Mahindra Lifespace Developers Limited (MAHLIFE) Q1 2027 Earnings Call Transcript

Thank you very much, everyone, and welcome to the call.

Good afternoon, everyone, and a very warm welcome. I would like to thank everyone for joining this conference call. We have with us today Mr. Amit Kumar Sinna, Managing Director and CEO, Mr. Vimalendra Singh, CBO Residential, Mr. Vikram Goyal, CBO Industrial, Mr. Shriram Today's meeting will begin with a brief presentation covering our operational and financial highlights, following which we will reply to the questions asked. I would now like to hand over the conference to Mr. Amit Kumar Sinha, Managing Director and CEO of Mind the Life Space Developers Limited. Thank you and over to yourself.

Is there a way that we are able to hear us well?

Whether we are audible, they can answer.

Okay, I hope you can all hear us, otherwise we will go for next 20-30 minutes without knowing.

Fine.

You are fine? Okay, good. So, I will go ahead with key highlights. I think from the presentation, you go to the next page. I'll do the video, yeah. So, that was Mahindra Beacon Hill, go back a little bit, one slide back, that we just launched that, we are in the process of marketing and all the sales will start netting out in the In the next few weeks, we had our channel partner meeting earlier this week on Beacon Hill, quite a successful evening. And this picture, I think we are showing it for the first time. Have you shown this before? No. This is about the phase one of Mahindra Rainforest, Banduk. So we call it Mahindra Rainforest Kanjur NX. So this is Olympic size, Olympic length swimming pool. Lots of amenities, lots of green. Phase 1 is part of the broader residential. The broader residential will have a huge green cover. It will be a forest that will have roughly 4 acres, and we'll share the details when we have the data approval for those phases. So, let me quickly cover some highlights for us in this quarter. I think I will not spend time, but we continue to have clarity on what strategy we are pursuing across all these themes. Portfolio choices, business development engine, superior customer experience, making sure the project execution is first-time right, excellent, maximizing value from IC and IC, and then across all our efforts, making sure that we have very robust financial discipline. Key highlights, I think, Resi business, Resi pre-sales, 925 crores, successful launch of Rainforest. We got maybe two to three weeks of sale time in this quarter. As you know, this quarter had the The impact of Iran war. Obviously, March was practically slow for many, but April was very limited footfall. May recovery happened. So our sales and marketing effort really started from May. And June, middle onward, we started netting. And that's what you see here reflected here. It has done well for us. And, you know, we're still in the launch phase. I think we are seeing the momentum continue with us in July. Sustenance sales contributed 42% of sales. So, Blossom, Vista, Marina64, Ivy Laud, those are our Sustenance sales contributors. There are five more launches planned later this year. Mahalunga, we have the final stages of approvals, Lakewood same, Sai Baba, Navrat, Westerha expected in H2 of this year, second half. We have also received three OCs, Eden, Phase 2, Luminar, and Palgar. 2.1.8 minutes second Second phase, the building number, two doors. Phase two's first part, eighth building, right? That's the 2.1.8. Sustained BD momentum, we had one major deal announcement in Kandivilly of roughly 15-acre land parcel, 5600 crores of GDV, total GDV of 50,000 crores, which is very healthy for us. IC and IC side, very good news yesterday or day before when we signed the partnership with Sumitomo. As you know, Sumitomo partnership was signed first phase in 2015-16, second one November 2024, and now phase 2B. So they continue to be an important partner with us. We have a strong pipeline heading into Q2. Q1 was a little bit lumpy, as you know, this business. So Q1 was shorter in terms of conversions. We see a significant pipeline for Q2. We are accelerating our land aggregation in Origins, Pune, and we'll make headway in the remaining part of this year. Financials, Sriram will cover them in detail. But overall, between Rezi and IC, 966 crore, 70% year-on-year growth. At 67% of 86 crore, Rezi collections healthy, more work for us to do. But because the sales were a little bit back-ended in the quarter, a big part of sales will come in Q2. And IC collections tend to be very big contributor for all will also should happen along the deal closure. Prudent, robust balance sheet, net debt to equity of minus 0.2. So we have more, you know, healthy cash across our subsidiary than our debt. All the debt is mostly ICD with the group. There's some CPs that we have with the banks, right? So that's the key highlights. We'll move to the next Next page, roughly 50,000 crore GDV. I'll point to the middle column. In blue font, K2 currently has been added, 5,600 crore. So that's a meaningful addition this year. Many of you have asked us what is our target for GDV this year. I think we have had two successful years of 15,000 crore each. We want to maintain the momentum, but we want to sign the right deals. And I want to make sure that the deals align with our strategic aspiration and they meet our financial guardrail. So anywhere, I expect anywhere from 10,000 to 20,000 to happen in this year. Obviously, the LMP, we are looking for a large size deal, but right deals for us. So you'll keep hearing about them as we win some of these new deals. Launches, I think you see this is a nice chart, shows our trajectory for multiple years. We are hoping to maintain the trajectory, a good set of launches planned in the rest of the year, And they will contribute very well to our expectations of pre-sales on the residential side. You have seen this slide in the past. We continue to fine tune this, especially with the new acquisitions in FY28. We expect K2. It's a greenfield project. We've started the approval process already. Design discussions are underway. So hopefully we'll be able to launch within the next 12 to 15 months. And then you see the rest of the page which covers which projects are getting added to our overall new launch pipeline as well as sustainability. IC business, I think, ended exceedingly well in terms of last year. Huge growth, amazing profitability. The being lumpy, I think quarter one has been, I would say, a little bit low. But we have good, healthy pipeline for Q2 closures. So we'll stay tuned. Vikram and I will continue to provide update on that. You've seen this slide before, the guidance from IC business is always going to 400 to 500 crores of business annually from IC business, which would give us 100 to 150 crores of PAT on an annual basis, our share. So that's our IC business. Then I'll hand over to Sriram for the financial highlights. Thanks, Amit.

