Ladies and gentlemen, good day and welcome to Q3 FY2024 Puravankara Limited conference call hosted by Axis Capital Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashutosh Mittal from Axis Capital Limited. Thank you, and over to you, sir.
Good evening, everyone, and welcome again to the post-result conference call of Puravankara Limited. We have with us the senior management of the company with us, led by Abhishek Kapoor, Executive Director and Group CEO, Vishnu Moorthy, Senior Vice President, Risk and Controls, and Neeraj Gautam, President, Finance. I now hand over the call to the management for the initial comments.
Thank you, Ashutosh. Good evening, ladies and gentlemen. Thank you for taking the time to join Puravankara Limited's earning call for the first quarter of FY2023. I am Neeraj Gautam, President, Finance at Puravankara Limited. Thank you for joining us today. We are pleased to present our financial results for the quarter ending December 31, 2023. The results, along with a comprehensive presentation, have already been made available for your review on the stock exchanges. To begin with, let me share my thoughts on the broader circumstances, both globally as well as on the macroeconomic front. Amidst global uncertainties, India's economy remains robust, evidenced by the RBI's upgraded FY2024 GDP growth forecast to 7.0% from 6.5%. The stable interest rates and controlled inflation gloss up economic prospects. The spike in demand for residential real estate mirrors increased economic activity and rising income.
In 2023, the strong interest from both foreign institutional investors and domestic institutional investors bolstered India's global index weight. Political stability and ongoing economic reforms position India as the fastest growing major economy. Turning to the performance of our company, Puravankara Limited, the first nine months of FY2024 have witnessed exceptional pre-sales, marking a strong growth of 89% compared to the same period last year. We achieved a sales value of INR 3,967 crore for nine months period FY2024, the highest ever for nine months period sales and profit. In the Q3, coming to the quarter sales numbers, the sales performance across our brands showcase robust results.
Puravankara led with INR 663 crore, Provident followed closely at INR 419 crore, and Purva Land contributed INR 158 crore with a total sales value of INR 1,241 crore, which is 60% up compared to the same period previous financial year. Coming to the geographical contribution, Bangalore emerged as a primary driver, capturing a dominant share of the business, followed by Chennai at 27% and Cochin by 9%. The average realization was INR 7,610 per sq ft for the quarter. However, if you look at the nine-month period, our average realization was INR 7,916 per sq ft . Coming to the new launches.
In Bangalore, we introduced a prominent unit boasting a salable area of 8.2 million sq ft with an initial launch area of 8.3 million sq ft. Meanwhile, in Chennai, we presented Purva Somerset, a plotted project with a salable area of 3.16 million sq ft, initiating with a launch area of 3.8 million sq ft. Coming to the business development front. We are expanding our horizon in aligning our strategic vision. We have eagerly stepped into the Mumbai redevelopment market. Our inaugural project encompasses approximately 6 lakh sq ft with a gross domestic value of about INR 1,500 crore. The Mumbai landscape holds tremendous potential, and we are actively pursuing several opportunities currently engaged in advanced discussions with four societies. Our launch pipeline is equally robust.
We have an impressive launch pipeline of approximately 13 million sq ft, ensuring a steady flow of new projects in the coming period. Non-Bangalore projects now account for 42% of the share of ongoing and 27% of launch pipeline. On a division basis, Provident accounts for 44% of launch pipeline, in line with market trend and the group's strategy. Coming to the debt management. In addressing our debt, we are pleased to highlight a positive trajectory demonstrating a fiscal prudence. Our net debt has reduced from INR 2,135 crore in Q3 FY23 to INR 1,741 crore in Q3 FY24, making a substantial decrease in net debt- to- EBITDA ratio from 1.09 to 0.85.
Notably, our debt has decreased by INR 251 crore and gross debt by INR 254 crore from the previous quarter. Equally significant is the decline in the debt per sq ft of building estate, dropping from INR 1,291 crore in Q3 FY23 to INR 791 in Q3 FY24, reflecting our commitment to disciplined capital utilization and fiscal responsibility. With this, our debt per sq ft of under construction area has decreased by around 62% over the last five years. Coming to the customer collection. Customer collection have been a driving force in our financial performance totaling to INR 2,516 crore for the first nine months of FY24, and INR 941 crore for Q3 FY24. These robust collection figures underscore our commitment to execution excellence.
