Max Estates Limited (MAXESTATES) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Q1F527 Earnings Conference Call of NEC State Limited, hosted by Ambed Capral, Private Limited. As a reminder, all personal lines will be the listening only most and there will be an opportunity for you to ask questions after the presentation panelist. Should you need assistance during the conference call, please signal an operator by pressing star when zero on a touch-down phone. Please note that this conference is being recorded. I would now hand the conference over to Mr. Karan Khanna from Ambit Subdates Private Limited. Thank you and over to you, sir.

Thank you, Muskaan, and good morning, everyone. On behalf of Ambit Capital, I would like to welcome you all to the 1QFI27 Earnings Conference Call for Max Estates Limited. From the management today, we have with us Mr. Sahil Vachani, Vice Chairman and Managing Director, Mr. Vachan Singh, Chief Operating Officer, Mr. Nitin Kansal, Chief Financial Officer, and Mr. Archid Gurl, Head of Investor Relations. We would like to now begin the call with opening remarks from the management, post which we will have the forum open for an interactive question-and-answer session. Thank you, and over to you, Sahil.

Thank you, Karan, and good morning, everyone. I'd like to begin with some industry highlights followed by key business updates for the quarter ended 30th of June, 2026. The Delhi NCR residential market, to cover that first, saw a broadly resilient quarter, despite a more cautious demand backdrop nationally. Delhi NCR recorded close to 8,800 residential unit launches in Q2, 2026, with Gurgaon continuing to lead the region, accounting for approximately a 70% share across their key vectors of Sonar Road and Dwarka Expressway. Noida, Greater Noida 2 contributed the balance with Noida Expressway and Noida Extension emerging as key micromarkets. For the first half of calendar year 2026, the total launches across the region reached approximately 18,500 units, reflecting sustained momentum. On the pricing side, weighted average prices held broadly stable on a quarter-on-quarter basis, while capital values recorded healthy annual growth across both cities and rentals improved steadily, led by the prime micro markets that I outlined. That said, the residential sales volumes across the sector moderated through the quarter against a backdrop of global uncertainty, tightening liquidity conditions, and cautious consumer sentiment. On the commercial side, Delhi NCR recorded strong office leasing of 4.1 million square feet in Q2, 2026 reflecting healthy occupied demand across key commercial markets led by GCC, IT, flexible workspaces, and professional service firms. Coming to the business performance for Max Estates, first on the residential side, We are very delighted to share that Max Estates delivered a strong Q1 FY27 with pre-sales of approximately 1,100 crores, registering a 5X year-on-year growth, a clear reflection of the continued strength of our brand and product positioning, even in a more selective demand environment. This was anchored by the full sellout of phase one of the terraces at Estates 361 in Gurgaon, which contributed approximately 500 crores, while sustenance sales across the existing portfolio added another 600 crores. Collections for the quarter stood at approximately 575 crores, consistent with our historical collection range of 20 to 25 percent of the sales value, enabling us to fund construction without incremental debt on any of our residential projects. On the embedded value, the total revenue potential across our launched residential and mixed-use portfolio stands at INR 17,500 crores. Of this, INR 13,500 crores is already sold and contracted, comprising 3,500 crores already collected and a further 10,000 crores to be collected as construction progresses. It's important to note that our current P&L reflects only a fraction of what is already contracted. Translating the sold portfolio into profitability terms, the embedded PBT is estimated in the range of 4,500 to 5,500 crores. This is a critical distinction of how we think about the business. A substantial majority of our future reported earnings is already locked in, well ahead of P&L recognition, which meaningfully de-risks our earning trajectory. Looking ahead, our residential launch pipeline spanning