I'll take the financial highlights. On the residential side, we did about 925 rows of sales, as Amit highlighted. That represents almost 106% growth over prior year. On the IC side, it's been a little blue type, but Q2 is expected to be, you know, is where we are expecting some of the deals to convert. On the GDV side, the Kandivili deal had really helped us to get to about 5600 crores of GDV in this quarter. Residential collections have been at 527 crores. It's healthy. Here, given the rainforest launch in terms of the CP event happened towards June, we had little time to collect. So all the rainforest collections is expected to come in Q2, and you will see that reflecting in the next quarter. The net debt to equity continues to be healthy, negative 0.2, and our cost of debt is at 7.5% compared to 8.1%. Moving on to the financials, this is the segment reporting that we do on the Resi and the IC side. On the residential side, of the 86 crores part for the year, the residential side had contributed to 76 crores, and I see 10 crores. A lot of questions last time on the margins of the completed projects. So this year on the residential side, we had OCs for Eden Phase 2 and Luminar, which contributed to the overall profitability. Happy to report the PBT margins from these two projects, you know, are at around 26%, which is one of the questions that we had fielded in the last calls. On the IC side, it's, you know, it's expected to pick up as we move into Q2. On the cash flow side, a healthy cash position is about almost 1100 crores of company-wide cash available. The operating cash flow, we were at 134 crores, which is expected to pick up as we see more residential collections and action from IC happening in Q2. On the cash flow from projects, I think last time when we reported, we were at around 14,500 crores. This time we added a deal that we just announced. And you have some projects that move out of the system, like Eden and Luminaire moving out of the system. So you will have the collections and construction costs move out. So, effectively, we have 15,300 crores of cash expectation from our current project portfolio. And this does not include, you know, our Jaipur residential and Murud land available. On the financial comparison, as we reported in Q1, we had revenue from operations of 962 crores, basically reflecting Eden Phase 2 and Luminaire. And at a path level, we are at 86 crores compared to 51 crores last year, roughly a 67% growth over prior year. And the profitability, even in Q4, was about 90 crores. So we are maintaining that trajectory. And in FI26, we reported 298 crores of overall payout. On the balance sheet side, no significant moments. It reflects in a very healthy position across our assets and liability side. On the inventories, you will notice that the inventory balance had come down a little. That's primarily reflecting the completion of the projects, where Eden and Luminaire had moved out, and that needs to be taken out of the inventory. And otherwise, from a balance sheet position, it remains anything. That's all.

