Ladies and gentlemen, good day and welcome to the Puravankara Limited Q2 FY 2024 earnings conference call hosted by Axis Capital Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Samar Sarda from Axis Capital. Thank you, and over to you, sir.
Yep. Thanks, [Gavin]. Good evening, everybody, and I hope everybody had a good Diwali. Wishing you a good Vikram Samvat 2080. As always, from the Puravankara management, we have the senior-most guys attending the call, led by Abhishek Kapoor, the ED and CEO, Neeraj Gautam, President, Finance, and Vishnu Moorthi , Senior Vice President, Risk and Control. I hand over the call to the management for the initial comments. Over to you.
Thank you, Samar. Good evening, ladies and gentlemen. Thank you for joining Puravankara Limited's Q2 FY 2024 earning call. I am Neeraj Gautam, President of Finance. Your presence is highly valued. We are delighted to share our financial results for the quarter ending September 30, 2023. Comprehensive details can be accessed on stock exchanges. Today, I am to offer insight into our strategic outlook and key initiatives. Let's commence by delving into the overarching economic landscape before delving into our company's individual performance. This analysis will furnish insight into the consistent demand propelling our sales achievements, thereby highlighting the potential for future growth. Amidst global challenges, India's economy stands out as a beacon of hope. In the initial quarter of this fiscal year, it recorded a robust growth rate of 7.8%, as reported by National Statistical Office.
Looking ahead, the Reserve Bank of India has appraised a GDP growth forecast of 6.5% for the fiscal year 2023/2024. Even in the face of global challenges, institutional investments in the Indian real estate market saw a substantial uptick, reaching to $4.6 billion from January to September 2023. This marks a noteworthy 27% increase compared to previous year. The resilience and appeal of the market are further highlighted by investments in sales reaching an impressive 96% of the total recorded in 2022. Further, the stability ensured by unchanged interest rates acts as a catalyst, inspiring prospective buyers to explore real estate investment. A consistent interest rate environment fosters a sense of financial security, driving individuals to make confident home purchases. Turning our attention to Puravankara Limited, this favorable environment has consistently driven us to surpass sales records quarter -after -quarter.
As evident from our operational update, we are thrilled to announce that once again, we have achieved the highest-ever sales value of INR 1,600 crore in any quarter since our inception. This reflects a remarkable increase of 102% compared to INR 791 crore in Q2 FY 2023. Breaking it down, INR 736 crore is attributable to Puravankara brand, INR 750 crore to Provident brand, and INR 124 crore to Purva Land. Our collections experienced a significant surge, reaching INR 879 crore, reflecting an impressive 70% year-on-year increase. Additionally, the average price realization witnessed a 7% uptick, rising to INR 7,947 per sq uare feet during Q2 FY 2024 from INR 7,396 per sq uare feet in Q2 FY 2023.
In terms of new launches, we are delighted to share significant developments in our portfolio for this quarter. Provident Ecopolitan in Bengaluru takes center stage, a new project spanning a saleable area of 1.1 million sq uare feet.
Additionally, unveiling itself as a new phase in Bengaluru, Purva Park Hill Tower B contributes a saleable area of 0.2 million sq uare feet. In Chennai, we introduce another new phase for Purva Windermere, phase IV-b, featuring a saleable area of 0.7 million sq uare feet. Regarding our launch pipeline, we are pleased to report a substantial figure of approximately 13 million sq uare feet, assuring a consistent influx of new projects in the foreseeable future. Notably, non-Bangalore projects now contribute 44% of sales of our ongoing projects and an impressive 72% on the launch pipeline. Breaking it down by division, Provident accounts for 50% of launch pipeline, aligning with market trends and the strategic focus of the group. Turning our attention to the debt management, we are pleased to report a positive trajectory.
Demonstrating fiscal prudence, our net debt has reduced from INR 2,144 crore in Q2 FY 2023 to INR 1,992 crore in Q2 FY 2024. Significantly, a substantial decrease in the net debt to equity ratio from 1.10 to 1.01. Noteworthy is the decrease in net debt by INR 127 crore from the previous quarter. Equally significant is the decline in debt per sq uare feet of building assets, decreasing from INR 1,376 per square feet in Q2 FY 2023 to INR 886 per square feet in Q2 FY 2024, underscoring our commitment to efficient capital utilization and fiscal responsibility. In finalizing our strong financial standing, I want to highlight that as of September 30, 2023, the outstanding receivables from our sold units stand at approximately INR 3,636 crore. This substantially amounts cover about 77% of the remaining cost needed to complete the inventory currently available for sale.
This indicates that a significant portion of the cost to finishing the remaining inventory has already been secured through receivables, establishing a robust foundation for meeting our financial commitments. Furthermore, our cash flow visibility is equally promising, with a projected amount of INR 6,465 crore anticipated over the next three to four years. This underscores our robust financial planning and substantial cash reserves, positioning us as well as support our operations, projects, and growth initiatives in the foreseeable future. In Q2 FY 2024, our revenue from projects grew by 54% year-on-year to INR 368 crore. The EBITDA for Q2 FY 2024 was INR 98 crore with a 26% EBITDA margin. Our FCF for Q2 was negative by INR 11 crore due to only 481 turnovers of units during the quarter. We are targeting to turnover 2,500 units during FY 2024.
