Sunteck Realty Limited (SUNTECK) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Suntech Reality Ltd. Q1 NFI 27 Earning Conference Call. We have with us today Mr. Kamal Khetan, the Chairman and Managing Director of the company, Mr. Prashant Chaube, the Chief Financial Officer. Please note that this call will be for 30 minutes and for the duration of the conference call, all participant line will be in the lesson only mode. This conference call is being recorded and the transcript for the same may be put on the company's website. After the management discussion, there will be an opportunity for you to ask questions. There will be a Q&A session and we request you to restrict your question to two questions only per participant. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch on phone. Before I hand the conference over to the management, I would like to remind you that certain statements made during the course of this call may not be based on historical information or fact and may be forward-looking statements, including those related to business statements, plans, and strategies of the company. It is future financial condition and growth prospect. These forward-looking statements are based on expectation and projection and may involve a number of risks and uncertainties and other factors that could cause actual results. Opportunities and growth potential to differ materially from those suggested by such statement. I now hand the confidence over to Mr. Kamal Khaitan from SunTech Reality Ltd. Thank you and over to you soon.

A very good evening to everyone. And thank you for joining us today for our company's earning conference call for the first quarter of FI27. I will keep my remarks brief and focused on the key developments of the quarter. We have made a good start to FI27. Pre-sales for the quarter grew 20% year on year. Collections grew 17% year on year. And with the strong pre-sales of the last few quarters, we expect collections to accelerate further through the year. The segment mix of our pre-sales remains well-balanced. Uber Luxury contributed 29%, Premium Luxury contributed 50%, and Aspirational Luxury contributed 21% of the quarter's pre-sales. This mix carries a high embedded EBITDA margin. The embedded EBITDA margin on both our FI26 and Q1 of FI27 pre-sales stands in the range of 35% to 40%, which will flow through to the reported profitability as the project reach revenue recognition. On reported financials, EBITDA grew 40% year-on-year, with the EBITDA margin expanding by 9.5% point to 35%, and the PAT grew 26% year-on-year, with the PAT margin expanding by 4.2% point to 22%. On the cash flow front, Our net cash flow surplus grew 79% year-on-year. In spite continuing to invest in business development, our net debt to equity remains negligible at 0.07x, and our ratings, AA long-term rating from India ratings, Fitch Group, remains among the strongest in Indian real estate. We have consistently maintained that we run the business on cash flow, not accounting revenue. We have been sharing our total GDV numbers in our investor communication. But this year, we have broken down our total GDV into three components. Launched, and to be launched, and the third is upcoming for launch GDV. In order to help investor understand our business better. Launch GDV indicates the projects that have received the relevant approval and it's already launched. To be launched GDV indicates projects that are under the approval process. And the upcoming for launch GDV indicates projects that are in the planning and designing stage. Our existing GDV gives us several years of launch visibility without considering any new acquisitions. Now, at the outset, we would also like to take this opportunity to update you on our Dubai project. As we have shared earlier, we have all the required regulatory approval in place and the project is launch ready. Only the timing of the launch has been recalibrated due to the ongoing situation. Finally, on sustainability, our GRESB score of 99 out of 100 with a green 5-star rating and our S&P Global DJSI ESG score of 78 out of 100 keeps us rated among the best in global real estate, well ahead of the benchmark average of 68 and 30 respectively. I shall now hand over the call to Prashant Chaube to take you through the financial performance of Q1FI27. Thank you, Prashant.

Thank you, sir. Good evening, everyone. I trust you have had the opportunity to go through our latest results and the investor presentation, which are published on our company website and the stock exchanges. I would like to take this opportunity to share a brief update on the financial and operational performance of the first quarter of FY27. The key details of operational and financial highlights are as follows. We sold Rs. 787 crores worth of area in quarter one of FY27, which is a 20% growth over quarter one of FY26 pre-sales of Rs. 657 crores. The segment mix remained well balanced. Collections for quarter one of FY27 stood at Rs. 409 crores, a growth of 17% over Rs. 351 crores in quarter one of FY26. On the profit and loss front, operating revenue stood at Rs. 191 crores for quarter 1 of FY27 as against Rs. 188 crores in the same period last financial year. EBITDA stood strong at Rs. 67 crores in quarter 1 of FY27, 40% growth over quarter 1 of FY26. EBITDA margin stood at 35%. Net profit of Rs. 42 crores, which is 26% growth over quarter 1 FY26. And net profit margin stood at 22%. We generated a net cash flow surplus of Rs. 193 crores during the quarter, a growth of 79% over quarter one FY26 after deploying Rs. 170 crores towards business development and land-related capital expenditure. Thank you. With this, we open the floor for questions.

Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Harsh Pathak with Mothilal Oswal. Please go ahead.