both unsold launch inventory and future launches stands at approximately 16,100 crores. Of this, 4,000 crores is already launched and available for sale this year, while the remaining 12,000 crores approximately represents new project launches planned through the course of FY27 as we continue to target annual addition of 2 million square feet of residential development. Max Estates launched the Terraces in May, its newest residential offering within Estates 361 in Dwarka Expressway, Gurgaon. The Terraces brought together smart residences, eight community-shared spaces across a host of amenities. This particular aspect within the development has a broad GDB of 1,200 crores, as part of Estates 361, which has an overall GDB of 9,000 crores. Phase 1 with a GDV of 500 crores was fully sold out in the launch quarter. Estate 361 is built as a fully intergenerational community encompassing the terraces for young couples and first-time homeowners. At Estate 105 NOIDA, driven by the strong response to the project, we have revised the development mix to a residential portfolio enhancing our project GDV to 6,000 crores with Phase 2 of this plan in FY27 as a launch. MAX 1, which was part of the transformative revival of the long-straw Delhi 1 project, has now got well underway. The acquisition and subsequent clearances provided a decade's worth of relief to erstwhile homebuyers who were brought into the MAX estate's family, including bookings recognized post-rata approval from the erstwhile developer. The project stands at 2.5 million square feet with a total GDP of approximately 3,200 crores and an annuity income of 145 crores. Delighted to share that the project has achieved the highest sales value in Noida with sales price of 37,000 rupees per square foot, excluding GST. Coming to a new launch in Gurgaon, Sector 59 on Golf Course Extension Road, it has a development potential of 1.3 million square feet with a GDV potential of more than 3,500 crores, and we are expected to launch in Q3 of FY27. Overall, like I mentioned, the company has a residential pipeline of 16,000 crores and continues to target an annual addition of 2 million on residential development. Coming to the commercial portfolio, on the commercial side, all three of our operating assets, Max Towers, Max House, and Max Square, continue to operate at 100% occupancy, Which remains perhaps the single most important data point for our commercial business. It validates both the quality of our product and the strength of tenant demand in the micro markets where we operate. Max Towers continues to command a significant re-leasing premium. The latest lease signed at 156 rupees per square foot per month against a current weighted average rental of 132 rupees, a mark-to-market upside of over 50% and a premium of more than 50% to immediate micro market rentals. In addition, the project, both Max Towers and Max Square, have received a five-star rating from British Safety Council in its first-ever occupational health and safety audit, evaluating over 50 best practice elements. Coming to the construction pipeline, Max Square 2, having a leasable area of 1 million square feet, is on track and is expected to receive occupancy certificate by Q2 FY28. It is expected to add 125 crores to the new T-portfolio. Strong leasing momentum highlighted by the signing of an LOI for a long-term release of approximately 90,000 square feet at 25% premium to the prevailing micro-market. Coming to MAC's district, which is in Gurgaon and also under construction, it has a leasable area of 1.6 million is on track. Also expected to receive occupancy across Q3 in FY28 and Q3 of FY29, respectively. We expect it to add 200 crores to the annuity portfolio. And again, here, strong leasing momentum highlighted by the signing of an LOI for a long-term release of 200,000 square feet at 35% premium to the micro market rental. As our under-construction pipeline progresses, we expect to achieve our annual rental income of approximately 700 crores at peak occupancy. We will also continue to target a million square feet of new business development towards this portfolio moving forward. Overall, we enter Q2 of FY27 with a very strong conviction in our execution capability and pipeline visibility, and I now hand over the call to my colleague Nitin, who's our CFO, to take you through. Thank you.

