Raymond Realty Limited (RAYMONDREL) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Raymond Reality Ltd. Q2-FI27 earnings conference call. As a reminder, all participant lines will be in the listener-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now have a conference to go to Mr. Akhil Daljandani from Antique Stock Broking Limited. Thank you, and over to you, sir.

Thank you. On behalf of Antique Limited, I would like to welcome all the participants to the Q2 and H1 F527 conference call of Raymond RIT Limited. Today, we have with us from the Senior Management of Regman RIT Limited, Mr. Rakesh Tiwari, Group CFO, Mr. Harmohan Sani, MD and CEO, Mr. Ankur Jindal, CFO, Mr. Saleel Baha, Group Head of Investor Relations, Mr. Amir Sabrawal, Head of Investor Relations. Without taking further time, I would like to hand over the call to Mr. Harmohan Sani. Over to you, Harmohan.

Thank you. Good morning, everyone, and thank you for joining us today to discuss our financial and operational performance for the second quarter of financial year 2027. So, guided by our Go Beyond ethos, we have successfully carried out the scaled execution, and with strategic From last year, we have walked into the first half of FY27. Our performance this quarter reflects strong operational momentum, validating our execution capabilities, and deep trust home buyers place in our brand. I would now fill updates for the quarter Q2 in detail. We achieved the landmark milestone this quarter by nearly doubling our quarterly pre-sales without any new launches, driven entirely by robust sales velocity and steady price realizations within our existing portfolio. Total income for Q2 FY27 grew at a steady 7% year-on-year to 757 crores. And through an optimized product mix and disciplined cost management, EBITDA also rose from 14% to 15 crores with margins now at 15% as compared to 14% in the corresponding quarter. They naturally fluctuate by project phase due to upfront marketing and construction setup costs. They are expected to normalize progressively as more of our projects go in mid-stage as this year progresses and moves into next year also. So we are firmly on track to meet our full year FI27 EBITDA margin guidance of 17 to 19 percent. Start seeing further improvements in the balance year. Our booking value contribution mix for the period reflects the well-balanced portfolio with projects outside of our legacy Thana land contributing 57% and Thana, which is our own land, which started the business, contributing 43%. And this ratio will keep getting skewed more and more towards projects which are outside, because most of the growth will come from outside of Thane. We also witnessed a 67% surge in customer collection to 682 crores. This highlights our intense focus on cash flow efficiency and operational labor. For the first half of the year, our cumulative collections, 1,233 crores, and booking values increased by 111% year-on-year to 1,602 crores. The additional achievement, one of the features of that was receiving the occupation certificate for address by GS1 Tower B in Thane, which comprises 270 units and almost 3.5 lakh square feet. And this also has been delivered ahead of RERA completion timeline as has been our tradition for all our projects we have delivered well before the timeline committed to the market and customers. So as a result, delivering ahead of schedule stands as a testament to a strong execution capability and operational effort. Our total portfolio now stands at an impressive GDV of approximately 52,000 crores, which includes what we have added in H1 of approximately 8,500 crores per rail. So this year itself, we have added 8,500 crores to reach this level of 52,000 crores. So, this reflects a diversified and high growth asset base across MMR and it as of now represents a prudent mix of own land and asset light JDA projects. If you look at the Thana land parcel which is a 100 acre parcel that remains the launch pad on which this business started and And it carries a 25,000 crore revenue potential. Out of this, approximately 65 acres is currently under development, which represents about 6.7 million square feet of Rera carpet area and a revenue potential of 16,500 crores. Out of this 16,500 crores, 9,770 crores has already been sold over the years, and collections have reached 7,977 crores till date from the initiation of the business. Now, driven by our strategic pivot towards asset light model, if we look at the JDA, JDAs now account for approximately 52% of our total GDP portfolio. Which represents a revenue potential of 27,000 crores at current prices. Now, within the JDA, if we look at all the projects, four projects, which are the Bandra project, the BKC project, Vadala and Sion, have already been launched and they are progressing rapidly. And they have already generated for us over the last two and a half, three years that we have launched this ADA-based model, they have already generated a sales value of 3,432 crores and a collection of 857 crores till date. And this will keep on growing. If you look at our booking value contribution mix for the period, that also reflects and follows a very similar pattern of the GDV, where non-Thane JDAs have contributed 57% of the pre-sale value, and Thana has contributed 43% of the sale value. So, while there is a mix, if you see 25,000 crores versus 27,000 crores in terms of GDV, but the sale contribution of GDV is higher as compared to the Thana land because they are distributed across various micro markets and the potential to grow over there is much higher. Now, if you look at our balance sheet, we maintained a highly disciplined approach to capital allocation. We closed the quarter with a net debt of 912 crores and a gross debt of 1200 odd crores with a healthy debt to equity ratio of 0.8x. If we look at the net debt to equity ratio, it will be closer to 0.5, which remains comfortably well below our 1 is to 1 ceiling and gives us ample headroom for growth going forward. Now, backed by 300 crore's liquidity buffer and a stable cost of debt at 9.6%, we are comfortably funded for our construction requirements over the current year. Additionally, total interest cost for Q2FI27 is 44 crores, which includes interest on bank borrowings of 27 crores and 17, 17 crores of interest to government