Shriram Properties Limited (SHRIRAMPPS) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Q1 FY27 Earnings Conference Call hosted by Shriram Properties Ltd. As a reminder, all participants' lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this 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 hand the conference over to Mr. Murali, Chairman and Managing Director from Sriram Properties Ltd. Thank you, and over to you, sir.

Good morning, everyone, and thank you for joining us for the Q1 of FI27 earnings call. We have come on the air on a positive note with a strong operational momentum and record first quarter sales of 484 crores. The response to our new launches in Chennai and Calcutta has been particularly encouraging. Our entry into the premium residential segment in Chennai and the successful launch of our branded plotted development in Calcutta are important milestones in our portfolio strategy and have further strengthened our confidence in the underlying demand. While Q1 financial performance was relatively steady, the quarter was also characterized by strong collections, continued execution momentum, and a healthy level of investment towards our future growth pipeline. With a strong set of scheduled project completions and launches lined up for H2, we have good visibility on improving revenue and earnings momentum through the balance of FI27. Our balance sheet remains healthy, giving us the flexibility to continue investing in new opportunities while maintaining disciplined capital allocation. With a diversified portfolio across our key markets and the growing development pipeline, we remain confident in sustaining our growth momentum and creating long-term value for our stakeholders. With that, I will now hand it over to Mr. Gopalakrishnan, CEO, and Mr. Ravindra Kumar Pandey, CFO, to take you through the financial and operational details in greater depth. Thank you.