The impact of our effective collection strategy is evident in the operating surplus, reaching INR 418 crore for Q3 FY 2024 and INR 965 crore for the cumulative nine months of FY 2024. Remarkably, our operating surplus has experienced a substantial year-on-year growth of 101%, a testament to our aggressive execution, heightened collection efforts, and operational efficiency. I would like to draw your attention to the fact that as on December 31, 2023, the balance received from our sold units amounted to approximately INR 3,867 crore. This impressive figure covers around 78% of our remaining cost required to complete the inventory currently open for sale. This indicates that a significant portion of cost to complete the remaining inventory has already been secured from the sales, providing us with a strong foundation to meet our financial commitments.
Moreover, our cash flow visibility is equally promising, with our estimated amount of INR 6,747 crore expected over the period of three to four years. In addition to this, there are cash flows from two new commercial projects, if we valued it today, it is about INR 1,608 crore. This signifies our sound financial planning and ample cash reserves to support our operations, projects, growth initiatives in the foreseeable future. Finally, turning to our financial performance. In Q3 FY 2024, our total revenue grew by 45% year-on-year to INR 596 crore. The EBITDA for the Q3 FY 2024 was INR 218 crore with a 37% EBITDA margin. The PAT for the Q3 FY 2024 was INR 78 crore. For nine months FY 2024, our total revenue increased by 37% to INR 1,313 crore in nine months FY 2024, which was INR 961 crore in nine months of FY 2023.
The EBITDA for nine months FY 2024 was INR 392 crore with a 30% EBITDA margin. The PAT for the period of nine months was INR 49 crore. In conclusion, I want to highlight that Puravankara is well-positioned in the real estate sector to grow net and wide. Our strong sales consistently beating targets are thanks to careful project choices, effective marketing, connecting with customers, and the commitment to delivering great products. As we move forward, thank you for listening, and now I am turning my attention back for your questions and suggestions. Me and my colleagues are here to answer all your questions and take the feedback if you would like to give.
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 touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Chintan from Puniska Family Office. Please go ahead.
How many units we have delivered this quarter?
498 units.
Okay. What are the plan for FY 2025? How many square foot we have delivered to planning?
While we don't give any guidance numbers, we will come back with the exact numbers that we are looking at delivering in the next financial year.
Okay. In last phone call, you mentioned that we are pending delivery of 2,500 units in H2 FY 2024. Now we are pending of close to delivery of 2,000 units. Correct, sir?
Correct. You are right.
Okay.
Delivered about 1,405 units for nine-month period.
Now we have OC already, we have received for two of our projects, three of our projects in the last quarter, towards the end of the last quarter. We are expecting three more projects to give OCs within the next two fortnights. We are in the final stages where we are expecting the OCs to come in, and those deliveries will happen. I think the last quarter we have been mentioning for a long period of time, it will be possibly one of our biggest quarters for delivery because all the OCs and the delivery of the projects are coming at once. Of course, the handover will take some time, but once the OC is there, then it is only a matter of time for delivery.
Okay, understood sir. Sir, what is the current unrecognized revenue?
Sold revenue as of now, as of today, I will just open the slide. Sold value is. If you go to our balances. Correct. Go to our. No, I was saying if you go to our cash flow plus revenue to be recognized. If you go to our slide number 29, that gives the detail of the balance received from the sold units. However, I understand your question is more related to how much balance revenue we recognized. We have not published in this nine-month period, the balance because that is not required to publish. About INR 6,000 crore is the sales value which we advanced from customer for which we have yet to recognize revenue. This is part of our advance from customers in the balance sheet. Unsold, of course. Unsold, which we can sell.
Which are value of about unsold inventory, which is there in the slide number 29, is about INR 5,617 crore. And of course, as I mentioned to you, about INR 6,000 crore is the advance received from customer where I have yet to recognize the revenue. However, I will send you the exact number after the meeting.