Thank you, Sahil. Good morning, everyone, and thank you for joining the call. I'll begin with an important update with regard to the credit rating of max estates. Last week, ICRA, one of the premium rating agencies of the country, assigned max estates a first-time issuer rating of A-plus with a stable outlook on a consolidated basis, covering the company and its 14 subsidiaries. In arriving at this rating, ICRA assessed uncommitted receivables of close to 9,500 crores as of March 26 and a cash flow adequacy ratio of about 105%, meaning our contracted receivables cover pending construction costs and residential debt. This is the first external credit assessment that the company has had, and we think it is a useful independent read on the points Sahil has described earlier. Now, let me take you through the operational and financial highlights of the Quarter 1 FY27. The console revenues stood at Rs. 52 crores in quarter one, while console EBITDA stood at Rs. 8 crores. Console profit before tax stood at Rs. 11 crores and tax stood at Rs. 8 crores. All the commercial assets were 100% lease, and the total area stood at 1.2 million square feet, with a lease rental income from max towers, max house, and max square up 5% year-on-year to Rs. 40 crores in quarter one. Max Estate Services Bank's revenue stood at Rs. 15 crores in the quarter one, a growth of 16% on year-on-year basis. As on June 26, the net debt stood at Rs. 234 crores, with a gross debt of Rs. 960 crores, including these rental discounting borrowings of Rs. 934 crores, while cash and cash equivalent stood at Rs. 1727 crores, with that means a net debt of Rs. 234 crores. Overall, we believe, Max's state remains well positioned with a strong launch pipeline, healthy collection, and growing MUT visibility across both our residential and commercial businesses. With this, I would now request Karan to open the floor for the question and answer session. Thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may best start and run on their touch-toe telephone. If you wish to remove yourself from question Q, 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 Q assembles. The first question is from the line of Khar Toda from 3 Netra Assets Managers. Please go ahead.

Yes, am I audible?

Yes, please.

Yes, good morning, and thank you for the opportunity. So, my first question is on employee and marketing expense. Like, it has increased materially by YOY in Q1. How should we think about the quarterly cost run rate and EBITDA margins over the rest of 2027?

Thank you. This is Nitin Kansal. I would like to answer your question. See, I think the underlying aspect of the advertising and marketing cost lies in the accounting principle. The way the accounting principles are defined under NDS 115 pertains that in the case of presidential sales, the entire sales is accounted for in the P&L at the time of transferring the position to the customer, although the advertising and marketing costs are all charged to P&L. If you see in the current quarter, we had launches and ongoing sales and marketing effort going in the current quarter as compared to the same quarter in the previous year in which we didn't have any leads. So, the current year quarter looks like a given impression of being elevated as compared to on a year-on-year basis. Going forward, these sales and marketing expenses would be in line with the launches which we have planned within the course of the year.

Okay, got it. And my second question is like, with 11,900 crores of residential GDP planned across Estet 361 Phase 2, Estet 105 Phase 2, and Sector 59, Which of these projects do you see as the biggest contributor to FY27 pre-sales?

So, we would not like to single out a single project. All these three projects, it will distributively give a contribution. And an important factor to note is that all these projects are in a different micro-markets. While Estate 361 happens to be on the Dwarka Expressway, Sector 59 happens in the upcoming Golf Course Extension Road, And we have a state 105, which is in NOIDA. So it's widely distributed and would be very much equidistributed across these three projects.

Okay, that's all from my side. Thank you.

Thank you. A reminder to all the participants, you may press star and run to ask questions. The next question is from the line of Aman from GoPesa. Please go ahead.

I wanted to say how exactly the relation is between Max India and Max Estates, particularly with respect to Anantara. I noticed from Max India's presentation that we are co-hosting some of the Anantara projects in Estates 351. So, how exactly does it work? How does it work commercially? And what kind of revenue shares, box shares do we have with this? And also the monetization of the Antara project. Thank you.

Sure, sure. Thank you. Thank you, Aman, for asking this question. I might just say for clarity, Max India and Max Estates, Max India being the holding company of Antara, are two distinct listed entities having separate managements altogether. At this point of time, the estate projects, estate 361 and 361, are completely housed on the balance sheet of Max Estates. And all the development which is happening in these projects, although are being marketed under the brand name of Antara, the entire profit and loss, cost, all benefits and expenses are on the balance sheet of Max Estates. As we speak today, Antara acts as a knowledge partner to Max Estates for which they are given a fee, which is a fixed fee in the range of close to 9.5%, which is a development manager's fee is given to them. And what Antara helps us is it propels and gives us the community of flavor of an intergenerational community, which gives us a multi-pronged avenues to sell our product, whereby, if you see, in the last quarter, we launched terraces. We have got Max Estate luxury residences. We have got a senior living residences under the brand name Antara, and then we have got the terraces. So all these things make a complete package in our projects in FK 360 and 361. So our relationship, just to summarize, our relationship with Antara is purely on an arm's length basis, and they get a 9.5% fee on the top line to run as a development manager for MaxiStates.