In conclusion, it is crucial to emphasize that Puravankara is strategically poised to seize opportunities in the nationwide expansion of the real estate sector. The substantial interest generated by our robust launch pipeline has translated into exceptional sales performance, consistently breaking records since Q2 FY 2023. This success is attributed to our meticulous project selection, robust marketing strategies, personalized customer outreach, and an unwavering focus on delivering exceptional products. Significantly, the ongoing quarter aligns with the impactful festive season in India, historically associated with increased investment in real estate. As a developer, we have strategically devised attractive deals to incentivize property purchasing. Acknowledging the historical surge in house demand during the season, we are steadfast in our commitment to leveraging this opportune period. With that, I conclude my remarks. Thank you for your attention.
Now the floor is open for the questions you may have and suggestions you would like to give us. Thank you.
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 their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Ladies and gentlemen, you may press star and one if you wish to ask a question. Participants who wish to ask questions may please press star and one at this time. To ask a question, ladies and gentlemen, you may press star and one. We have the first question from the line of Samar Sarda from Axis Capital. Please go ahead.
Yeah. [Gavin], t hanks. Neeraj, a couple of things if you would want to inform the participants. One, you made roughly INR 3.7 billion in the first half, 377 odd crores after interest and tax. With a lot of deliveries happening in the second half, like you mentioned, a little more than 2,500 units. How would the operating cash flow post your interest costs and other things tend to look like at the end of the fiscal? So that's question number one. And from absolute debt perspective, you have a gross debt of roughly INR 2,600 crores. So given that you're also looking to deploy money for land and CapEx, how would this INR 2,600 crore number move over the next two quarters?
I will answer first on P&L, then the operating cash flow and then the debt briefing you have asked. During the quarter, as I mentioned in my opening remarks, we have handed over only 481 units, and thereby, the gross profit which came to P&L is only related to these 481 units. However, as against to this, we have sales and marketing costs for the quarter as well the overhead has been charged to this gross profit and thereby there is a loss for the quarter. However, for the second half year for the period, we are targeting to handover about 2,500 units. Then corresponding gross profit will come to the P&L and we are expecting the sales and marketing expenses as well as the G&A will maintain the trend, and then the outcome will be positive. We are not giving any guidance. We are not quantifying the number.
However, in a broader math, against 481 delivery, this kind of number we are reporting. In next H2, I am going to deliver or targeting to deliver 2,500 units and thereby keeping the fixed cost remain the same, the outcome will be different as far as the P&L is concerned. Coming to as far as cash flow is concerned, as is evident from the slide number 26 of our presentation, we have been posting the operating surplus for last few years by now. If you look at operating inflow also, consistently, we are increasing. For half-yearly basis, we have collected INR 1,756 crore. That was our inflow. This is by doing the sales of about INR 2,700 crore for the half year period and the operating activity.
If this trend continues, the cash flow and operating inflow will grow furthermore commensurate with the number of sales growth will happen in next six months as well as the construction activity and the delivery happens during the second half of the period. So commensurate, the cash flow, operating inflow will increase for the next half year of the period. Coming to the third question which you asked about the debt. My gross debt was INR 2,616 crore. However, against this, my debt was, first time, my net debt was less than INR 2,000 crore. My net debt at the end of the quarter was INR 1,992 crore only. This is because we have cash and cash equivalent lying in the bank account is about INR 624 crore.
This cash and cash equivalent is lying in different project RERA account and other accounts, which due to certain RERA regulation and debt-related requirement, the money is available. However, I am not repaying or not using it. But liquidity is there in the overall liquidity is there in the business. Coming to the debt level is concerned, our repayment is slated about INR 400 or so is slated by the end of the next financial year. That repayment will automatically happen due to the schedule. Plus, by SI also some reduction will happen. However, as we mentioned that we are on a growth trajectory, and we will be acquiring land parcel, and thereby there will be some increase in debt as well as the drawdown of the construction finance. However, our endeavor will be maintaining the debt as at this level, at least by the end of this financial year.
Thanks. Something about the launches. Last year also, we had a big guidance on launches. Most of your launches in this year again are skewed only in the second half. What is the likelihood that the 13 odd million square feet which is planned in the second half might be spilled over to the next year? Which are the really big launches which are slated during this year, which could give impetus to the sales further from the INR 1,600 crores already done in the quarter?
Samar, Abhishek here. Hi. If you see the slide, which is slide 20 on the launch pipeline, we have given an indication of what the timelines are looking like. Most of these projects are in very advanced stages of either RERA or, and submitted for RERA and awaiting approval in RERA or in advanced stages of approval. We are expecting that almost these are about total of 15 odd projects, and out of 15 projects, at least 12, 13 projects definitely will go to the market by March. That's the target that we are definitely working towards.