authorities for various approval payments which get paid over a period of time, particularly agencies like BMC, TMC, and MADA, Where the approval costs get paid over a period of time, and on the balance, the government charges a nominal interest without any documentation. Regarding our cash flows, if you look at, we have also shared a detailed breakdown of our first half FY27 cash flows as a part of our investor deck. You can refer to slide number 23 of our investor presentation. You will see that our existing mature projects continue to deliver strong operating cash flows, which is being reinvested into recently launched and new yet to be launched projects. The reason we have broken it up is because it gives you a better insight and it will help you understand in greater detail how the cash flow cycle for various projects move as they move from early stage to mid stage and then late stage. And as is typical for any new JDA project, it remains cash flow negative for the first two years due to upfront investments And then becomes cash flow positive from third year or middle of third year onward. And then so it goes on towards positivity after that. So all our projects have very healthy IRRs and strong underlying cash flows. Therefore, as these projects mature, we shall see the cash flows improving. Once we reach a steady state in terms of 8 to 10 projects outside of Thana, which will be under execution, start throwing out cash, and Thana is already net cash positive, you can see. So between these two, I think within, I mean, my estimate is that within the period of two years, we will reach that steady state and you will start seeing much more stability in cash flows, much more stability even on quarterly, quarter on quarter numbers because the hyper growth phase will start to stabilize in the next two years. Just now in the last six years, and we are continuing in that hyper growth phase, which requires a lot of capital, and we have done this growth profitably. It's always a challenge to display a profitable growth, but happy to share with you that your company has managed to grow in a profitable manner and yet maintain the financial discipline of not exceeding one is to one debt equity. One more thing, I think, which I have heard echoes of, which I want to address just now, is that a lot of people have asked me that your interest charge has gone up and the debt level has gone up, which is a fact. But if you compare it with last year, the last year the debt level was extremely low because a lot of new projects had not launched and only mature or very early stage one or two projects were there in the annual. But last year, towards the end of Q4, we launched a lot of new projects. And as a result of that, all these projects are in early stage and they require capital to begin with. And because of that, the debt level has gone up. And if you look at a steady state debt level, one is to one debt equity is a very healthy norm. Of course, our endeavor is to stay well within that, and this debt level will also stabilize. So, if debt level stabilizes, let's say, at this 1,200, 1,400 crore level, then next year's comparison will not give you this kind of a delta, which you see, because last year, the average debt was about 300, 400 crores in that zone, and this year, the average debt is higher, but it is still at a very healthy level. As mentioned in our earlier conference call, our endeavor has always been to attract institutional capital with a focus to enhance scalability. We are also very happy to share that Rayman Realty's subsidiary company has raised 210 crores from AIF, which is promoted by ICICI and Prudential AMC Limited. This is part of our ongoing process of addressing the cap table at the same time, since I alluded to all the interest costs. Apart from that, the promoter himself has committed about 400 crores of equity that he is infusing, and the first tranche of that is going to be received shortly as per the schedule, and balance will be as has been approved by the shareholders in the EGM. And with this strategic collaboration with ICICI, our subsidiary will get 210 crores as part of the peak investment, which would represent almost 60% of the peak investment that particular project needs. So, this joint equity investment will directly fund a high-value redevelopment project in one of the Mumbai's very premium micro-markets. And this transaction actually validates our very disciplined asset-light expansion strategy where we continue to spread our risk as the project moves on and accelerates. And we keep derisking ourselves and share the risk with other market participants. It allows us to accelerate project timelines. It allows us to grow even faster than we have grown in the past. And also, the most important part is it keeps our capital efficiency at an optimum level, which is what the endeavor is. So, by leveraging this institutional capital, we can scale across premium micromarkets without over-leveraging our balance sheet, ensuring strong project delivery and enhanced returns. That's the conclusion of working on the cap table. Now, looking ahead, if you see, we are accelerating our growth trajectory over the next two quarters. So, H2 will see two launches from us. Both of these launches are going to be in Mahin. The combined GDP of these projects is about 4,100 crores approximately. Exactly. Now, so with a clear strategy and the land parcel that we have in Thane and a GDA pipeline which is already signed up plus there are more GDAs which are in the pipeline which we will be signing going forward. Along with that, our operational intensity of committing to timely delivery and everywhere so far we have maintained before time delivery and going forward also all our projects are currently on time or ahead of schedule. We see no significant challenge in maintaining that track record going forward as well. So as a result of that, we remain firmly on We are on track to achieve our four-year guidance of 20%, minimum pre-sales growth, return on capital employed of 20%, and our EBITDA margins for the year will range between 17 to 19%, and the PAT margin will be 9 to 10%. This has been an earlier guidance. We are maintaining that guidance, and as of now, everything is on track to deliver this performance that we have promised.

Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-down telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes in the line of Prithul Shah with Anubuti Advisors, LLP. Please go ahead.

Yeah, good morning, and thank you for the opportunity. So, my question was with respect to the investment that we have received from ICSA-EMC. So, what is the amount of stake that the fund would be received in the 10x subsidiary for this 210th year?

So, they have infused through OCPRS. As far as the economic interest is concerned, the deal is structured in a way where we are the execution partner, and we will be charging a fee to them for executing the project, which is about 5% of the total turnover of the project we will charge as fee, and they are contributing 60% of the capital which is required. Up to 210 crores of rupees, and we are contributing 40% of the capital. So the balance profit which is left will be distributed in that 60-40 ratio. So we will be contributing 40%, but we will be getting profit on that 40% plus 5% on top line. So that's the deal.

Okay, got it. And, sir, as you mentioned that we are comfortably placed at, you know, debt equity levels, and we have already received the fund for the 10x subsidiary from ICACI, then why we have, you know, announced the preferential issue to the promoters? And if I recall, before two or three con-call, we said that we are not looking for any fundraise. So, is there any major land parcel that we are eyeing or, you know, what is the major reason for diluting our equity currently?

So, a promoter has infused equity of approximately 410 crores. See, our ambition is to grow even faster and better than what we are, and we are doing it with a lot of discipline and the right kind of assets. Naturally, capital is needed, and as you are aware, you know, with real estate companies, anyway, market is showing concern on debt levels and interest costs, and also we don't want the debt to go out of control, so naturally the other option is to raise equity. As far as ICICI is concerned, that was always part of our plan, and it was baked into our annual operating plan for the current year that we will be getting money from some private equity player and that will remain a strategy going forward also if we get the right opportunity. We would continue to do this because it helps us in two, three ways. One is, of course, we share our risk with other market participants. Second is we get access to capital so we can grow rapidly. And third is my margin profile also improves because I am charging a fee which was never part of my revenue stream. So all three benefits we get, so we will continue to do that. So as a result of that, this has happened.

Okay, sir. Thank you so much.

Thank you. The next question comes from the line of Avantika Jahwar with Banyan Tree LLP. Please go ahead.

Yeah, hi. I noticed in this time's presentation on the guidance, there hasn't been a guidance on revenue mentioned of 20%, unlike last time, where the revenue guidance was also called out of 20%. I wanted to check if we are still on track on that.

This year we have not given a guidance on revenue growth, but if the revenue growth is lower and the EBITDA growth is 20%, you should be happy because my margin is expanding. I am not saying that it will be lower, but we haven't given a guidance on revenue so far, because the reason for that is simple. As our operation becomes more complex with so many projects, and we follow percentage completion, there are many moving parts in calculation of turnover. So, we didn't want to give a guidance where we were not 100% sure that we will be in a position to, Meet that guidance. But rest assured, as far as the BITDA is concerned, we will deliver a 20% and even on pre-sale also, we will deliver a 20% growth.

Understood. I think that's clear. Thank you for the response. Just to clarify, I was referring to the August 19th presentation, slide 9, where you called out a revenue guidance also besides the pre-sale one of 20%. But thank you for your response.

So, you can assume it will be within the similar range. It's not going to be significantly different.

Thank you.