Okay. And sir, if I look at your cost from borrowing, it is close to 11.92%. Any efforts we are doing to bring it down more in the realistic way? Taking borrowing or any efforts or any plan for it?
Yes, it is very much a plan. If you look at my cost of borrowing has come down compared to the immediate previous quarter. It is 11.49%, which was the previous quarter is 11.61%. As and when I am launching projects, I am converting to the bank loan at reduced interest rates. And this is already reflecting previous quarter to this quarter, it has come down. And we are putting the continuous effort to reduce interest rate by taking new loans at a competitive rate and refinancing the existing rate also for lower interest rate loans.
Okay. And sir, for the commercial project, we are looking to lease it out or to sold it out? How we are monetizing it?
Currently, our goal is to lease out one asset and sell one. There is one asset which is about 2.1 million sq ft. This is under construction on the airport road in Bangalore. The other one, which is at Kanakapura, is about 800,000 sq ft. At this point in time, we haven't sold anything. Very active interest is there in leasing. There are multiple LOIs which are currently in progress. We will wait it out and see how it goes. If we can hold on to the inventory, we prefer that, the whole lease model because we want to build a portfolio over the long term. However, one is a JDA, one is our own asset. The 2.1 million, which is an own asset, definitely we are going to own and keep.
The JDA asset, we will evaluate as and when we get closer to completion. Currently, we are out for leasing for both assets.
Okay. One request from my end, in presentation the possession date of each ongoing or under development project. That would be a great help, sir.
Yeah, sure. We will make sure that we can publish the expected date of completion of each project.
Yeah. Thank you so much, sir. Congratulations. Good numbers.
Thank you.
Thank you. A reminder to all the participants. You may press star and one to ask question. The next question is from the line of Mr. Ashutosh Mittal from Axis Capital. Please go ahead.
Yeah. My question is related to your entry into Mumbai city development. You guided for you are in advance discussion for four projects. What kind of projects and what micro markets specifically you are looking at? How would the margins be different for these projects versus your other existing projects? Thanks.
We are looking at all the markets, both in the western and central suburbs, and of course, in South Bombay. Currently, actively pursuing. Actually, we have participated in more than 12 projects, in terms of the tendering process. Active short-listed conversation engagement going on four. Mix of all three markets, which is south, west and central. From the margin point of view, we are continuing to target our EBITDA margin of about 30%.
Okay, thanks.
Thank you. The next question is from the line of Vignesh Iyer from Sequent Investments. Please go ahead.
Sir, thank you for the opportunity. I just wanted to know which projects are expected to get OC in the coming quarter. Could you tell me how many units is coming from this each projects?
We are expecting Zenium, Somerset, Promenade, and Tivoli. Tivoli, partially we have received the release of sites. The balance we will get now in the coming week or 10 days. Between all of these, the total inventory would be about 1,300 units. We also got OC for Provident Equinox in the last quarter. So in all, if you take including the last quarter, we will have about 2,000 plus units inventory available with OC.
Okay. Including the quarter 3 OC, right?
Yeah. Will be available for handing over. About 2,000 plus units will be available for handing over with OC.
Okay. We have got a good pipeline in quarter one of FY 2025, and followed by quarter four and quarter one. What is the pre-sales target that the company, what is your internal estimate of the pre-sales target for FY 2025 for the company, unit-wise and maybe even value-wise, if you could help us understand?
We do not give guidance, as I mentioned earlier, on what we are expecting in terms of the sales numbers. But we do publish our expected launch pipeline, and from our past track record, you can kind of assess for yourself, but we normally do not give guidance on the. But what we do give guidance on is the number of launches that we are looking into.
Okay.
If you look at our slide number 20.
16.
Slide number 16. That will kind of give you a trend of the sales trajectory that we have achieved. For example, for the nine-month period last year versus this year, we were in 2023 at 2.78 million sq ft for three quarters. This year, we are at 5 million sq ft for the three quarters. I think the sale value has gone up by about 89%, and volume has gone up by a little over 90%, if I am not wrong.
