity in land. Having said that, our focus will remain on generating higher cash flow and even further strengthening our balance sheet.
Because we, as I mentioned in my remarks, are sitting on very significant available supply, almost INR 2 lakh crore of GDV available for us to sell in the next five years.
Got that. Thanks, Abhishek.
Thank you.
Thank you. We take the next question from the line of Abhinav Sinha. Please go ahead.
Abhishek, first question on business development. We have seen a big spurt this year, so how do you plan next year? Or, you know, are you looking to moderate the pace?
Hi, Abhinav. As I alluded in some of my earlier responses, we have front-loaded business development, and that will give us the opportunity to be, you know, more profit-focused when we do newer business development, and hopefully that is, you know, margin-enhancing. We also, this other side of the same coin is probably are not going to spend as much money on business development in the next 24 months as we've done in the last 24 months. And therefore, hopefully we are further strengthening our balance sheet over this period.
Okay, secondly, question to Shaishav. Shaishav, on the data center side, so when you're talking about power shell, or turnkey, will you wait for a client signing before you start work here, or we are looking to start work immediately? And what is the costing going to look like?
Yeah. No, thanks. We are, I think we would basically be looking at discussions with clients, because ultimately the specifications are quite specific to a client. So, we would be pursuing that route in before we start the, you know, as we are doing the build-to-suits. Secondly, is on the costing, again, it's very client dependent, but what's I think important is India in general is competitive on the capital side, but with the MOU signed and the benefits, the ability is to ensure that the overall cost reduction comes down by 15%. So as I said, our turnkey today, with the benefits, can come down to maybe $6 million/MW , which is, you know, much lower than what it used to be, our global standard of $8 million-$12 million/MW .
and maybe-
To add to that-
Yeah.
Our model is focused on building the powered shells on a BTS basis, and the cost for the powered shell will approximately be at about 3 million /MW , including the land value.
Okay, that's very helpful. And maybe-
Abhinav, I would request you to please join back the queue for follow-up questions.
Okay, thank you.
Thank you. We take the next question from the line of Murtuza Arsiwalla from Kotak Mahindra. Please go ahead.
Yeah. Hi, Abhishek. Thanks for taking my question. Just two questions on my side. I know the base year of it, so 2025, had a lot of land sales that also bumped up the collections. We've not seen the same kind of traction, at least in the nine months on land sales. Is there anything that could be in the offering in the fourth quarter? Or maybe this is not the year which you have the bumper land sales. Also, on the collections, you know, the drop, is it largely attributable to, you know, the base quarter having a lot of land sales? Or is there some moderation in execution this quarter because of which maybe milestones were not reached?
Anything to read on that, in that direction, or it is just, you know, we are comparing the year-on-year, where there was a lot of land collections and this year there's just not?
Hi, Murtuza. In terms of, you know, whether we'll have significant land sales in this quarter or not, very difficult for us to forecast that. There are ongoing transactions and discussions in relation to land sales, but when they will fructify, you know, we'll only know when it happens, so maybe this quarter, maybe next quarter, unknown. In terms of the causes why the Q3 collections on a YoY the land sales component is one significant component of that. And the second is what I had mentioned earlier that the environmental clearances for the stalled locations only started coming through towards mid-November and onwards.
So, you know, picking, restarting construction, remobilizing labor, and then getting the construction done and raising the demands, that all is a cycle. So we lost, you know, on a few locations-
A lot.
on account of that.
Yeah.
That's behind us now, so it's fine.
Just as a follow-up, you know, there is a remark in your presentation on the OCF guidance. Is there still a chance that you could meet it, or you think you'd probably be more around the INR 70 billion mark as opposed to the INR 77 billion previously? Could you play catch up in fourth quarter, or?
Murtuza, at this time we think that it is the INR 70 billion that we are, like I mentioned to you, some of the delays on account of the environmental clearance and some other factors have pushed things out by, you know, four to six months. So that has some impact on the OCF generation. So we will probably be at the INR 70 billion ±5% number, not the INR 77 billion.
Sure, sure. Thanks so much.
Thank you. We take the next question from the line of Pritesh Sheth from Axis Capital. Please go ahead.
Yeah, a couple of questions. So first one on, you know, how you read this quarter's performance, because most of the sales came from, I would say, a couple of projects, concentrated in one market, which is not generally how we obviously operate. It's more driven by sustenance and, you know, regular sales across markets. So first one on that, and second, on the business development side, you know, while we know we had a good year, but again, most of the projects are concentrated in South Central. Was it just a conscious effort to build that pipeline or, you know, we are probably, you know, looking directionally towards, you know, where demand is more stronger and hence focusing on those markets?
So your thoughts on that? Yeah.
Hi, Pritesh. In terms of our sales mix, we, as I've mentioned, in previous calls, we look at two metrics: the sales coming from our non-launch weekly sales, and then, of course, those coming from launches. Our non-launch weekly sales at about INR 3 billion per week were quite consistent throughout the quarter, except for the last 10 days, where because of Christmas, things slowed down. That was distributed, of course, widely. The launches that we did in this quarter were more focused in South Central Mumbai, and therefore the residual value beyond that, you know, INR 36-37 billion came largely from the launches in South and Central Mumbai.
In terms of your question on business development, I think we have—obviously, we look closely at where we find the pockets of demand, combined with the margins that we target. And, that combination influences the transactions that happen. Obviously, there is some element of, you know, what closes in a given quarter in these numbers, so I won't read too much into it. But yes, we are sort of, you know, widely distributed in terms of our available supply of land and product to construct across, you know, a large swath of the market.
Sure. And just one last, if you can elaborate this large project that we have signed up this quarter, you know, almost INR 20,000 crore, 2 million sq ft, you know, 1 lakh sq ft kind of rate on the sellable area. So just you can, you know, put some thoughts on what, what the project is about. Yeah.