The next question comes from the line of Daksha with Desvalado Research. Please go ahead. Mr. Daksha, your line has been unmuted. Please go ahead with your question.

Hi. Hi, I'm an audible, sir.

Yes, you are audible.

Sir, I just have one question. Our interest expenses have already reached 91 crores this past. Do we still maintain the full year interest cost cap of 100 to 120 crores, or will cost be elevated in the second half?

We got this number from, but our full year number will be in line with whatever is in H1. You can safely assume that it will be following the same run rate.

Thank you. The next question comes from the line of Rishabh Khotari with Ashish Shah Investment. Please go ahead.

Hi, sir. Sir, given the current microeconomic uncertainty and the possibility of a, let's say, 50 to 75 basis point rise in the interest rates over the next year, how do you see this impacting the home buyer demand, particularly when it comes to MMR market? Do you believe that the underlying demand remains strong enough to withstand higher borrowing costs? Over to you, sir.

Yeah, so naturally borrowing costs definitely impact high-ticket purchases, but the point is when is that tipping point and inflection point going to reach, when it starts pinching household budgets. At 25-50 basis point, I don't see that will have any major impact where people will change their decision because their EMI is going to be impacted. And the reason I say this is, and I am only referring to our portfolio, I am not talking about market in general and other players and which segment they are present in, because our segment is very clearly mid-market and above. We are not present at the bottom of the pyramid or even lower value apartments, which is most sensitive to these interest rate changes, where even a 75 basis point interest rate change will immediately reverse the decision or change the decision. Our lowest value apartment in Thana is not less than one and a half crore, and that's the lowest value. And bulk of our inventory is in the category of about 3.5 crores and onwards, going all the way up to 20 crores, if we look at all the MMR inventory that we've got. In that segment, my belief is that unless interest rates really run away, there is not going to be any serious impact. The only issue with interest rates is that generally if the economy starts to slow down because of that, but usually that's with a lag and you see early signs of that. As of now, there doesn't seem to be any major impact. I guess India also doesn't have a choice looking at the interest rates in US and the way our currency has behaved so far That they have to harden interest rates a little bit. But I think it's already priced in people's decisions.

It's already priced in. Okay, sure. And, sir, my next question is in terms of valuation. Sir, we listed at a valuation of around 6,500 crores. But despite delivering the growth in both top line and bottom line, our market valuation is still nearly 50% below the listing levels. How does the management view that significant disconnect between the company's operating performance, let's say, and its stock price? How concerning is this for the management, and what steps are being taken to improve the institutional participation, given the decline in DII and FII holdings since the listing? Over to you.

Yeah, so naturally, like you said, the performance has been good if we compare ourselves to our peers also, in terms of growth, in terms of return on capital employed. Our numbers really stand out. But yeah, market is giving us a message that we have to work even harder and deliver better numbers. So, we are committed to that, and we are working out strategies to see, like, for instance, this ICICI deal we have done is in line with that, which will improve our margins and our growth also further. At the same time, like you mentioned, that the efforts to reach out and communicate with the market, see, it's a three-pronged strategy that we have come out with. One is, of course, the communication part, which we have to do. Second is, we need to increase the coverage of the stock, since you rightly mentioned that we listed only in last July. And suddenly, we were not in any of the indexes, so a lot of passives sold our stock, and we became a small cap. So a lot of mutual fund radar we were not on. So, naturally, the strategy now is to look at all the market participants who focus on smaller cap companies so that, you know, the cap table for us changes and there is more institutional participation. These things do take time, and we are already making efforts, significant efforts, actually, in this. And you will see this year itself that our coverage with a lot of institutional brokers and research firms, the coverage will increase. So far, there was only one entity which was covering us, and we are expecting by the end of this year, At least four people will be putting out report on us and covering us. So there is more information available. Even if people have interest, they didn't have any place to go to other than talking to management. And not everybody has the time to do that. So that's one effort. But then Amit, who is on the call with me just now, Amit Savarwal, he has joined us as head of Investor Relations. And he has started his outreach with all the mutual funds who focus on smaller caps and also other institutional participants in the market. So that there is a constant connect and communication about the good work that we are doing. Now, these are the two things we can do. And third is, of course, through PR activities, whatever work we do should get publicized with public at large, that you would have noticed that we are doing as much as we can, everything, any significant event which happens, we communicate to the market. So I guess it's just an equation of time, maybe a couple of quarters more of these efforts will start showing results going forward. So that's what we are doing.