Okay. Going by the trend, we can expect similar or better performance going ahead. Would be the right analysis. You have done a CAGR of 28% in last four years, so we can expect similar line improvement going ahead, right?
Look, again, as I said, we do not give guidance. But our effort is definitely to continue our growth trajectory.
Okay. Right, sir. Yeah, that is all from my side. I will get back in touch. Thank you.
Thank you. The next question is from the line of Shivang Joshi from Centrum PMS. Please go ahead.
Hello. Thank you for the opportunity, sir. I hope I am audible. . You indicated on one of your slides about your launch pipeline for the fourth quarter. Just wanted to understand, there are six projects in that slide. I am referring to slide 22. What is the status of approvals for all these projects in that quarter? What is the likelihood of any project launch getting delayed to FY 2025 quarter 1 or 2?
No, there are none of them which will get delayed by a quarter or two. We are actually at the final stages of all of these projects. Some of these are already approved projects where we are opening a new phase. We already have the approval. Some of these projects, we will get the approval. We are confident that we should be able to take these to the market in between this quarter and the next quarter. There is nothing out of this inventory that will go to the quarter beyond this quarter and the next quarter.
Okay. Indicatively, can you give a number as to—I understand you will give your launch pipeline for next year. But a ballpark number as to what will be your area to be open for sale, new projects as well as new phases in existing projects for FY 2025. Any number?
Look, if you look at our current inventory which is available for sale, it is about 5 million sq ft. What we have sold already in the nine-month period is 5 million sq ft. What we are planning to add and open for sale from the launch point of view is about 8.86 million, almost 9 million sq ft we are going to add in, let us say, two quarters. Now, if you look at this trajectory and our existing inventory available, which is not open for sale, I think we will continue to open approved project for sale as we get—We have our own internal criteria that only upon certain percentage of sales having been done, we will open for sale. But our goal obviously will be to continue our growth momentum. Last quarter, we will see where we lined up.
It will obviously be 5 plus X million square foot. Then again, the next quarter. Our endeavor will be to continue the growth momentum. We will publish our data on next year's launches in the first quarter of the next financial year.
Okay. Yes. Just wanted to understand, since you are venturing big time in Mumbai, what kind of outlook would you have? When you mentioned margins, you have been giving a brief idea on what kind of project level margins that you may keep, including your target 30% in Mumbai projects. What would be the overheads over and above this project overheads? If you can just briefly indicate, since you are aiming big in Mumbai markets now.
Sorry, are you asking-- Just to confirm, you're asking about the margins only or is there any other question there?
Margins only. 30% I believe would be at project level. What kind of other overheads do you have in your books?
Look, if you look at our standard model, EBITDA numbers will continue to be 30%. When we say EBITDA, it is largely the cost of capital that is left for the calculation of the PBT. We will continue to target the cost structure there. How we operate is a percentage of the construction cost, and we target that percentage of construction cost. In fact, fortunately, because we are a player who is multi-regional, we have scale, and that helps us keep our overheads in check and under control. We have three different brands which require different level of overheads versus a Purva Land, where your turnaround time is very short versus a Provident, where scale is very large versus a Puravankara where it is all premium and the construction cost is slightly higher.
On an overall average, we are quite certain that we should be in the 30% ballpark range or plus. As far as each of the brand is concerned, and region-wise is concerned, our average goal has to be at 30%, probably maybe between 27% and 32%, Puravankara between 30% and 35%, and Purva Land will be in excess of 35% at the moment.
Okay, last one from my side on the debt piece. Your debt numbers have been coming down. From a strategic perspective, wanted to understand, you are foraying into Mumbai or other western region, Mumbai and Pune. Should we be more asset light? Can you correct in my understanding. If that is the case, then any rationale behind keeping INR 800 crore cash and not prepaid something which is costing you 11.5%?
I will answer this question in two parts. One is, as far as the model in the western region is concerned, it is a mix of redevelopment, joint development, and outright. We always believe that there is a lot of margin to be made in an outright transaction as well. Of course, Mumbai as a market, it is hard to find enough outright transactions, so largely it will be redevelopment and maybe JDA to some extent. Pune may be a lot more of outright because there are opportunities available there.