Thank you, sir. Good morning, everyone. My name is Ravind Pandey, and I am the CFO of the company. Thank you for joining us today as you present the performance highlight for Q1 FY27. We have uploaded the presentation on the website and the stock exchanges, and I hope you all have access to it. Over the next few minutes, I will walk you through the operational and financial performance of the company for Q1 FY27. Following that, Mr. Gopal, our CEO, will also join me to take the questions at the end. Let me start with operational highlight referring to slide number 4. Q1 has been a good operational start to year 527, providing strong launch momentum and improving visibility on sales, handovers, and revenues for the balance of the year. Coming to the overall performance, we had a strong operational start with three launches during the quarter. Two new projects, Sriram Steller in Chennai and Sriram South Group in Kolkata, and a new face at Green Meadows in Chennai. We achieved our highest average Q1 sales of up to 484 crores with sales volume of 0.85 million square feet. Collections were up to 365 crores, supported by execution and handovers. The amicable resolution with government of West Bengal achieved in April 26 is now translating into monetization opportunities and accelerated launches supporting Kolkata value unlocking. We have expanded the product portfolio from apartment to village and now plotted development. The response to the plotted development launch has been particularly encouraging with approximately 55% of inventory sold within the first 30 days. With Sriram Estella, we have entered Chennai's premium residential segment with our premium offering. Around 20% of the project was sold during the first weekend of the launch, validating the product positioning with our brand strength. Overall, the strategic direction remains unchanged, deeper presence in our core markets, premiumization wherever appropriate, and diversification of the product portfolio. This year continues to be estimated while Q1 performance remain modest from a revenue recognition perspective. Healthy collections sustains construction progress and scheduled completion pipeline provide strong visibility for the balance of the year. Referring to slide number 5, coming to the quarterly KPIs, sales value are Rs.484 crores, up 10% year-on-year, with sales volume of 0.85 million square feet, up 4%, collection stood at Rs.365 crores, up 8%, and we handled over 690 units during the quarter. On pre-endal front, revenue was Rs. 271 crores, UBITA Rs. 42 crores, and PATH Rs. 11 crores. Revenue growth does not fully reflect the endal front of the momentum, primarily due to timing of handovers and project completions. With limited new projects reaching OC milestone in Q1, we expect stronger revenue recognition in Q2 and E3. The muted margins are largely product mix-driven rather than structure. With around 40% from relatively lower margin legacy projects from Kolkata. Margins are expected to improve in S2 and higher margin product reaches completion. From the cash flow perspective, we generated Rs. 135 crores of e-cash flows before new project investment, invested Rs. 88 crores in new projects, and indexed a quarter with a strong liquidity position. Our business development, we added 0.7 million square feet with an estimated GDP of Rs. 650 crores. Overall, Q1 was a strong operational start. Slide number 6 summarizes what we have discussed. Referring to slide number 7, during Q1, we launched approximately 0.9 million square feet at all three launches. 0.3 million is perfect as share. I'm still learning. 0.4 million square feet at Sriram South Loop in Kolkata, and 0.2 million square feet at Green Meadows face launch in Chennai. These launches demonstrate premiumization and product diversification, while also validating customer demand in our core markets. In Chennai, Sriram Stealer is our premium residential offering. As the product was launched towards the end of June, its impact on Q1 was limited. Nevertheless, approximately 20% of the project was sold during the launch weekend. In Calcutta, it was introduced as the bonded land concept. The response was particularly strong, with approximately 55% of the inventory sold during 30 days. This provides confidence in the parts and support faster value realization and capital recycling in the Calcutta portfolio. Referring to slide number 8. This site provides a glimpse of the two key launches during the quarter. Both launches receive intelligent customer response and reinforce our strategy of minimization and product diversification. Referring to slide number 9, Project Pipeline and Business Development. Project Pipeline remains one of the strongest aspects of the business. We currently have approximately 16 million square feet of ongoing projects and 17.7 million square feet of the upcoming projects, giving us a total current pipeline of 17 million square feet. The ongoing portfolio has 2.9 million square feet of unsold area with unsold GDP of approximately Rs.1,970 crores. The upcoming portfolio of 17% has a GDV potential of approximately 11,560 crores. Overall, the GDP potential of the current pipeline is approximately 13,530 crores. In addition, over 7.3 million square feet of projects with GDP potential of more than Rs.6,000 crores are at advanced stage and are likely to be added over next three to six months. We continue to evaluate 20 plus million square feet opportunities for accelerating pipeline addition. Therefore, management remains confident and committed to nearly doubling the upcoming project pipeline over next 18 to 24 months. Referring to slide number 11, financial highlights, Q1 revenue was Rs.271 crore, up 4% year-on-year, with a grass profit of Rs.56 