Okay, got it. So, okay. Thank you, sir. Thank you.

Thank you. The next question comes from the line of Tananjay Mishra with Headroom Broking. Please go ahead.

Yeah, hello sir. This 14,800 unsold part, what proportion is it to be launched in this? I mean, we have 14,800 of unsold inventory, and in that also, we have to, certain part, we have to launch, right? So, what is that?

Yes, so, so, Dananjay, basically that changes from project to project, and therefore, as a footnote also, we have mentioned that in the annexure, We have given project by project breakup. Basically, how many units have been launched. For example, in Madala, the total inventory is, for example, 1500 units, but only currently 670 units have been launched, which is like almost kind of 45% of the inventory has been launched in that particular project. Although the GDV of the project overall is 5000 Kauru, but within that only 45% has been opened up right now. And within that, we have already sold around 60% kind of, around 370 units plus. So that way we have given every project-by-project breakup in the NXR, if you check.

Yeah, that is there. So I just wanted the consolidated figure, I mean, if it is ready. Otherwise, I will...

I wish. I can share that with you.

We'll communicate separately that with you. We don't have it readily available just now with us. Okay.

And secondly, this 14,300 project-level cash flow we are talking about, So, likewise, what will be the net operating cash flow, if you can give some estimate over next 4-5 years?

Sure. So, with the current portfolio, so this has been prepared, keeping in mind the current portfolio, which is 52,000 crore of the GDB as it gets executed. So, in that, this is the project level cash flow of around 14,375 crore. Within that, if you see, we have mentioned that there would be selling and marketing expenses to the tune of around 5-6%. And there is a corporate overhead which is currently at around 5%, but as we grow in size, maybe it might reduce, but even if I take the 5% as this figure, then you can reduce the 10% from that. So it is around 10,000 crore kind of pre-tax cash flow that will be getting generated from this current portfolio.

So 10% of the GDP value, GDP value of 50,000 crore, we can...

Not 50,000, because only the unsold and unlaunched inventory, 38,800 ka 10%, which is like 3,800 crore we will have to reduce. Right.

So, 10,000 crore net operating cash flow, we can assume over next 4-5 years. Correct.

As we execute these projects. Correct.

Okay, that is... This would be pre-tax. And this, Mahim, again, we are, Mahim 1 and 2, we are launching close to 4,000. So, that will be also launched phase-wise, right?

Yes, so we are launching currently in Q3 one project and in Q4 one project.

Okay, that is all for my son. Thank you.

Thank you. The next question comes from the line of Ashita Lhuda with Fraun Investments. Please go ahead.

Thank you for the opportunity. My first question is with respect to IPICI deal that we did. So, can you expect to receive the entire sum by H2?

Obviously, it will come in tranches. The first part of that money is expected in the next 30 days, and the balance should come towards the end of this year. So, by end of this year, by March, we would have received the entire sum.

Got it. And also, it is for 10X Realty Vest. Since my understanding, sir, is that it is for the Mahim project that we are planning to launch or any other project also?

So, currently, this investment is against the Mahim project.

Okay. And at the time of launch, how much inventory are we planning to open for sale?

We haven't taken that call yet. Closer to launch, we will decide on that based on market conditions and feedback from the participants.

Okay. Also, the sustainment sales was very good in the last two quarters. So, can we expect the same trajectory to continue in coming quarters as well?

Actually, it will be better than H1, because the festive season is now beginning, and typically the sales are better. That's been our experience over the last few years.

Also, by doing this deal with iPro, is this IRR accretive to us, and will you consider to do similar deals for other upcoming projects as well?

Yeah, it is definitely IRR-recreative and quite beneficial for us. And we will certainly, for the right project, we will certainly consider this going forward. It's part of our strategy.

Thank you so much.

Thank you. The next question comes from the line of Jainam Shah with Aquarius Securities. Please go ahead.

Yeah, hi. Hope I'm audible. Yes, you are. Yeah. So this would be kind of a long-term question. So if we see our company, we started with the Thane land. Over the period of time, we had a few JDA projects across the MMR region. And now we are doing almost, you can say, 50-50 in terms of our overall JDA as well as in terms of pre-sales between Thane and non-Thane. And we are now expected to grow at around 20% for this particular year. If we see, let's say, next fire trajectory for the company, how do we see the pre-sales CAGR growth that we can achieve? And this would be in conjunction with what kind of video activities we wanted to do every year, which is to make sure that our growth happens. Along with that, how the capital will be managed to make sure that that growth happens without any deterioration in the overall financial, you can say, numbers as well. If you can just guide us how we think our company will be in for our next, you can say, 4-5 years kind of, I think, medium-term perspective.