Having said that, coming to your cash balance question, I think what we are doing now is going in our existing investment path because if we have to continue our growth momentum, as we have said on the debt piece, we have said that we will keep it range bound, somewhere between INR 2,000 crore-INR 2,200 crore in that range is what our net debt is, what we are intending to keep it at. On a per square foot basis, more importantly, because it is obviously a question of scale versus the debt you have got. On a per square foot basis, our target is to keep it, if our average realization is between INR 8,000-INR 9,000, our target is that we should keep our debt per square foot of INR 1,000 per square foot or lesser.
Keeping those numbers in mind, because if you want to do larger volumes and keep your debt, there is a maximum course in which the debt is going to get repaid. One is use of capital. Of course, there is always an opportunity to return capital, and we are in active conversation in some places to return some of the capital ahead of time. At the same time, deployment of capital towards new investments which will add GDV and bottom line for us. Of course, there is some bit of liquidity that is always kept in the system for an organization the size of our scale.
Fair. That answers most of my questions. Just last thing, since you mentioned INR 2,000 crore-INR 2,200 crore sustainable debt number. Say two years from now when your commercial development is at advanced stage or complete, what would be the total debt? Ideally, when you are saying INR 2,000 crore-INR 2,200 crore, that includes your commercial debt.
See, as I said, there are two contexts. Commercial is to be treated very differently. I will explain myself a little bit. In commercial, you are creating an asset. The moment you have leased out the asset on an LRD basis, the asset gets completely 100% freed out even if you do an LRD, depending on how much loan you have taken, anywhere between four to six years time frame. That debt is pretty much self-liquidating. The second category of debt is residential, which is also self-liquidating because if you see our debt pool right now, and we publish now the data on how the debt is moving in each of the categories, you realize that in its natural course, a lot of debt is going to get repaid because these projects are self-repaid as we launch these projects, right?
In our mind, all of the debt is pretty much self-repaying. The capital invested in commercial assets and the debt thereof, which is getting repaid through LRD. Obviously, the cost of capital is much lower and then your asset gets free over a period of time. On the other side, residential debt. Having said that, I will go back to my earlier conversation and I will say that our debt is going to remain range bound. That is the target which we are working towards, both on a per square foot basis and goal is obviously to try and see how we can make sure that the volume goes up significantly so it becomes irrelevant really to have this conversation on debt.
Okay. That is fair. Thank you. Thank you so much for answering my questions, sir. Congratulations once again on a good set of numbers. Very good set of numbers.
Yeah.
Thank you. A reminder to all participants, you may press star and one to ask questions. The next question is from the line of Ronald Siyoni from Sharekhan Limited. Please go ahead.
Good afternoon, sir, and congratulations on a very good set of numbers. Sir, on the revenue booking front, we are seeing a very good operating margins this quarter. Was it only on account of sales mix because of more of Purva Land getting booked or something of that sort? Are there any one-off items in this margin?
Sorry to interrupt, sir. Your voice is not clear. I request you to please use headset.
Yeah. Am I audible now? Hello.
Yes, you are audible.
Sir, congratulations on good set of numbers. During this quarter we have seen good margins, around 35% operating margin. Was it just because of job or sales mix, because of Purva Land getting more booked during the quarter? Or are there any one-off items in these margins?
No, see, revenue recognition is a factor of the handing over possession and any real estate-related transaction that we may have done. As soon as pre-sales happen, pre-sales have no impact on the revenue recognition. Therefore, these numbers are clearly from the real estate activities that we have done.
Yes. That is what I meant to say. More revenue booking was towards the Purva Land projects or
No, I will share that breakup offline. I think we have handed over a lot more in Puravankara and in Provident, but we will share that offline with you.
Okay. And this kind of margins are sustainable going ahead also? Or their margins can vary to a larger extent going ahead of, for say, next
Let me explain this in this context. Our margins are pretty much on target. It is more a matter of time on when we recognize the revenue and how the margin looks in a particular quarter. If you look at it over a period of time, it will always average out with the kind of margin that we are working on because as you deliver these projects, your pre-sales convert into your revenues and therefore your margins start showing up on the books.