Very good. That's all. Thank you.

Yeah, maybe we'll take questions now, and then we'll fill out the answers.

The first question is from Mr. Jainam Shah of Iqvera Securities. The question is about the projects which are completed in Q1 and what are the margins which are booked for those projects in Q1? Very good. Thank you.

I'll request Hiram to jump in with that.

Yeah, so two projects, as I said, we had Eden Phase 2 and Luminar completed in Q1. Both these projects are very profitable. And the PBT margins from these projects were approximately 26%. You know, and that is reflected in our financials currently.

To be complete, we also had one tower of Palkar also finished, OC-wise, but it was breakeven. It is an affordable project. We are fulfilling that and moving on. So that was also a completed task.

So next question is from Mr. Lovish of Burman Capital. The question is, given our guidance of 4,500 to 5,000 crore of pre-sales in FY27, and we are expecting a sustenance This mix of 60 percentage, do we have the inventory in our current projects to achieve Rs. 3000 crore of pre-sales in FY27?

I didn't understand 3000 crore, what is meant by, but let me address that overall question. I think if you look at the launches that we expect this year, roughly 7000 crore, somewhere 6700 to 7000 crore and we didn't sell any of the rainforest last year. So, the entire 3,000 crore is available to us. So, roughly 10,000 crore, maybe a little bit more, with hoping more launches will happen. And of that, we're expecting that, plus the inventory we had from prior years, like Blossom, Vista, Ivy Lush, and then a few others, and Marina 64. These are big projects for us, and a decent amount of inventory is there. So, between all these sustenance projects as well as current year project, we should have enough inventory to achieve our aspiration of 4500 to 5000 crores. Anyway, 1000 has already happened. So, now a little bit less to be achieved in the remaining nine months. Hopefully, we will address the question, right? If you have any more, we can drop a note, we will follow.

So, the third question is from Mr Bhatia of Seer Fund Management. The question is, what is the progress on Origins Ahmedabad and Origins Pune and when Mahalashmi project is likely to be launched? These are the two questions.

Yeah. So, let me take that. I think, and Vikram, you can jump in. I think Origins Pune is very simple. We are still finishing land aggregation. We are trying to create a healthy size of of industrial park. So, it will take some time for us to complete that. That will keep you updated of the progress. Origin Ahmedabad, there is no issue with land aggregation. It's a commercial, finding the right commercial client. And I think our desire is not to have first client which is small. We want it to be decent-sized anchor client. So, that's something that we are awaiting. We also feel that with the new data center policy that has been announced, The land parcel like ours will become valuable. But this land is a little bit outside Ahmedabad. So we are aware of and we are patient about getting the right line. Hoping that it will happen in the next few quarters or years. We are patiently awaiting the right client at Origins Ahmedabad and Origins Punei covered. You have a sub-question on that? Mahalakshmi, right? Mahalakshmi project likely to be launched. You know, the VERA has been received. The pre-launch activities have already started, sales and marketing. I think we had our channel partner meet just on Tuesday, right? This Tuesday, three days back. So, anyway, we are in the launch, pre-launch effort. I think the first sale will start to happen, I think, by end of this month, Vimalendra is confirming first week of August is when we expect to start the selling part to start at Mahalakshmi. So that's the question we asked.