Sure, sure. Your question is actually very well-timed. We have just finished our activity of long-range planning because the earlier long-range plan that we had will be finishing by the end of this year. So, for the next five years, we have just finalized that looking at all the facts and figures and everything. So, you can expect approximately 20% CAGR as far as pre-sale is concerned over the next five years. And in terms of capital, as of now, we don't see any significant requirement for capital. May be in the range of 500-600 crores of equity going forward we may need, apart from what we have already raised, and that's a decision which the board and the shareholders will take at an appropriate time, and we will obviously inform you at that point in time. But in terms of growth, we see good growth going forward. Given our strategy, there is a lot of interest that we have. As far as business development and GDV is concerned, going forward, if we add about 8,000 to 10,000 crores worth of GDV every year, it should give us this kind of a target easily, given that we already have a strong base which has been established in the last few years.

Got it. One more question on this, how we would be targeting, you can say, land acquisition. Will it be like, let's say, adding up something like 100 to 1500 kind of a resource velocity kind of a land, and then you can say changing it out as early as possible in four, five years, or will you be buying out a large land parcel and that project can go on, you can say, for 10 years kind of a thing with phases and all those things. So any specific thing that we would be doing in this particular thing, or we are open for everything as of now?

I mean, we are obviously in business, so we are open for any good opportunity provided it meets my financial criteria and the promises that I have made to all the stakeholders. Having said that, as of today, buying land and sitting on it is not my strategy. So even if, let's say, I decided to buy a land and it was very attractive, it will be in the I'm going to take the market as quickly as possible. If at all, I was to do that. But our stated strategy is to do JDAs.

Got it. So just last question from my side. You can say good guidance that they are giving in terms of pre-sales. How do we generally assume this? Like the market growth would, you can say, 20%-odd % and we'll be maintaining the market share or, let's say, market growth. Whatever may be the market growth, our positioning would be such that we'll be doing this 20% kind of a CAJR number. But how do you see the overall market versus our market share in a particular market, or is it a broader MMR share?

So, see, the way we look at it is our margin of participation in the market, you know, market share, is so abysmally low today. I mean, Bombay sells 2.5 lakh crores of real estate every year, and that's the ballpark number. Probably, it will be higher. And what are we doing? We are very, very small as percentage of that. So, I don't think market growing and all really is a hypothesis. If I was Coke, I had 50% market share, then I have to worry about that. Today, I can grow just by entering a new micro market or starting a new project or starting a new product line also. For instance, Thana, when we started out, we started out with a sale of 400-500 crores in a year, and we are currently doing between 1,500 to 2,000 range every year. It's different. So let's say Thana will stabilize at 1,500-1,600 crores per annum. I don't see any significant growth coming beyond this number from Thana. But all the other projects that we have got, some of them are early stage, and then we are launching new projects, we are entering new micro markets. So, a lot of growth will come from there, and as a result of that, managing and maintaining that growth is not such a big challenge. The bigger challenge actually is executing all those projects, for which we are fully geared up, and our track record shows that we can manage that. So, growth will come. I mean, that's not a matter of concern to us, because Because there are so many micro markets and new products that we have yet not touched.

Got it, sir. Got it. And any other market we would be trying in maybe NPR, South Southern India, Pune, anything in the near term or we will be focusing more on the MMR only as of now?

As of now, our focus remains that. But like I said, we are opportunistic. If something comes which meets my financial criteria and I'm confident of executing it, we will definitely consider it. But our key criteria is going to be it should meet my financial metric, and I should have the execution capability of doing a project like that. We will not take speculative bets.

Got it, got it. Thank you so much for that.

Thank you. The next question comes from the line of Bhavan Modi with Anandrati. Please go ahead.

Hi, sir. Thank you for the opportunity. So, my first question is with respect to the debt levels. Right now, we stand around 1,200 crore, you know, gross debt. So, going forward, you know, should we see this as the, you know, peak debt level, you know, and now it should, you know, come down, right? Or should we still see, you know, some pinch up in the debt? And whatever the promoter contribution is done, right? So, would it be utilized towards, you know, this debt repayment or, you know, would it be towards the project?

Yeah. Sorry, carry on.

No, no, this was my first question.

Should I answer that first?