Yeah, hi. Thanks for the opportunity. Kamal Ji, just one question on the Dubai launch. While you highlighted that the timeline remains uncertain, is there a possibility this project will get launched in this financial or in FY28?

Yeah, good evening, Harsh. So, Harsh, we are very clear that we are, as we shared earlier also, we have required, all the required regulatory approvals are in place, and the project today remains launch ready. Only the timing of the launch has to be obviously recalibrated due to, we all know that it's an ongoing situation, and we don't want to launch in such a situation. Just to recap, our land parcel is one of the most prime location, in the prime location, next to Dubai Mall, in Burj Khalifa community, downtown Dubai. So, that is one very big advantage. Whenever the markets, we are almost launch ready, and whenever the market is there, we will immediately launch. But the market is right, I mean to say. And our land cost to GDP is very healthy. And there is no debt on the project. So we maintain that our earlier communication once again, that project continues to remain highly profitable, irrespective of the situation what we are. And just to bring it to your knowledge, like our investment in Dubai as on today on the project is close to not more than 200, 225 crores. So, that is again a very, and from that kind of investment, we are looking at such a large surplus cash flow which will be coming out. And we are definitely looking at this cash flow whenever it comes to bring it to India for the growth of it, again, for growth of the company overall.

Understood, sir. That's clear. Coming to your launch pipeline, like you highlighted that you have broken down the GDB in three parts. So to be launched GDB is close to 16,000 crores. Can you please break down what quantum can be launched in FY27 and FY28 and which would be the key projects here?

So, to be launched GDV, if you go, that includes obviously 9,000 crore coming from Dubai projects. So, if you remove that 9,000 crore, so to be launched GDV is close to 8,370 or 7,100 crore, sorry, 7,100 crore, close to, and which is like ODC, the additional tower in ODC, our Hungary redevelopment project near Western Express, Then what we are looking at SunTech Park, Mira Road 2, Mira Road 1 is already ongoing, so we will be launching now, looking to launch the new project which we have acquired last year. And the Wasai, there will be one tower. We recently launched two towers, and we are targeting to launch one more tower this year. Then, Naigaum, we are looking to launch again one or two towers. Again, we launched last year. Again, we are planning to launch this year again. So, looking at all these things, if you see, this is all put together is close to 7,100 crores.

Sure. So I believe this entire inventory will come into launch in this financial year. Anything additionally that will be added to this launch pipeline and what can we look for for the next year?

So, uncertainty is definitely only related to, we can talk about Dubai, because we don't know how long the situation will be there. Otherwise, all the other projects, pipeline, what we are looking to launch this year is close to 7,000 crore, what we are looking to launch.

I understand. So, one last question, what is the growth guidance for the pre-sales for this financial area, and maybe even for FI28 also, if you can just throw some lights?

So, looking at the project pipeline, Harsh, we are very confident that we will maintain, although this quarter we have done 20% growth in pre-sales, but we are confident overall in the full year, we will match what we are given the guidance of 25 to 30% growth in our pre-sales, considering the full year of 27, we will be at least 25 to 30% higher than the last year. And with such a strong pipeline, we are really very confident about it.

Sure. And any new business development?

I'm sorry to interrupt you, Mr. Parthag, but you may please rejoin the queue for more questions.

Sure. Thanks.

Thank you.

Our next question comes from the line of Rishit Shah with Access Capital. Please go ahead.

Yes, thank you for the opportunity and good evening, sir. So, a couple of questions. So, first, on the sales mix, so this quarter we have seen a good increase in the sales coming from affordable segment. As well as on the premium side, the ODC, SBI, etc. So, I mean, on the aspirational luxury specifically, what led to this growth, and similarly, some views on the premium luxury segment as well?

So, aspirational luxury, in fact, obviously, we are seeing the market getting improved because of the reason I feel is aspirational luxury is slightly, we feel, is picking up because of the lower interest rate and also some signs of recovery somehow we are seeing. And the mainly it came, basically, we see that coming from Naegaon and Kalyan, both. Both are now giving, and we are very bullish on now Kalyan picking up more strongly. So, obviously, we have a large GDV there, so we want to monetize as early as possible. So, we are, that two projects, obviously, both are in aspirational luxury, only those two. It has come from both the projects. And when it comes to premium luxury, obviously Suntec City in Gorengav and Suntec Sky Park in Mira Road and the Suntec Beach Residences, SBR, all three contributed for this 391 crores. And with coming quarter, we are again very confident because we'll be launching in this segment, Suntech Skypack 2, which is the next acquisition what we have done. Cover 2 in Suntech City, which will be coming. So, due to this, we see the growth picking up, and that's why we are confident that we will be able to achieve 25 to 30% growth in our pre-sales for the FY27.

Sure. So, just to follow up, the launch that we had this quarter was just the SBR and nothing in the aspirational segment, right?

So, yeah, so this quarter we didn't do any launch. In spite of this, we could do good aspirational luxury sales.