The next question is also from Seed Fund Management. The question is what is the update on Lakewoods as it is completed 100% The second question from them only how luminaire revenue recognized in the financials and our revenue from the Alco project when it will get recognized. There is one more question from them. What is the total residential development, residential and commercial mix for the Thane land?

Okay, so let me cover the first two and I'll request you for the Thane piece, right? So Lakewoods has multiple phases, right? We have delivered A, B, C, D, E. Five towers have been delivered in two phases, right? And the H and I is launched, fully sold out, is being constructed right now. F&G is something that we are likely to launch this quarter. We are just waiting for final setup for three months. So, and then typically you count, these are not high rises, they are mid-rise. So, maybe you can take two and a half to three years for it to be completed. But we have seen a big swing in the fortunes of Lakewood with last phase when both the towers were sold out in one day, right? Right, all the apartments with one large customer. How Luminaire revenue is recognized in the financing and how revenue from the Alcove project? Sridharam, you want to take that?

Yeah, so as I said on Luminaire, you know, we bought out our partner in this entity, Mahindra Homes Private Limited, and we are now consolidating 100% of that entity. So 100% of the profits for Luminaire is something that we recognize right now. So this, in this quarter, we had roughly 600 crores of revenues coming in from Luminaire and recognize the profitability. And as I said, it's been a very profitable project. Between Eden and Luminaire, we had recognized close to 26% of PBT margins.

And I think what you recognized, part of that has been recognized when you bought out. So Luminaire profitably reflected in two years. You know, last year we had some gains when we bought out Actis. That also reflects the higher profit, the part of the profitability of Luminaire. And on top of that, we had when the OC received, then we got 100% of that. That's what's captured here.

Yeah, on Alcove, we are expecting the OC to come pretty soon.

CDN has already come.

CDN has, yeah. Alcove had five towers in all. CDN, we received the OC last year, and it has been recognized in the profits last year. Two towers, we are expecting OC to come very soon.

The Alcove is a revenue share or area share agreement with the landowner. So, that's how it's recognized, right? We recognize our portion in that project. Vimlet, can I request you to address the total residential and commercial development potential for Thane?

Yeah, yeah. Hi, good afternoon, everyone. So, Thane, we are currently at the planning stage is obviously a large project for us. In terms of the split, the way we are looking at it is because this location is directly connected to the main road, main highway, the Thane highway, roughly say 20 to 25% of the FSI available we are looking for, say, commercial, given the way a lot of the business opportunities and the jobs are creating in Thane. And the balance around 70 to 75% we are looking at residential. So that's the broad level mix. Of course, we have multiple options in terms of under what policy to go for the approvals, but that we will evaluate prudently and then get back to you. So I hope this addresses your question on Thane. Value-wise, right now we accounted 7500 crores. Value-wise, currently the GDP is 7500 crores.

But we have more FSI, right? So it depends on...

More FSI, just depending on what kind of product we want to do. And we want to do a great job and make it a landmark given that we have a large contiguous land here. In a way that, and the thought is that how can we make that as the most And as you would know, a lot of infrastructure projects currently going on in Thane, which are also enhancing the connectivity, which are also enhancing the overall navability and the value proposition of Thane as a city, and very specifically about our location, because it's very close to where the tunnel for a Thane-Borivoli is being done. So, that will, that really augurs well for this particular destination in future.

Very good. Dev, back to you. So, the next question is, inventory months has rose from 13 to 15 months. What is the current scenario? Also, could you share the city-wise for MMR, Pune and Bangalore separately? And additional to this question is, even the IT sector headwits, are you seeing any challenges in site visits, conversion ratios, or cancellations specifically in Pune and Bangalore over the last two quarters? And this is from whom this question? This is from Mr. Saurabhar Avrha.