Yeah, you can answer. Then I will follow up with my other questions.

So, see, as far as debt is concerned, I mean, it's a strategy of how you are going to manage your capital table. Now, like we have stated that we will remain within one is to one, and at the end of the day, it makes eminent sense to have some kind of debt on your balance sheet, because debt is available to me at under 10%, and all my projects give me an IRR of 20 to 25%, around 25%. So it makes eminent sense and equity anyway is available at a higher rate and nobody likes dilution unless it's really necessary. So having said that, debt, to answer your question specifically, we are at 1200. It will not come down at least for the next one or two years for sure because we are continuing to grow and we are adding new projects and we want to grow and we don't want to, We will not raise any kind of significant equity going forward. Like I said, our requirement as per the LRP is in the range of maybe 400 to 600 crores additionally and not more than that. So, debt is an avenue we will definitely resort to. And it will remain around this range. I don't see any challenge in maintaining that kind of range. And it will still be within one is to one.

Got it, got it. And so to follow up with the related question, you know, with respect to the, you know, the fund infusion, you know, done by the ICICI, right? So first thing, you know, about 140 crore have you already infused? And second thing, you know, from the debt perspective, you know, if the instrument is OCPRS, right? So I believe from the, you know, bookkeeping perspective, there will be some portion, you know, which will come, you know, as a debt, and some will be, you know, recorded as equity. So, optimally, that will also, you know, in a way, you know, inch up our debt, right? Am I right in my understanding?

No, it will not reflect as debt.

Okay.

Because it is dependent on the terms that you have agreed. And our terms are that this is equity that we have got from ICICI. And only for ease of movement of cash flow, they have structured it as OCPRS. And there is no reason for it to be classified as debt on our balance sheet.

Understood. So second thing is with respect to our pre-sales guidance, you know, so we have, you know, guided 20% growth. So that will be, you know, turnout between 3,500 to 3,600 crore. And we have already done, you know, 1,600 crore of, you know, like the pre-sales already in H1. So we are still pending with 2,000 crore, right? And even if I expect, you You know, Mahim conversion to be the 25%. So, can we, you know, safely assume that we are assuming, you know, 1,000 crore of pre-sales from our existing portfolio?

No, it would be much more than that.

Okay, okay. And so, what would be the, like, the, you know, in this quarter, we saw, you know, out of the 900 crore, 700 crore, you know, came from your, you know, the address, you know, by GS product, right? Right. So, can we assume Mahim, you know, product to be more of a, you know, address type of a team rather than the Invictus product? So, have we decided on the, you know, the product category for the Mahim product?

Yeah. So, one Mahim will be Invictus and the other Mahim will be Address.

Okay. And so, just last question, you know, with respect to the, you know, the overall, you know, we have been, you know, tagging the sector and seeing, you know, a bit of a, you can say, a flattishness in terms of, you know, luxury and delta luxury. And even in our case, you know, when I see, you know, the invictors, you know, in Thane, there was almost like, you know, the Tower B, there was almost like, you know, no sales. And I think the BKT, we saw this, so sale units of 14 units. So shall we see this, you know, as a more, as a, you know, momentary thing or there is a, you know, underlying, you know, pain in the luxury or luxury product. So how should we see this?

Thana was, you can, you treat Thana as our, you know, lab that where we test our various products. So Invitas actually is a product for Bombay market and not really for Thana Thana per se because of the obvious reasons, you know, the ticket size and what have you. So the kind of clientele that we have. After having tested it in Thane and seeing success If you see, we have introduced very limited inventory of Invictus in Phane. It's not as though we've saturated the market. We have launched two towers in Phane. So, it's not any, I mean, don't go by percentages, they are misleading. But we haven't introduced any significant quantity in Phane market. As far as Bandra is concerned, the Bandra Invictus did exceedingly well, way beyond our imagination it has done. Now, we don't have upper floors available to us in BKC just now because of the aviation approval which is pending, which is expected shortly, it should happen, you know, in the next few weeks. Once that comes, then you will see sales pick up because currently our choice is also limited as far as consumer is concerned. Because of the typical nature of the product and Invictus, those guys actually don't mind paying more money, but they want a certain type of apartment and those apartments are today not available because of the approval. I have to get rarer registration of those once I have the approval. And then those, you will see sales pick up in Victor's BKC also. We already have a strong pipeline for higher floors where people are just waiting for my approval to come.