Just as you can write on this one, 9.5% of what exactly? Of the top line.

So what is happening? Just to clarify, in the case of SK 360, one-third of the project was being marketed and developed under the brand name Antara. So on the one-third portion, which is close to ballpark in the range of 1,200 to 1,500 crores of SK 360, which was under the pages of Antara, only on that they get 9.5% and not on the entire project.

Since it becomes, so technically it becomes an Antara project, which we are developing. So, is this strategy, do they get, help us get extra, in terms of extra, rate for 20, or how does it help us to have the Antara and it's the holding company? But how exactly do we use the Antara platform?

So, what happens is, I think I would like to differ on this, it does not become an Antara project. It remains a max states project. And what happens, because of the expertise which is coming on the table for the senior living component through Antara, Antara is able to drive better price realizations on the assets, which means, and we're making it as self-funded. So the way to look at this, without having a cost escalation, in fact, better economics, we are able to get a better sales velocity on the section, which is unsold under the brand name of Antara. In the estate 360, we had a continuous basis. We had a price escalation, a price differentiation of Antara as compared to luxury residences in the range of 7% to 10%. What it means is that whatever fee which we were paying to them was getting realized and they were able to realize the pricing which was a premium to max estate residences.

So you are saying 18% of extra revenue we make and that is in itself passed through to them?

It's not 18%. I think I'll again repeat the revenue. The revenue is fully to the account of max estates. On the top line, if we sell an apartment of 5 crores, the top line accrues to max estates. And if it's a senior living apartment, they get 45, 48 lakh rupees as a fee. And that is also paid as we collect over the life cycle of the project and not upfront.

Hello, Mr. Aman. I just request you to rejoin the queue for the follow-up question, please.

Thank you.

Yeah, thank you. A reminder to all the participants, you may be star and want to ask questions. The next question is from the line of Karan Khanna from Ambed Kapital. Please go ahead.

Yeah, hi. Thanks for the opportunity. So, firstly, Sain, a question at a broader macro and, you know, the industry level. We've seen a lot of new graded developers taking a chance in the Gurgaon and Delhi NPR market at large with premium projects which have been launched lately. While, obviously, this shows that demand has been quite resilient, how should one read the success of, you know, one of your peers' project in Mumbai, from Mumbai, and, you know, add golf course extension door, and what does this do to your project in sector 59? And more importantly, with increased competition, how should one think about BD potential, given that there will be higher demand from the landowners, and the overall scope for absorption of inventory, given that many new projects have similar ticket sizes.

Yeah, thank you for that, Karan. So, we do continue to believe that there is a wave of consolidation that is happening in the real estate space, and that consolidation towards organized, trusted, listed players will continue. And we are seeing a trend of that. In specific, we remain very encouraged by the response some of our peers have received in the Gurgaon market. It is reflective of the inherent demand for a good quality offering and product and a brand. And as Max has stated, we believe that we firmly operate in that category, where from a product differentiation perspective, From a brand recognition perspective, we do believe that we will be able to command very strong sales, and our track record has shown that to us, like the fact that we have closed 5,300 crores plus sales in the last two financial years, and even in Q1, having done 1,100 crores of sales as we speak. On the business development part, I think we remain very confident and optimistic that there will be, while there will continue to be a consolidation amongst the listed and organized players, Max Estates continues to be one of them and will continue to do the BD within our guidelines and within our parameters, and we continue to do that as we move forward. So, we remain very optimistic about that as well.

Sure. And then second question, Sajal, is on the BDA pipeline. You'd earlier said that Ghaziabad, Javar, and Faridabad were markets you were studying, but your core focus remained Gurgaon, Delhi, and Noida. With Ghaziabad now appearing more prominently in the BDA conversation as well as on slide 29 of your investor presentation, has max estates moved beyond evaluating markets, you know, to actively pursue specific parcels? And if so, could you give us some sense on the potential scale, deal structure, and return hurdles that you're seeing in Ghaziabad versus the traditional Zurgao and Maeda markets?