crore, EBITDA was Rs.42 crore, and PATS is to rate Rs.11 crores. The top-line performance was impacted by the timing of project completions and product mix. Revenue was primarily driven by spillover handovers from FI 26 completions. And recently completed legacy low-margin projects from Kolkata, particularly Ghand I and Sunshine I, resulting in lower gas margin. Other operating revenues predominantly comprises of reversal of constructive obligations relating to Sriram Greenfield, along with fair value gains on projects and land advances relating to Sriram's projects, 122 West, Sapphire and Sriram. Implied costs were marginally higher due to routine annual increments while other expenses remain broadly stable with some increase in new project launch expenses. Finance costs were also broadly flat. The JV loss of around Rs.4 pro primarily reflect higher selling expenses at 122 bucks, partly offset by handovers from recently completed JV projects. With scheduled project completions, providing a strong visibility, revenue and earning momentum will be stronger through the balance of 4.25.1. Referring to slide number 12, which summarizes our discussion. Referring to slide number 13, consolidated cash flows. Operating cash flows remained healthy, supported by healthy collections and execution-led handovers, which generated free cash flows before new project investments of Rs. 135 crores and invested Rs. 808 crores in new projects, resulting in net free cash flow of Rs. 47 crores. The positive net-free cash flows improved our closing cash balance to Rs. 219 crore. Overall, the cash flow position remains healthy, with adequate liquidity to support ongoing project execution and planning investment. Refer to slide number 14, debt profile. The balance sheet continues to remain comfortable. Grass external debt at June was Rs. 651 crores against cash and cash equivalents of Rs. 219 crores. This results in net debt of Rs. 432 crores. Net debt to equity is 0.29x, which remains a very healthy level. Our cost of debt is around 11% and we continue to benefit from the reduction in benchmark rates. The company's equity stood at Rs. 1471 crores, supported by healthy liquidity and a crystal A-positive credit rating. This provides ample funding capacity to support future growth. Therefore, with our strong equity base, healthy liquidity, and low hearing, we have sufficient balance sheet capacity to support future growth without taking levels to uncomfortable levels. Referring to slide number 16, FI27 guidance and outlook. Our guidance remains unchanged. We remain confident of achieving our full year guidance. The confidence is primarily underpinned by the strong launch lineup and the possess completion visibility. Referring to slide number 17, the FY27 launch calendar. We have 7 million square feet of potential launches with approximately 6 million square feet planned for FY27 across Bangalore, Chennai, Pune, and Kalpata. Out of this, we have launched two projects with 0.7 million square feet during Q1. With well-distributed launch calendar across the year, we are well-positioned to drive sales growth and maintain strong business momentum in FY27. Referring to slide number 18, FI 27 handovers. This is one of the most important slide from an earning perspective as it provides strong visibility and revenue recognition for the balance of the year. Recently completed projects has over 410 units and Rs. 400 crores of unrecognized revenue from sold units, which is expected to be recognized during upcoming quarters. In addition, two projects with over 400 plus units and Rs.160 crores of revenue potential are targeted for OC in Q2, while 5 plus projects with over 2,100 units and Rs.1,000 crores of revenue potential are scheduled for OC in S2. Overall, more than 2,900 units representing over 1,560 crores of revenue potential are scheduled for handover and revenue recognition during the balance of the year. The high confidence handover pipeline provides a strong visibility for improving revenue and earning momentum through Q2 and the balance of FY27. Referring to slide number 19, FY28 mission, we are familiar with this slide and would like to reiterate and assure to our investors that we are on track towards achieving our FY28 mission. The current pipeline provides substantial visibility for this objective. The 33.7 million started current pipeline has revenue potential of approximately Rs 14,000 crores to be recognized over next five to seven years. To summarize, Q1 FY27 has been a strong operational start with our highest level Q1 sales and handy collection. The launch response in Chennai and Krakata validates our strategy of minimization and product diversification. The project pipeline with 33.7 million is perfect of current, ongoing, and upcoming projects, along with additional opportunities and the revaluation. The balance sheet remains strong, with net productivity of only 0.29x and cash of rupees 219 crores. And most importantly, the S2 launch and completion pipeline provide a strong visibility and therefore confident of receiving EFI 227 guidance. Overall, the business is on a strong trajectory, with the benefit of the current investments, launches, and studio completions, expected to become increasingly visible through S2 EFI 227. On behalf of the management team, I reaffirm our commitment to governance, customer experience, and value creation. Thank you. I now hand over the call back to the operator. Myself, along with our CEO, will be glad to answer all your queries. Thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 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 hands-up while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Subrata Sarkar from Mount Intra Finance. Please proceed.