Saurabhar Avrha. Very good. So, Saurabhar, great set of questions. I think let me attempt to address them. And so you're right, the inventory months have gone up. And especially for last quarter, I think from the analyst reports, research report, what we found is that we saw a significant slowdown in March, but it's captured in the previous financial year. But the April month The month was practically washed for most of the real estate players. It didn't have a lot of, it's driven by sentiments, you know, what is going to happen, how long the war will last, all those things came to play. Things started to move up in May, but June was, I think, as I learned from one of the reports, is that it was one of the best months in the last, I think, one to two years, right, somewhere around that. So, pent-up demand of, let's say, April, May came to, like, conclusion in June. So, that's what we have seen, and that gets reflected in the overall inventory months index that you see. And while June was good, but overall, you know, we'll see some kind of slowdown till this war situation finds a conclusion. I think every day we wake up to some new news about Israel and Iran and U.S. and oil prices and foreign currency, and it has impact on our financial market, which has an impact on sentiment, which has an impact on real estate purchases. So, I think, you know, that's how the 13 to 15 has happened, and I think we'll take maybe another quarter, two quarters for it to stabilize, right, to the right level. But as you know, real estate is cyclical industry. It has always has great years, and then it has some tough years. I think we've seen the best years in the last four or five. I think next few months, maybe a few quarters, may be slower than past. But the good news is that the players who are well-established, branded players, have the trust of customers, will continue to gain share from, let's say, builders, developers who are less established or who have not delivered great products or relatively new to the market. So the branded players, listed players, are likely to gain share, and we're hoping to be one of the beneficiaries. So that will, even though inventory overhang might increase, but counterside is the flight to quality towards better builders will help us. For MMR, Pune and Bangalore, Srinam, you have the data. Inventory months.

Yeah, so MMR pretty much is around 16, 16 and a half months of inventory. It's still healthy relative to, you know, where the past was. And on the MMR, on the Pune and Bangalore side, the inventory overhang is actually much better. I think Pune and Bangalore ranges at around 8 to 10 months. And it's in a very healthy position.

So as you can see, these are the three cities we are participating. So one is on the average, higher value, the other two which are slightly lower ticket size are better. But then if you go to let's say Delhi and Hyderabad and some of the other markets, you'll see probably lower than the average. So the overall average is around 16. Luckily and touch wood that we are playing in those markets that are slightly lower than the average. It's slightly better from a portfolio perspective, and we hope to capitalize on the momentum that we still have in these markets. Your second part of the question was given the slowdown in IT sector due to the headwinds that we see, the AI challenge that we see. I think we didn't see the IT-related slowdown as much as we saw war-related challenge, especially in Mumbai, right? Yeah, we didn't see. I think and also probably we had a blockbuster launch in last quarter, in quarter four, in Mahindra Blossom, which was not affected by war sentiments. We had Citadel Sanctum launch currently going on in Pune. And I think we have a very good footfall so far. Good football. So, that's been okay for us, but we are watching the market sentiments, segments, which are, you know, lucrative for us to pursue very carefully. And so far, it's not been major from an IT perspective, but we will keep our eyes and ears open. And conversion ratios, no major change. Cancellations, I think, luckily, we never had high level of cancellations. We are very, very small, less than 1%, right? So it continues to be good. Over the last two quarters have been similar. Yes, nothing out of it. Yeah, nothing out of it, right?

So, next question is from Parishit. Three questions, I will go one by one. The first question is, what are the plans for NCR re-entry? Next question.

Let me come back to this question.

How is the response for rainforest? And the third one? Third one is, can you give some more color on BD for rest of the year? At what kind of deer sizes are you seeing in MMR, Pune and Bangalore?