In addition to that, Ronald, what I would like to add is, as we are scaling up in all our fronts in terms of sales, in terms of construction, so fixed cost, which is there in the company, will of course, it will come down as a percentage and as a scale go up. To that extent, margin will improve.
Okay. Second question was, that you are closely looking to close a deal in Pune. So, at what kind of level you are there in Pune, to go ahead with some outright or JDA acquisitions in Pune? When should we see Pune acquisitions to start?
Well, you will see acquisitions happening between this quarter, next quarter and thereafter. We will start hearing some announcement happening in coming quarters, including this quarter.
I just want to add that we have received OC in one of our important projects in Pune just for our review. Of course, the acquisition plan Mr. Abhishek have mentioned about it. We have a project, Purva Silversands. There we have received OC this quarter and we started giving early possession.
Okay, great, sir. My last question was on this various Provident and Puravankara and Purva Land. Both in terms of the mix of the different segments and different geographies, where you are seeing better traction and where the segments which are lagging, both segment-wise and geography-wise. If you can-
Look, of course, our biggest volumes have come from Bangalore. Having said that, currently our projects are active in all the markets, which is Bangalore, Hyderabad, Chennai, Kochi, Mumbai and Pune and Goa. Across all of these markets, we are seeing traction, and one can safely say that we are not seeing any challenge. In fact, we are seeing increased momentum in our sustenance projects at increased prices because the projects are getting more and more visible towards completion. We are confident that sales momentum from all of these regions are cutting across Purva Land, Provident and Puravankara will continue to be there.
Okay. Thank you very much, sir, and best of luck.
Thank you so much.
Thank you. A reminder to all participants, you may press star and one to ask questions. The next question is from the line of Deepak Purswani from SVAN Investments . Please go ahead.
Yeah. Good evening, sir. Sir, just wanted to understand our strategy on the Western India. We mentioned we are looking out for four projects in the Mumbai region, and then there are some projects we are looking in the Pune market. Could you please throw some light in terms of the investment outlay we are highlighting over the next 12 months for these geographies? Also, if these things materialize, what would be the GDV addition we would be looking at?
As far as already acquired project is concerned, we have added a GDV of about INR 1,500 crore with our first redevelopment project, which we have acquired at Lokhandwala in the western suburbs of Mumbai. We are, as I mentioned earlier, in active engagement with multiple societies for redevelopment and of course, multiple transactions which we are engaging in Pune market. Having said that, I think your question was on the capital outlay. We are expecting over next 9-18 months time frame to deploy approximately INR 1,000 crore in the western region, including all of these markets.
Okay. So, sir-
This is in addition to what we have already deployed and the projects which are ongoing.
Okay. So from the cash outflow point of view, if I were to think, on an average, we would be requiring INR 1,500 crore kind of cash outflow for the construction, and INR 1,000 odd crore would be this investment in the new project, and apart from this, there would be a kind of debt repayment to the extent of INR 750 odd crore over the next 12 months. Would that be the correct understanding?
Not really, because we are also going to be making investments in southern part of India in all three brands, which is Puravankara, Provident and Purva Land. So obviously that also needs to be factored in when we are looking at the free cash flows from the business because a lot of free cash flows will get deployed instead of on retail debt towards these new acquisitions and then taking them towards launch.
Okay. Got it. Thank you. Thanks a lot, sir.
Also, and a tag, sorry, that a bunch of cash is also going to go into. We still have land banks which we are working on, which is from within the company, which also will get unlocked in the next year. So there is obviously capital going in there as well. I missed out on mentioning it.
Okay. Thank you.
Thank you.
Thank you. A reminder to all participants, you may press star and one to ask questions. As that was the last question, I would now like to hand the conference over to management for closing comments.
Thank you for joining us for today's call. I am wishing you all of you Happy Republic Day, and me and my colleagues are available. If any further questions you have, you can write to us. We will respond to your questions. Thank you.
On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.