Hello. Hello. Good morning, sir. Yeah. Sir, can you reiterate and explain a little bit about our FY28 mission target? Basically, we are still speaking with like sales value of 5,000 and then revenue of 2,500. And then PBT, we are talking about 250 crores, sir. So, right now, our FY26 PBT was actually 80 crores, the kind of thing. So, is it right figure to match, like you are talking about from 80 crore of FY26 to 250 crore by FY28, and in that case, how much will come from our asset sale of the Calcutta land, basically?

Yes, the numbers are right. And Calcutta land sale is not a significant part of it. We are developing Calcutta land from where we are today, which is about 110 acres or more is left for development beyond whatever approvals we have. Those will also be developed into a project or monetized in some way to a development through third parties. We are evolving the strategy there because we got the approvals, we got the litigation out of our way only late last year. But this 250 crore PBT or 2500 crore revenue is coming from ongoing projects that are to be completed. As you can see in slide 19. We have sold, launched, sold, and to be recognized of about 8 million square feet, to be recognized over the next two years. That alone brings you to 4,800 crores of revenue recognition potential between FY27 and 28. Therefore, you know where the confidence of 2,500 crore annual revenue coming in. In addition, the new launches, some part of the launches will also come for revenue recognition, depending on what the product mix is and when we launch during FY27 and early part of FY28. If it's a plot, it takes only 18 months to 24 months to turn around. So some parts of the market also will be ready for income recognition. The combination of these two gives us the confidence that we will reach the revenue recognition of 2,500 crores. And we are looking at PBT stabilizing in the range of, what, a 10% margin. And that's fundamentally where we are coming from. It's a bottom-up based on individual projects, not on land sales.

So my primary concern of where I want you to highlight is like we are talking about PBT of 10%, where we have not done even EBITDA of more than 7-8% in the last 4-5 years basis. So like, can you help me to understand that sales value part and revenue part I am comfortable with. The only thing I want to understand is what is the underlying explanation and can you just highlight it and explain in detail that we can achieve 10% PBT, basically. So that is my point because if you track the way I'm tracking your company, more or less for the last three-fourth years, you have always clocked the revenue you are talking about, most of the cases. But the major problem is arising out of the margin, basically. So that is very volatile, to be very honest. Now we are giving a guidance of 10% PBT margin where we have not even done more than 7-8% at EBITDA level. So can you help me to understand that part, basically? Rather than sales value and revenue, it's a PBT and maybe collection. These two figures, if you can highlight.

Yes, I think we have consistently reiterated this point in the past also. There is definitely a disconnect between how you look at our EBITDA and how the industry should look at and how we look at it at least. Our other operating revenues are integral part of our business. So when you look at our other income in the financial statement, we need to be able to divide that into two parts. One is the normal other income. Second is an other operating income. Other operating income is associated with our joint venture. Development rights, monetization, or other ordinary course of business income. And that is why in our presentation, we consistently show other operating revenue separately. Accounting standard is accounting standard that requires all of them. Auditors will combine all of this into non-income from operation. Therefore, if you add EBITDA margins in FI23 was 22.5%. If you want to reconcile, I'm sure I'm ready to get one of our team members to talk to you offline. 24, 22.6%, FI25 was 18.4%, FI26 was about 13.5%. We believe with the product mix changes, 27 and 28, we will see an improvement in EBITDA margins. And similarly, PBT, FI23 was 8.8, FI24 was 7.7, FI25 was 9, 26 was lower at around 5.5%, 5.6%. That number we expect with the change in product mix over the next two years, we expect it to stabilize around 10%. So this happens with most people because they're mechanically taking like money control or others.

Okay, but sir, in that case, in terms of our own estimate, like what kind of EBITDA we can do in FY27 and FY28? Corresponding to 10% PBT, let's say what should be our EBITDA in terms of our own calculation and FY27 also, if you can give a ballpark.

I would not likely like to put absolute numbers in such a large domain like a call like this. What I would like to say is our EBITDA margin should be in the range of 22 to 24 percent by FI28.

Oh, perfect, sir. This is perfect. I was not looking for a particular number, but the range will help me. And, sir, can you give some highlight on the date and interest that we will be having, sir? What kind of date, total, what will be the figure as per our estimate of the date figure and the corresponding interest rate that interest we have to pay, basically.

So, if I look at our overall gary, it will go up. It would most likely go up during FI27. The gearing can rise temporarily because, as you know, as we are pursuing aggressive growth and trying to lock more project pipeline. Understandably, either an equity or a debt has to come in, not only the cash flow operation. If we have to live within our cash flow operation, the growth cannot be there. Therefore, we might go up on the gearing level, but our comfort zone, even on a short term basis, it may not be very significantly higher. So, our long term comfort zone will be about 0.5 is to 1. Temporarily, it might go up.