Yeah. So, you know, we at Max Estates will continue to evaluate many, many opportunities and within the greater NCR region as well. And we are already doing that as is evident and as we've shown. It's a little premature at this stage to give guidelines or to give guidance on what the commercial parameters of a deal that we have not yet closed are. But I think broadly, just to give you perspective, NCR and the larger part of NCR, we remain very confident to continue to accelerate our growth journey.

Sure. And then lastly, Nitin, in the last call, you indicated 2,500 to 3,000 crores of SI27 collections against 1,578 crores last year. You know, with project deployment of around 1,500 to 1,800 crores. Given Q1 collections were around 500 crores, are you still comfortable with the 2,500, 3,000 crore full-year range? And importantly, should we expect OCF to remain meaningfully positive even as construction spend accelerates at S8 105, MAX 1, and S8 361?

Absolutely, Karan. In fact, the quarter one collections has, in fact, given us more confidence that we are on track to achieve our target collections in OSA for the current year. And we expect our collections to be in the range of 2,500 to 2,700 crores in the current year, which would be a combination of the projects which we've already sold, which will be heating the construction milestones and the fresh sales which we are planning to do, which is in equal proportion to one of them. And we would be deploying, say, if I can break up my deployment, it would be on two prom. One would be on the, we would be deploying close to 1,500 to 1,800 crores on the project, and we would be having OCF of close to 750 to 1,000 crores left, which we would be planning to deploy on the BDA efforts ongoing in the council.

Great. Thank you. Until these are my questions, I'll come back and look if any follow-ups. Thank you, Zanand.

Thank you. The next question is from the line of Pritesh from Access Capital. Please go ahead.

Yeah. Hi, Sahil. Hi, team. Good morning, and thanks for this opportunity. Just two, three questions. Firstly, see if I say the velocity that we have achieved in, you know, From in projects which you've launched in 361, MAX1, and ISK105, we can see like 50 to 70% of the in.

Mr. Pritesh, your line is not clear.

Hello? Is it fine now? Yeah, go ahead. Okay, okay. So I was just checking on the one should have now, given that we have sold 50 to 70% of the inventory in first six months. You know, how should we think about velocity? Like, you know, should we going forward also assume that whenever a project is launched within six months, there is enough demand where we give this kind of velocity and within a one year or two years, we should be able to sell out this project. And apart from that, for MAX 1, while it's on the ultra-luxury side, we know where there, how it can go, the sales can go to the project.

Yeah, so, you know, just to give you an overview, we are not giving forward-looking guidance in terms of sales, but as you have seen our track record, we remain extremely optimistic and confident in, you know, in achieving very robust sales. You've seen that you mentioned the numbers that we have done. I would like to highlight that even in this quarter, almost 50% of our sales came from sustenance sales and 50% came from a new launch, approximately. So we remain very confident on the strength of the product, on the strength of the brand, on the pull that we have on our geographical diversification and on our product diversification to continue the growth trajectory for MaxEastates at large.

Mr. Pritesh, we can't hear you. Your line is not clear properly.

Okay. Is it better now or should I come back?

It's better.

Yeah, yeah. Okay. Just as a follow-up, you still want to avoid doing the guidance for FY27 or now that we have seen first full quarter and, you know, half of second quarter as well, You know, you are more confident on guiding for FY27?

Yeah, so, you know, like I said, we are not giving a guidance for FY27. All we are saying is we do have about 16,000 crores of inventory available with us to sell and, you know, for the coming year and beyond. So we remain very confident, optimistic that what we have is in fantastic locations. It's a great product mix. It's a great, you know, product diversification based on our strategy. So we remain very confident on that.

Sure, sure. And just one last, you know, in terms of launches, you highlighted Q3. We will have a sector 59 launch. But apart from that, the balance inventory in 361 and estate 105, How should one think about phasing that out?

So some of it will obviously go to FI28, and we'll plan it in that. Like I said, of the 16,000 cores, there'll be some which will come in Q3, and there'll be some that will come in FI28 as well.

You want to exactly put them now? At 16,000, it will be more in FI28 and less in FI27.