Okay. So, sir, just last question, you know, so from this, you know, thing, you know, from this experience, can we see, you know, going future, you know, if any, you know, project that comes in, you know, So the lower flows would be, you know, the address product and the higher flows, you know, we can, you know, we can have a mix of, you know, invictors. So can we see that mix, you know, going forward in our product or it would be like, you know, totally, you know, a particular tower, you know, allocated as a, you know, address or invictors? Or can we see the mix combination?

It's unlikely that we will mix address and invictors in the same tower. It's highly unlikely.

Got it, got it. Yeah, that's it from my side, sir. Thanks, thanks a lot.

Thank you. The next question comes from the line of Deepak Poudar with Sapphire Capital. Please go ahead.

Yeah, I'm audible, sir. Yes. Thank you very much for this opportunity. So, just wanted to clarify, I mean, this year we are looking at EBITDA growth of about 20%. Is that the right understanding? I think you mentioned somewhere to the previous participants.

That's right.

So, I was just doing back up the envelope calculation. So, ideally, because we are expecting some margin expansion also from 17% to 19%, and earlier I think last day it was 16.5% including your other income. So, ideally, in spite of EBITDA margin expansion, we are expecting 20% EBITDA growth. So, ideally, the revenue growth will be low double digit or high single digit rate, I mean, if I have to calculate backward, yeah.

You've got the same calculator as me, my friend. But to be serious on this, see, this is a question which one of the other participants also asked. So, we haven't given a guidance as far as the top line is concerned, but it will not be very different from a 20% growth. I don't have an exact number to guide you with, but it will be in that range.

I got it. That would be it from my side, all the way. Thank you so much.

Thank you. The next question comes from the line of Ehas Paramesh with Cloudarian Management. Please go ahead.

Hi, am I audible?

Yes, sir.

Yeah. Hi, Mr. Sani. Thank you so much for the opportunity. Again, congratulations on both the fundraise as well as a great set of numbers. I just had a quick question on the cost side of things. What I have been observing is that with a lot of these EPC contractors, as well as what I'm seeing in the market as well, is that construction costs, especially labor, has increased after the April elections. And with crude oil where it is, you know, I think construction costs and raw material costs have gone up across the board. So one, the question really is like, surely these costs should moderate apart from labor, I guess, which will remain elevated at this price. How are we placed on that? Do we have fixed contracts with these EPC contractors and builders that were able to maintain our costs? Or do we have the flexibility of passing on the price increases or the cost increases to the end customer? So that's the first question. The second question is on the OCPRS raised from ICICI. Is there a preference dividend or is it a 0% dividend? Is it cumulative? That was the second question. What is the, you know, if there's any dividend attached to that reference shares? Thank you.

Yeah, I'll answer your second question first. As far as the OCPRS is concerned, the coupon is virtually zero because, like I mentioned, it is actually an equity investment that they have done. It's only for structuring point of view. It is OCPRS. So there will be no dividend payout. It is effectively zero. So that's one. The other is, as far as costs are concerned, naturally it is a matter of concern for the entire industry today. And not just our industry, it is a matter of concern for the entire economy, for the entire world. But the projects which are under execution as of now, where contracts have already been given, these are all fixed-price contracts. There is no provision of increases that anybody can ask for. Even if they ask for it, it's not going to be easy. We had a similar situation when the war broke out also, and suddenly there was panic, and now of course things have settled down quite a bit. And there was no relenting from most of the industry participants on contracts which were already awarded. But despite that, all our projects have a healthy level of contingency that we provide because it's a project activity to be executed over a four-five-year period. So it is prudent to have some contingency available within your budget to absorb any kind of fluctuations in cost, because there are always reasons, and every time it's a different reason, but there is fluctuation. Sometimes the seasonality itself plays out, you know, cement, steel, and labor is something which will anyway keep on changing. As of now, yes, it's a matter of concern, but on the ongoing projects, there is no immediate impact that we have today. The projects which will get launched in future, We will definitely have that impact. But we are factoring that in our planning and the way we are pricing them. So part of it will get passed on to the customer and part of it we will absorb in our contingencies. And that's how we will maintain our margins going forward also. Of course, all this is subject to this not being prolonged into years and Thank you,

everyone,

for taking time out and attending our Q2 and H1 F527 phone call. Please feel free to connect with us for any further queries or any further details, and we'll be happy to share all the answers as well as all the data which is required. Thank you. Thank you, everyone.

Thank you, sir. On behalf of Antique Stock Broking Limited and Raymond ERD Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.