Got it. Last point, in our FY27 outlook, we have given us a sales value growth of almost 40% to 50% up to 3,300 to 3,500, whereas the corresponding collection figure is much muted at a 26% to 30% growth of 2,100 to 2,200. So why this disconnect? Can you help me to understand a little bit more? Where sales value will be much higher, but collection will be slower?

Yeah, so the collections tend to follow the project progress because the initial collection on sales will be only 10% and then with the ATS, it goes to 20%. After that will be a project progress link. And since based on the project approval status today, as we indicated in the earlier calls, our launches are back ended and you can also see that in the slide here in slide number 17. Since they are all Q3, Q4 launches, they were not translated exactly into the same amount of collections. And so this year, based on the progress of current ongoing projects and the timing of launches of our five or six launches that we are targeting in Q3 and Q4, we expect the collections to be in the range of about 2100 to 2200 crores. As the project progresses, the collection will ramp up in the subsequent quarters and in the next financial year.

Thank you.

Thank you. A reminder to all participants, anyone who wishes to ask a question, may press star and one on their touchtone telephone. The next question is from the line of Ronald from ICICI Securities. Please proceed.

Thank you, sir, for the opportunity, and congratulations on good response for new project launches. Sir, my question was for the guidance for FY27, the pre-sales number. So, if we expect about 350 odd crore quarterly run rate from sustenance sales, then we make up up to 1,400 crore. So, the balance, you know, what would be the launch GDV for the full year? Like, I believe 450 odd crore we have launched during Q1. And if I assume, you know, 2,000 crore worth of GDV projects to be launched during FI27, and approximately 40% to be sold from this, then also the total works to about, you know, not more than 2,200, 2,300 crore. So if you can, you know, break up in terms of launched GDV, what is the launched GDV you are expecting in FI27, and whether the sustenance sales number around 1,400 to 1,500 crore we can achieve for this year.

Yeah, let me start with your GDV. Based on the 7.23 million supply that we are targeting to release, we will be, most likely, we will get about 5 million square feet of launch area out of that, 5.8, 5.9 million square feet of launch area. The GDV of the supply that we are giving is roughly about 6,000 crores, somewhere around 5,950, 5,600 crores. And because all of this will not materialize, out of this, we are looking at new sales, the contribution during the financial year of roughly about new sales. Your sustained sales of 1,400, 1,500 crore seems right. The balance will come from the new launches.

Great, sir, that explains it. Secondly, you have got a good response in... We were testing the waters, and you were looking for about 2.3 million square feet apartment launches for which there were approvals in place. So whether this would come in FY28, have you planned whether there is any bifurcation in terms of how you would go for apartment or plotted sales in Kolkata? If not for this year, then next year.