Like I said, we will decide that this is the, you know, market scenario and microeconomic environment.

Sure, sure. Okay, just one last on the Delhi, how should one thing about the time?

This has been one of the most important milestones in this development, whereby the hurdles have finally got cleared, and now with the DDA finally agreeing to this, the new guidelines that have come has cleared the path for land pooling to finally take off, And we, as Max has said, continue to be extremely excited and optimistic. And we believe that this is a complete transformational policy for the state of Delhi, for development in Delhi, and for housing in Delhi. So it's completely a very, very transformative, broad policy and contours of the deal, which is in line with what has been the discussion that DDA has had over the past many years. So, we are very happy that finally this has come through.

And in terms of timelines of getting to the listed entity, how should one team?

It's difficult to mention timelines. As you know, that this has just happened a few days ago. So, we are still, you know, trying to get more details of it. We understand that there is still some notification that Ministry of Housing has to do. So, and then, you know, we have to understand in more detail some of the aspects. But yes, it is something that we will look at as access very, very seriously.

Sure. Okay. That's it from my side. Thank you for answering all the questions and all the best. Thank you.

Thank you. The next question is from the line of Parikshik Dupta from Fair Value Capital. Please go ahead.

Thank you very much for the opportunity. Excuse me. And congratulations on a good quarter. My first question is in continuation from one of the other participants on business developments. In the previous Quarters' Concall, we also articulated the fact that the discussions with landowners were opportunistic given the volatility in pricing. Can you please help us understand the current scenario? I mean, how the discussions are going? Is the pricing more favorable or anything on that sort, please?

I think we continue to remain very optimistic and push on the business development pipeline. As I discussed, we have identified our key geographies, and we continue to drive them. At this stage, I would not like to comment any more on how some of those discussions are going, obviously because of the competitive nature of each of those opportunities. But it's suffice to suggest that we are very optimistic and we are continuing to push the business development pipeline.

Okay, thank you for that. My second question is just a bookkeeping question. So, when you mentioned that the 1 million square feet of commercial real estate will be added each year, is that inclusive of the 700 crores annuity guidance or is it on top of that?

Yeah, thank you. This is Nitin. Just to answer that, 700 crores is an account of the projects we have already done and under construction and the development at this point of time. So, 1 million is over and above what the 700 crore is.

I understood. This is very helpful. That's it for now. I'll join back the queue for any questions, and good luck for the quarter.

Thank you so much.

Thank you. The next question is from the line of Jay Khan Beria from IIFL Tartu. Please go ahead.

Yeah. Hi. Thanks for the opportunity. I just wanted to get a sense of the cash flows for this quarter. So, our collections were quite healthy, but our net debt has seen some increase. So, can you give some flavor on how the cash flows have been deployed in the quarter?

So, I think the way we have to think is that although our debt has gone up, so has our cash balance has also gone up. The current debt which is going up is on account of the construction finance we have taken on the commercial assets. Currently, we have got three assets which are underway. We have got max square two, max districts, and max one, which is underway. So, as we speak today, what is happening is the debt drawn on this project, which is towards construction finance, is getting added, and which adds to the overall debt of the company.

Okay, Andy, so how do we explain the rise in net debt then? Because net debt also has gone up. So, have we deployed, so have our construction spends accelerated in the quarter?

Our construction spend is across the SX. What is happening in addition to what we're deploying on the projects, we're also paying for the land. We also have a land revenue share to its landowners, which go over there. So if you see in terms of actual deployment, it has accelerated in the quarter.

Okay. Okay, my second question was on the commercial side. So, have you made any progress in terms of pre-leasing after a strong FY26, where we saw some good pre-leasing momentum for our under-construction assets? So, because our peers are saying that there are some deferrals by large lands, so how are we seeing the leasing momentum for our assets? Great.