Okay, got it, got it. So I think Pariksha, thank you for these questions. I think the first question, I think I will wait on NCR re-entry for at least a year. This is the first time I've given guidance for our residential pre-sales in our recent history. There may have been more in the past, but for us to achieve this target is a way to demonstrate that we can execute well and meet our commitments, We have a good set of launches planned. We hope to achieve our aspirations and targets for this year. Once we achieve that, then we'll evaluate. Are we meaningful enough in this market and where the opportunities are? And is NCR the market or should we double down another market? That is also a consideration for us. As you can, you know, with the new government in, you know, Eastern, in Kolkata, is that a market that's going to happen? That we should consider, or should we consider Chennai? Because, you know, Wellcity has created a great name. Mahindra Wellcity has created a great name for itself. Or should we focus on Jaipur, which will have the rub off of NCRO, and we have a huge, you know, piece of land under Mahindra Wellcity, Jaipur. So I think we are evaluating these three, four choices that we have. But I think this year is all about execution on the sales side and making sure we continue to demonstrate profitability and execution on the ground. So NCR interview, I think we'll take this question again in a few months. So that's first. I think the second is the rainforest. I think rainforest was one of our biggest bets to transform Mahindra life spaces away from affordable, I think I would say that despite some of the war-related sentiments, we have done well. I think we couldn't capture all the sales that happened as of 30th June because quarter ended. But in the, I would say, month, maybe five weeks of sales opening, we have done close to 600 crores, which is, as we understand, one of the largest, We are just in that micro market. And this is only part of the year. We have still nine months, eight months to go. So this will again be a very successful project, notwithstanding some of the challenges of the war which we saw in the early part of the previous quarter, hoping that they don't affect the morale and sentiments for further buying.

And I mean, just to add, we have done these numbers, Pariksit, by commanding a premium on the pricing side, relative to all other players in that particular micro market, although that's also pertinent, so we have done good volumes at good value in terms of the pricing. You're calling it rich pricing. Rich pricing, yeah, and I think the people have really taken the project well, the number of walk-ins are very, very strong. And you will see the numbers growing from here on.

Great. And the third question was BD, right? Business development, right? And there were certain elements within that, which cities, right?

Yeah, Mumbai Pune.

Yeah, I think our BD will continue to be strong, as I mentioned in my opening remarks. We have done, I finished three years, right? So, we've done 18, 18, and 4,000 soft, right? So, it's been roughly more than 40,000 crore that has been done. And we had early, you know, some of the earlier inventory and projects that were already there with us, right? Citadel was there, Vista was already there, right? And a couple of others were already there, like Vista was already there. And then Jaipur and Murud is also part of our 50,000. So, we have made a big stride in our GDV. And good news is that we have done it in a versatile manner, right? Some are greenfields, some are JDA, some are society redevelopment, and we are leveraging our capital strength adequately. We feel that when the market slows down, there will be more opportunities for somebody like us who has been very focused on execution, but also managing a healthy balance sheet, you know, with practically no debt, right? So, something that we want to leverage as we enter this slightly slower phase. Since we've done the last two years of 18,000, we've already done 5,600 this year. We expect, I think, somewhere between 10,000 to 20,000. Let me just put a broad. And the reason I gave a broad guideline because I don't want to chase a number. I want to chase my team is fully aligned in doing the right deals rather than our deal, right? The right deal means it should give financial returns to our shareholder. The deal should have more upside than downside, especially as we enter the slowdown, you cannot have low cost assumption and high price expectations. So we will always, in our underwriting, under price and over cost so that we have upsides on both sides in terms of the actual execution. So that's our plan, 10 to 20,000, but no specific number, but we'll hopefully continue to show growth. A big part of that has already happened. In terms of portfolio, it will be 60-20-20, 60% will be Mumbai, 20% Pune, 20% would be Bangalore. And I think we have a healthy pipeline for us to achieve that. So those are three questions from the parish. One more question. One more question, yeah.

So, the question is, what is the initial response for Mahalashmi? How is EOI stacking up versus the GDP? How is EOI stacking up versus the GDP? Oh, okay.