Yeah. So Pritesh, I think there is some misunderstanding in terms of your assessment of the value being INR 1 lakh per sq ft on saleable. It is over the life cycle, INR 1 lakh per sq ft on carpet area, not on saleable. And the location of that project is on at Worli, next to Three Sixty and Beaumonde.
Sure. In presentation it was mentioned 2 million sq ft saleable area and INR 21,000 crore. That's it. No worry, I'll get that clarification separately. Thank you.
Thank you. We take the next question from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Yeah, hi, Abhishek, congratulations on a decent quarter. So my question is: Are you seeing any signs of elongation in the sales cycle? And you did mention that footfalls continue to remain consistent. So any color on the clients are taking some more time to decide closure or the pace continues to remain same?
Hi, Parikshit. The answer, I think the same similar question was asked in a different mode. So, so far we've seen that conversion rates, which is really a different way of measuring the duration to convert, have remained, have remained pretty steady. So we haven't yet seen that there is any downward pressure on that.
Okay. The second one is on the embedded margin. We have seen a substantial jump in commodity prices of late. Any color on your historical embedded margins, do you see any pressure on cost side, which may result in margin contraction as these projects come for revenue recognition?
So far, you know, the increase in commodity prices, and we publish the data pretty regularly about the overall construction cost base that we have. The increase is primarily around copper and silver, have very little impact. We have very little sensitivity to those two categories in our overall construction cost. Probably, you know, less than 1% of our construction cost is exposed to both of those elements. So while we, you know, key commodities that we are sort of our costs are driven up, are driven by, including steel and cement, have been quite reasonable. So we haven't yet seen any reason to worry that our construction cost estimates will overshoot our what we budgeted.
We in fact have significant contingencies in our budget, and more often than not, end up having some of that contingency left over, which is margin positive. But at this stage, no, nothing that is causing us to worry about a pressure on our budgeted costs.
Sure. Thank you. Those were my questions, and wish you all the best .
Thank you. We take the next question from the line of Parvez Qazi from Nuvama. Please go ahead.
Hi, good afternoon. Thanks for taking my question. So two questions from my side. First is, what was the contribution of launches to pre-sales this quarter? And secondly, while we are obviously doing well, we are on track to meet our sales guidance and delivering healthy sales growth. At the industry level, we have seen a weakness in volumes over the last year. So just wanted to get your thoughts on it and what is the way around it? Thank you.
Thank you for that question. Our contribution from new launches for nine months is at about 1/3, about 33%. We tend to be in that range of about 30%-35%. This quarter was higher, but for the nine-month period, it is at about 30, around 33%.
Sure. Your thoughts on the volume weakness in the industry?
Sorry, Parvez, I'm, I'm not able to follow the question. May I request you to please repeat?
Over the last year, we have seen a weakness in sales volume at the industry level. I mean, whether we look in terms of number of houses sold or volumes in terms of million sq ft getting sold. I mean, while we are obviously continuing to do well, but I mean, in our main markets of Mumbai and Pune, now volumes have been declining for last two odd years. So just wanted to get your views on it. I mean, what, as an industry, what is the way around it?
Very difficult for me to sort of, you know, have a response in terms of what is happening and what are the lead causes of the... I have not studied what the causes of the decline in volume at the industry level. For us, volumes are up about 24% in sq ft terms for the first nine months. Hence, my sense is that it's the two forces which I think have been often talked about. One, very clearly, is that the market is moving towards the best place players, because consumers who are buying want the assurance of getting a high-quality product and from the best brands.
I think the other side is that at the very bottom end of the market, homes below INR 75 lakh, I think there has been a decline in both supply as well as in sales in that sort of entry-level affordable housing segment. So I think, again, that used to be a big driver of volume, not of value, which is the reason why you're seeing that value is continuing to move up. But volumes are, have moderated at an industry level. Because we have consciously, you know, sort of moved away from that segment over the last two to three years. We haven't seen the impact of that, but there is definitely moderation in that segment.
Thank you.
Thank you. We take the next question from the line of Gaurav Khandelwal from JP Morgan. Please go ahead.
Hi, good afternoon, gents. I just wanted to understand the expenditures on construction this quarter. So we are at INR 8.6 billion of construction spends, which is the lowest in last seven quarters, if I'm not wrong. And my understanding was that some quarters of last calendar year, we were stuck with environmental issues, which is behind us now. So ideally, construction expenses should have moved up in quarter ending December, whereas the number actually came down. So can I just understand this better? Thank you.
Gaurav, hi. So I would more look at the nine-month number, because, you know, when things are billed and when they are paid out, that a quarter is too short a period to judge that. We definitely are looking, you know, we are, we're about just under INR 30 billion of spend on construction for the nine months, which is below our desired level, and we do expect to push that up, as I mentioned in my earlier remarks, over the next few quarters, both the quarterly run rate as well as an equivalent nine-month period, which in turn will have a significant improvement for us also in terms of collections. For the current quarter, we expect that number to be about INR 12 billion or thereabout.
Got it, thank you. But is it fair to assume that the construction momentum has increased, since last quarter, as in third quarter onwards?
The construction momentum has started moving up from November and onwards as these environmental issues got to be the bottleneck.
Got it. Thank you. Those were all my questions.
Thank you.
Thank you. Ladies and gentlemen, with that, we conclude the question-and-answer session. I now hand the conference over to Mr. Ayush Raghuvanshi, Co-Head of Investor Relations, for closing comments.
Thank you, everyone, for joining the call. I hope we've been able to answer all your questions. If you have any further questions, or need any information, you may connect with the Investor Relations team. Once again, thank you all for joining the call today.
Thank you. On behalf of Lodha Developers, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.