So, we see a strong traction. If you see, in our last quarter, we had mentioned about both our projects and the construction projects. Max district having close to 2 lakhs square feet of area getting free grease, and in the case of Maxwell, close to 100,000 square feet of area getting free grease. I have to assure you, as we speak today, in both the projects, we have a pipeline of, which is in excess of 3 million square feet, which is under discussion. And the also important part to note is that our pre-leasing momentum is not only on the content, it's also the increase in premiums of the rates which we are getting. Both the pre-leasing happened at a 25% to 30% and we are gradually trying to inch up the premium on the remaining pre-leasing which we are planning to do.

Sure, that's helpful. Thank you.

Thank you. The next question is from the line of Akash Gupta from Nomura. Please go ahead.

Hi, am I audible?

Yes, sir.

Hi, sir. My first question is on the launch lineup for FY27. I wasn't clear. So, we have 15,000 crores of GDV launch pipeline. Could you just give us a sense, what is the value of launches that we are looking in the balance nine months, if quarterly, if possible? That's my first question.

So, I think broadly, we will have close to, I would say, 5,000 crores of launches that we are looking to do in the remaining half of the year that we have, in the second half of the year, and between 5,000 to 5,500 crores of new launches. And we will have about 3,000 to 4,000 crores of old inventory that we have available with us as well that is already launched that we continue to sell through the sustainment process.

Understood. And my second question is on the FI27 pre-sales guidance. I'm seeing slide 15, and we continue to give guidance for the past three years, and now we have changed our strategy. All your peers are also giving guidance, at least on the pre-sales and launches. So I just wanted to understand why has there been a change in strategy?

We feel that giving a guidance in the current microeconomic environment is not the best thing for the long-term health of the company. And we are very focused on the quality of sale that we do, in how we sell, in who we sell to, etc. And therefore, I don't want to, you know, lock ourselves in by giving guidance, and especially in a microeconomic environment, which is extremely volatile. So we have to take in the path of not giving sales guidance, and we will stick to that. Understood, sir. Thank you so much. Thank you.

Thank you. The next question is from the line of RISBICC from Vanna Financial. Please go ahead.

Hi. Good morning. Just one question from my end. Sir, the Sector 59 project, are we launching the entire project together or it will be phase-wise?

We will take that decision, you know, as we get closer to the time. I think it's not a very large project in terms of the number of units that we are planning. So, this is a decision that the management team will take closer to launch.

Okay. But we have the approval for the entire project, right?

Yes, of course.

Okay. Okay. Great. All the best and thank you.

Thank you so much.

Thank you. The next question is from the line of Avishayi Lodhya from Antics of Broking. Please go ahead.

Yeah.

Good morning, Favilan. Just one question. So, we are developing commercial assets. I just want to understand what kind of CAPEX is still remaining. As I can see, we are expecting a certificate by Q2 or FI28 for at least Phase 1. And, yeah, so that's one. And whether that will basically weigh on our balance sheet anymore from here, or how should we see the cash flow moving on?

Hi, Abhishek. Good morning. Abhishek, just to get context in the remaining topics to be done on the commercial assets, to begin with, to clarify, currently we have achieved financial closure on all our commercial assets. What we had underwritten, both the equity partners have put in their share of equity, and we have also got debt sanctioned from leading banks like SBI, ICIC, and Excel. The remaining capital which we need to deploy on these assets is an amount of close to in the range of 1,500 to 1,800 crores, and which is completely tied up as we speak.

Okay. So basically, current balance is already, I mean, includes that kind of provision, right?

If the equity provisions have been made, as in when we draw the construction finance, if you see we have been stating that our long-term strategy is to put in equity to the tune of 40% and the remaining is done through debt. And once the project is commissioned, then construction finance is converting to lease rental discounting. If you see from the balance sheet reflection, this incremental debt of 1,500 crores is not reflected. But the whole objective is once the projects are completed, This construction finance would be converted into a legal discounting.

Okay. Thanks for the clarification, Sanya.

Thank you, Vishak.

Thank you. The next question is from the line of Jigar from Financial Research. Please go ahead.

Yeah, thank you for taking my questions and congratulations on very good results. Sir, I wanted to understand a bit more about the Max India understanding that we have regarding Anupar. I think you alluded a little bit about SJ360, and maybe I understood in SJ360 one also. If you could just go through it once again, please. Thank you.