We believe you are going to answer that. Yeah, yeah. Hi, Pariksha. So, in terms of, we just did a channel partner meet this week itself, actually, and that's how we formally introduced the project to the market. Great. The initial response has been very good, very encouraging. As you know, this is basically, if you have seen our ad, we have said it's homecoming for Maidra Life Spaces in South Mumbai. So in the past, we had done two projects, but after a long, long time, we are doing a project in South Mumbai, and hopefully we'll do more. And all the feedback from the channel partners and the customers you have walked in has been very, very positive. I will not be able to give you a very specific number given that we are in that current book building phase. But I can tell you that it's been received very well. The other thing is, as a very conscious strategy and conscious choice, we said that it's not that we have too many units to sell in this particular project. And hence, you know, we want to command a significant premium in that particular micro market again. So from that perspective, we are very well positioned. Again, we have pitched the project at a higher pricing compared to the micro market. And in spite of that, given a very strong brand pool that we have, we have seen some great interest, which has got converted into UIs as well. And hopefully we should be able to start the netting process somewhere in the first week of August as Amit mentioned earlier. So watch out for more with respect to my Lakshmi project.

The next question is on luxury segment. What would be the share of luxury projects going forward? So it is from...

Okay. Luxury. I think luxury is a very tricky one. What happens is you have a higher price and higher size. Ticket size becomes very large. And we want to be careful about participating in those segments. We are anxiously looking at Vimalendra for Beacon Hill sellout or a good response. And that's Beacon Hill, Westerra, a couple of other projects like Lokundwala, they are in the price segment of 50 to 60,000 rupees. One Mahalakshmi, one Lokhandwala, and one Santa Cruz, right? These are interesting locations. And these would be the highest price point products per square foot wise we would have done. I think the selling is different, the product design is different, the delivery is different, the timelines are very different. I think this should give us enough learning and confidence to do more. I think as you've seen our Mahindra cars, SUVs have really pushed the boundaries on And I think that's the value creation that happens. That's the value offered to the customers. And we hope to deliver the same thing. You give a great product at a very good price. And that's why you will gain share in the market. So we are not chasing luxury right now, but we're chasing success of some of these projects. Once we have the success of the learnings, we'll hopefully be able to pursue other projects where we can say that this is a, Better than any other project that you may have seen from our peer group. So, no specific luxury plan, but we are making our progress towards achieving a premium positioning in

The next question is, how will we control the expected significant rise in construction cost for steel, tiles, concrete, glass, and other materials given the current situation of war?

Yeah, I think if you, I mentioned that earlier, we are conservative in our financial planning. We over cost and under price. So I think we had taken a healthy contingency, healthy escalation, healthy DLP, healthy many of the CER and all those things, all those requirements. And as you noted, the cost will go up a little bit for certain commodities like aluminum will go up, aluform will go up. It's 10% of a cost structure. But what happens is we don't award all 100% in year one, especially in the year when things are tough. We award some part, let's say 25-30% in year one, another 20% year two, 20%, 20%, 20%. So, five years has roughly 20% each is what we award. So, what you see is an uptick this year may get normalized next year. So, we are careful. Our calculation, Sriram and our team have done the analysis. I think we have taken additional contingencies. I think it's on top of what we had already assumed, roughly just under 1%, because you'll not give all the contracts today. You'll do it in the next few years. That's what we have additionally created a reserve for us, which will give us the opportunity to tap into any kind of cost increases we have. And we feel that that should give us enough cushion. But we'll stay tuned. But also understand this is an industry. India is a country where the wage inflation is somewhere between 8% to 10%, right? And the pricing growth in real estate, we have assumed is 4% to 6%, right? And the cost increase needs to be below that, right? Like in one year, it might go up, but overall, it will be 4% to 6%. So think of it, we have a little bit of a, it's a natural hedge that happens. Inflation of wages, inflation of housing prices, and inflation of costs, they're kind of hedged to each other, right? Naturally. So, hopefully, and not 100% of cost is getting increasing, like steel prices actually came down, right? Right, Sriram? That's right. So, the aluminum is up, concrete is slightly up, right? Some of the other commodities are okay. But as the demand contracts a little bit, the supply also is there. So, we'll also see some benefits on the purchasing side.