Perfect, perfect. Secondly, I mean, regarding the collections, so how are we looking at the collections overall for this full year? Can you give any guidance? And related to that, anything on the RERA approval for the NAPNC project?

So, proportionately, obviously, the collection has to grow, and I made the same remark in my speech, also opening speech. And, obviously, the bigger collection will start happening once we start the construction of Nepensee Road. That will definitely give us a big collection. But if you see trailing, if you see, our collections are close to 1,500 crores. which is again stronger than the past 12 months and this will continue to become stronger and stronger looking at the last few quarters what we have been doing the pre-sales.

Sure. Would you like to attach some number to it for this year?

We will see a similar growth. I would say 25-30% growth in the pre-sales also. Yeah.

Perfect. Thank you so much.

Thank you. Thank you. Thank you, Rishi.

Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address all the questions from the participants, we kindly request you to limit your question to two questions only per participant. If you have a follow-up question, please rejoin the queue. Thank you. Our next question comes from the line of Vasudev from Novama Wealth Management. Please go ahead.

Yeah, thank you for the opportunity, sir, and congratulations on a good set of numbers. So, sir, my first question is, how is our business development pipeline looking like? And in Q1, we had a BD spend of about 170 crores. So, for the full year, what is the amount estimated?

Hi, Vasudev. The 170 crores that we spent in quarter one is mainly for NAPNC, Mirado 2, and certain redevelopment projects. So that is where we have spent the 170 crores.

So with this spend, obviously some has gone into redevelopment and some we have initially given as a token money. So we are, you will see some good acquisition BD announcements for sure. If you see last year also, it was like a highest spend on BD, what we did more than 800 crore in FI26. And we are looking to, in fact, We have surpassed this number looking at our strong balance sheet and the markets and what we are already under negotiation or in the advanced stage. We are looking to spend definitely this year also much more than the last year for getting into doing BD, more BD.

Okay, sure, sir. And secondly, what projects are we looking to deliver in FI27? What is the delivery pipeline looking at?

So, we are, this year, we are confident once we will be delivering our project SunTech One World and maybe some more new floors. 4th Avenue, and there are some more new floors which will be done on the 1st Avenue. So, plus some additional floors even in Pinnacle. So, all this will be constructed and delivered within this year, and this will give us additional sales as well from this project. And this will be a strong cash flow, because once we launch, the project will be like, these are the additional flows, so this will be completed in, like, three to six months. So we are looking to monetize all this inventory in this current year itself. So this will be substantial, very large delivery.

Sure, so that's it from my side. I will join back with you.

Thank you. Ladies and gentlemen, anyone who wishes to ask a question, press star and one.

Our next question come from the line of Jainam Shah with Equally Securities.

Please go ahead.

Yeah, hi, thanks for the question. Sir, the first question is on the resolution that board has offered about the fundraising of around, let's say, 2000 plus CR to debt and equity. Is it just an enabling resolution?

Sorry, sorry, sorry.

Yeah, so is it just an enabling resolution or are we planning for some fundraising in the near term?

So, this is obviously enabling resolution, and if you see, every year we take this enabling resolution. So, as on today, if you ask me, there is absolutely no planning of any fund raising.

Okay, sir. So, just for the clarification, one part, on the Dubai project, you said that it's ready for the loan. There is no approval or anything which is pending, right? Yes. Yes. So, sir, just wanted to check on the presentation part because in the presentation, the table that we have given in which it has been incubating the to-be-launched GDV, which is of around 16,100 CR. And when we write the thing, when we read the thing below the same to-be-launched GDV, it indicates projects which are under approval process. So, has there been any, you can say, change in the presentation part or there is some approval which is pending? So, both things are actually contrasting.

No, no, I appreciate. I think this is slightly we'll have to edit that. I agree. I appreciate your comment. You're totally right. So we should add, like it indicates projects which are in the approval process or approved, which are to be launched. You're correct. So I think we'll have to edit that.

Got it, got it. So on the commercial revenue part, we are seeing this FF99 going up to $450 in the presentation part. So what's the status of the construction for the fifth revenue ODC as of now and by when it is expected to get delivered?

So Fifth Avenue construction has already started residential, and residential has already started. So we are looking to deliver that in three years from now. And you are asking about commercial. So commercial, we are looking to start very soon. And once we start there, we are targeting because it will be a special commercial. So we are looking to complete that in 24 months, 24 to 30 months.

Thank you, ladies and gentlemen, due to the time constraint, that was the last question for today. I now hand the conference over to the management for the closing remarks. Thank you, and over to you team.

Thank you all for taking the time out of your busy schedule to join us today for the call. In case any of your queries have been left unanswered, please feel free to reach out to us. We truly value your continued support and look forward to strengthening this relationship. Thank you.

Thank you so much.

On behalf of SunTech Reality Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.