I'll try and explain it. I think the way we need to look at it is in the context of where you have a hotel owner and a hotel operator, right? So you have brands that run hotels, they are operating hotels, and they take management fee for operating that. And the property owner is separate. In the same way, just to give you that analogy, Max Estates is the developer of the senior living component as well. Antara is the operator of it. And Antara takes a development management fee for the operations of it. And that's what they will take and that's how they are scaling with us. And we are, as Max has said, developing Antara as part of our various developments, not in all of them, but in some of them. And Nitin had highlighted that we do pay about Antara as a development management fee, 9, 9.5% of the sales value. It's also important to note at this time that Antara sells at a premium of approximately 10% compared to our own Max Estate sales. So, therefore, we are able to offset that cost in that sense. I hope that's clear.

Yeah. So, as I said, 360, you mentioned that the senior living portion, the inter-generation community would be about 1200 to 1500 crores, right?

Approximately, yes. Correct.

And what about 361? What would be the, I think, out of the total, I think 361, about 10,000 crores is the peak GDP, right?

I think between 50% is approximately the sales value of Antara. Sorry, you got cut. 15% to 20% of the total value would be Antara.

Of 361?

Yes.

Okay. Thank you so much and all the best.

Thank you. The next question is from the line of Tushara Garwal, an individual investor. Please go ahead.

Hi. Good morning to you. I have a couple of questions. First is on the lease rental parts, you mentioned that the inventory that you have released is at a premium. So that premium is on today's market rate or when the, you know, when the property will be occupied on those market rates, projected market rates in those years?

Thank you, Prishan. So, the premium is on today's prevailing market rates. When we do our projections, we have been projecting numbers of what we get today.

Understood. And what is the yield that we are targeting on our projects?

So, when we underwrite the project at the time of greenfield, that is in the range of 12% to 14% is when we underwrite. And by the time the project is completely constructed and leaked, if you see the prevailing cap rates of the prevailing REITs is more in the range of 6.5% to 7%, thereby resulting in a significant capital depreciation from the time we take over the asset and the project is delivered and leaked. This entire cycle journey happens in the range of 3 to 5 years.

And on Antara front, how much percent of the project do you plan to keep moving forward in your other projects?

So this is not a – see, what is happening, we would like to have a second portion of senior living component, but that is not crystallized that all our projects will have a certain portion of Antara. That is depending upon how the market situation is and what is the market acceptability and the acceptance of senior living in that community. So, it's a dynamic feature which we keep on evaluating on a project-to-project basis.

Do you see the 9.5% fees which is K2 and R are going down sometime in the future, or is it a fixed fee kind of a thing?

It's not a fixed fee. It's a dynamic thing, since it's a commercial transaction between two commercial entities. It's always commercially negotiated and comes to a certain conclusion. To give a firm commitment, the number going, remaining static going up and down would not be possible for us at this point of time.

Antara also would be charging for their services in the future. So do we get some revenue share from their portion of revenues?

So Antara would not be charging anything. They would be one of the facility managers at that point of time because they have a deep expertise in managing the senior living residences. But that would be all on the balance sheet of MaxSTH. And the entire revenue stream will accrue to Max's states only. Whatever fee would be given to them would be a function of charges at that point of time.

And lastly, are we exploring some other markets?

Sorry, just to add to that, in case the question was about the operating facilities, etc., that fee for the Antara component will go to Antara itself.

Understood. And do we have plans to explore other markets, or we will be still focusing on NCR market only in the near future?

Yes, we continue to focus on the NCR and the larger NCR region itself.

Thank you so much. I'll get back in the queue.

Thank you. The next follow-up question is from Palayana Aman from GoPesa. Please go ahead.

All my questions are answered. Thank you very much.

Thank you, Aman.

Thank you. As well as no further questions from the participants, I would now hand the conference over to the management for closing comments. Over to you, sir.

Thank you so much. Thank you, everyone, for joining the conference. Look forward to interacting with the next quarter results also. Thank you so much.

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

Thank you.