So we're carefully looking at that equation.

Our goal is to deliver great quality products to our customers on time, right? And if that means a little bit of cost here and there, I think we'll be able to absorb that.

Good, good. We will have one more question.

This is from Biplab. This is from Biplab. The question is, we are targeting 15 billion pay for IC and IC, for IC and IC business over four or five years. How much did that translate to pre-tax cash flows? 15 million.

What, 50 crores of cash flow? 1,500 crores of PAT, which we're expecting over the next few years. Wow, I'll take that. Piplab, in the IC business, we had put out that, you know, we'll have about 1,500 crores of PAT coming from our IC business over the next few years. See, typically, this translates to anywhere between 150 to 200 crores of PAT every year. And in terms of cash flow, since the land cost and, you know, some of the initial infrastructure cost has already incurred in our parks, especially Jaipur and Chennai, it tends to have a cash flow potential of close to 200 to 250 crores.

The doubt PAT is...

Anything you want to add?

No, I was just saying that, you know, we do it on the receivables business, right? So, we only account for the income when the cash flow is in place. So, in this case, when we talk about the revenue, it's the entire revenue which is in cash flows and the PAD is available for us to use.

One last question is there. The question is, what is the look on the current residential market given the geopolitical tensions we have in the world?

I think we have seen the best of the current cycle in the last 3-4 years, right? The next At least two years will not be as high in terms, especially on the pricing growth side, right? It will be moderate and driven by the demand that will, I would say, the investor demand will just go away. The end user demand will continue. And India is a large country with a large end user demand. Just to give an example, in Mumbai, 40% of the population Still rents apartment. 30% lives with family or friends or some relative. 30% are owned and lived, right? So there is in a way, 40% for sure, but probably 70% of the current residents are prospects for us to sell our apartment. Overall, India-wise, we don't have enough volumes, right? So the big question is how do we match the needs of these customers with the right segment, right value proposition, right pricing, right? And that's where most developers are focusing on. We feel that the volume will continue to be there, but at the right price, and that's why we have positioned our product at mid-premium premium. We feel that the pricing growth will be instead of 7-8% or 20% that we saw in the past years, It will be around 4% to 6%. And that is just to cover, let's say, the inflation on cost side. So a little bit of slowdown, I would say. But the counter to that is those developers who have great trust, great brand, they will gain share from other developers who may or may not have. Because the smaller developers can't have price premium, right? The cost of debt when they take is probably 50% higher or 100% higher. Like we are at 8%, they are at 10, 12, 15%. And then the cost structure may be a little bit lower, but it cannot be so low that they can absorb lower price and higher cost of funds. So they will find it difficult financially. And they operate with, if they can't make 25% return on their capital, they will not participate in this market. So, a lot of that capital that came in the last few years to pursue real estate may just go away or may not exist in future. So, there will be a share gain for, I'm hoping, for some of the well-established developers, including us. So, whatever slowdown that you might expect might get made up in the share gain for better quality players, and we hope to be one of them. So, that is our view on the market. And also, you're playing in the right set of market. Don't play in all the markets. Some of the markets are slowing down. We are focusing on, as we discussed, inventory overhang, where that's at average or below average, which is good for us, because that velocity will continue to help us in terms of achieving our targets guidance for this year, as well as for FY13. That's all from the question side. Well, with that, thank you so much, you know, all colleagues on the phone, on the bridge. We really appreciate your questions, thoughts. We are all ears in case of any suggestions, anything that you have, and we'll follow up. Please let Sriram, Dev, Myself, Vikram, and Vimal know if there are any other questions that you have. Happy to set up a call for a follow-up discussion.

Thank you.

Thank you, everyone, for joining the call.

Thank you.