Having said that, the point you made on what can be expected in terms of sales trajectory, given the fact that all of the earlier launches have gone to such tenants and the new launches add to the impetus of sales, we expect that this momentum will continue in the coming two quarters or the second half of the year. Largely on account of approvals is where it is, and from the beginning, we've been saying that in the third and the fourth quarter, we'll do a lot more launches. I think we are pretty much on track as far as the launches are concerned, and obviously, we are working on other assets as well for the next financial year.
Great. All the best for the second half as well.
Thank you, Samar. Thank you.
Thank you. Participants, you may press star and one if you wish to ask a question. We have the next question from the line of [Samar Sapre] from Wealth3 Advisors. Please go ahead.
Good evening, sir, and congratulations on your good set of numbers. Sir, this is just regards to our debt. I believe we are having some INR 2,000 crores on books. If you can just share how would be the trajectory going forward and especially seeing that we have a good collections and sales trajectory. Would you see that this would be sustaining it for next couple of years, seeing that real estate market is in very strong footing?
Let me just break this down for you on an overall debt basis. If you see, this is slide 31 of the debt composition. Our residential debt continues to come down. There is obviously some addition of land that has happened, and CapEx towards commercial development has increased the debt. However, with the cash and cash equivalent, we have been on an overall basis on a net debt basis, the number has come down to INR 1,992 crores. There is another slide we have, which is slide 32. If you look at our trend of debt per square foot, and I keep going back to this number, continues to come down from about INR 2,100, INR 2,077 a square foot, down to about INR 886 - INR 900 a square foot on per square foot area under development.
And why I keep pointing this out is because I think that is relative to the quantum of business that you do. Our business clearly has shown 100% growth this year in the first half of the year, and therefore, we are continuing to see this debt level come down. Our intent is, and goal is, to keep the debt level in and above the current absolute number and not increase it substantially while we go into the acquisition mode. These new launches and the liquidity that is further coming into the system, along with the scheduled repayment, as Neeraj mentioned, is to the extent of about INR 700 crores, if I'm not wrong-
Next 12 months
in the next 12 months. About INR 700 crores in the next 12 months. But having said that, we'll obviously not hold back from new acquisition and you'll start hearing a lot more about the new acquisitions that we are looking at going forward. Therefore, the way we are seeing it, we'll try and keep it at similar levels, but increase the volume of business that we do and continue to reduce our debt per square foot by launching more and more projects and hence creating a lot more surplus available from coverage, servicing, and liquidity perspective.
Okay. That was helpful. One last question with regards to the realization. I believe we are at now close to INR 8,000 sq ft in the residential division vertical. So, how would the gross margins behave in this segment?
So-
Yeah.
Go ahead. Please complete.
Yeah. Would that be sustainable, seeing your new launches coming in?
Sure. I will break this again into two parts. What is ongoing currently, where we see current ongoing and new launches coming in, I think our average realization, because of a large number of launches, especially coming in Provident, will hover around a similar number. Also Purva Land. On an average realization, you may see, in fact, slight dip because the mix of product will be different in coming two quarters. Having said that, our new acquisition strategy that is currently from the land point of view, especially adding West as a significant contributor in the next financial year, both in terms of new launches and acquisitions that we are doing, other than what we are already working on in South, should pick up our average realization over the next one year's time as we do those launches.
To answer that question, I think on the longer term trajectory, you will see our average realization continue to go up while the volumes go up, specifically on account of addition of projects in Mumbai, Pune, and also other projects in Puravankara. Having said that, having added Purva Land and Provident where the realizations are Purva Land, the realization may be as low as INR 3,500, which drags down my average realization, but gives me the volume and the margins. If you look at the margin levels, I think to answer that question, our EBITDA levels will continue to remain on an average hovering around 30% and above. While the average realization in the coming couple of quarters might slightly drop, our average realization will continue to go up in the longer term.
Okay. Last, I will be joining back in the queue again if needed. This was with regards to the current quarter. How much of the portion is attributed to the new launches of the sales?
Of the total, new launches would be to the extent of, if I am not wrong, to the extent of about INR 600 crores, if I am not wrong on the number. About INR 1,000 crores should come from the under the sustenance projects. I will confirm that number to you. I am just giving it from my back of the envelope calculation, but I will be just confirming the number.
Okay. That run rate would be maintained for the current quarter, seeing the launches coming up, coming ahead in the H2 also?
Look, we do not give a forward-looking statement because all the launches-
No, roughly. Ballpark. I don't want an exact one.
It all depends on the launches that hit the market and the timing of those launches. I think we'll wait and watch, but our expectation is that we'll continue the trajectory.
Okay. Thank you so much.
We are targeting for the launches we have already reported on the presentation.
Sure.
Thank you so much for answering all the questions in detail. If needed, I'll be back in the queue.
Sure.
Thank you. Ladies and gentlemen, that is the end of the results call. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
I will just add, it is about INR 680 crores from new launches out of INR 1,500. My number was off by about INR 80 crores. Over to you, Neeraj. Thank you.
Thank you for joining our earning call today. Thank you very much once again, and wishing you all a very happy Diwali. My colleagues and I are available for any inquiry. Any question you have, you can write to us and we will respond back to you. Thank you very much.
Thank you.
Thank you. On behalf of Axis Capital Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.