So, as far as Kolkata is concerned, let me take a few minutes to explain. I think it's a very interesting evolution which is happening, and I think we'll land properly in this current year. 2.3 million square feet approval that we have already obtained pre-elections is unlikely to be launched fully this year. We have roughly about 650,000 square feet of apartments to be sold yet from the previously launched projects, Sunshine 2 and 3. And when we, as we reach, you know, like half of this or more, about 200,000 square feet of unsold inventory, then it is probably worth releasing the next set of supply. Even then, 2.3 million cannot be released in one stroke, because then it will be excessive supply, and customers will pick up from multiple towers of sales, and then we will end up spending our own money to construct. So, we will release in phases. Historically, we have released 750-800,000 square feet per lot, per branch of launches, like phase 1, phase 2, phase 3 types. That is one part of it. We might launch one phase of it during this year, but nothing more than that. That is point number one from an existing approval perspective. After the approvals are done, after the handovers of land are done to the government, we have about 105-160 acres roughly or slightly less than 110 acres of land to be developed, leaving aside the common infrastructure, water bodies and all that. That one is the one which I said in, Mr. Pandya also said, and I said earlier in the earlier answer that we are evolving that strategy. For a simple reason, we wanted to test various products before concluding on what that revised development looks like. So in that context, the Villa launch in Q4 late last year and plot launch this year has been very encouraging. Based on the launch price that we have achieved, Based on the launch price we have achieved, and based on the cost of development, we believe both these products deliver between 600 to 700,000 net contribution to us per acre. If that is the case, it does not make economic sense to sell the land to a warehousing or any other bulk sale. It seems to make a lot of sense. For us to develop into this low gestation or a quick turnaround projects like plotter development, which seems to have taken off very well. As Mr. Pante mentioned, our plotter development sales, we really reached about 55% of the project got sold in about a month's time, which is very encouraging and the appetite of the local market is very obvious. And therefore, we will do a combination of this release from 2.3 million square feet of apartment, which is outside is 104 acres, which is already considered as an approved, and therefore land is utilized. The balanced land we will try and categorize in such a way that we optimize per acre contribution, and that's our whole intent. And more importantly, it has to be done with a faster timescale. Therefore, it will be a combination of villas, apartments, and plotted development to be developed in that site. And intent is to complete everything in three years time and hand over the projects in five years max and get out of the site. That's our broad strategy. How we are fine-tuning each pieces is something that we are working on internally. We hope to land it in a quarter cent.

Great, sir. Thank you for the detailed answer. And lastly, on the DDV addition you have done, sir.

I missed one, Ronald, sorry. So this, I actually, I don't know where you picked it up. Apparently, I gave you the contribution as well. So, that shows what the land can fetch us as a company. True, true. Land of 104 acres, 105 acres, maximum 110 acre developable land, fetching you that kind of contribution is an inherent cash flow to be recognized over a two-three years' time in Sriram property. Great, great, sir.

And lastly, sir, on the project which we have added, so if you can give some details with respect to, you know, where exactly and what kind of structure it is there and how we are planning this project to come up for launch and some details on the new project you have added.

So, during the quarter, we added a project, which is a JVA. It is in Bangalore, it's called the Micromarket, it's called Doddugubi, and north, northern side of Bangalore, and we have already submitted the development plan, and it's a joint development, so roughly about 8 lakhs per feet or thereabouts is the total saleable area. We expect to get that on board end of Q3 or early Q4. I did mention in one session with some of you in a group meeting or in a previous call. We are at an advanced stage of closure. We are waiting for the plan approval with regard to the Pune project where our transaction is complete. Final documentation has been frozen. But we opted to buy this, pay for this FSI once the approvals come through, and we're waiting for the plan approval. Once it comes, within about a month's time, we should be able to launch, which is called Manjari. It's a 2.3 million square feet, which is where we are doing an FSI purchase from the existing owner of that township. And so that project should also get taken off in Q2. We are basically waiting for Pune, the local authority approvals. Once it comes, we'll launch. The list of launches, Mr. Pandit talked about. The next list which you will see is Banargata Road, which is what we internally call is Tijon, which is a development project, and plan approval has been submitted, and we're waiting for the plan sanction. And that should also take off most likely in Q3. We have very high visibility on those approvals. Beyond that, if you go down, the projects which are there in slide number 17, transaction is closed. Be it Elanka Rangalur Villa project, Hinjewadi apartment in Pune, Elanka apartment project of 0.57 million square feet, Elanka row house of 0.52 million square feet, Durdugubi I just mentioned, Sajabra. All these transactions have been completed. There are different levels of plan submissions. In fact, I must say that our planned submission has actually commenced. The submission process has already progressed in terms of apartment in Elenka and roads in Elenka as well. Of course, this status is up 30th June, and since then, we have made further progress. So I think projects are progressing well. External environment where we face challenges in the past has also become a bit more controlled, bit more stable. So I think, and more importantly, as you have noticed, our launch dependency is not on one city anymore. It is spread across multiple cities. Therefore, the risk profile of these launches is a lot less compared to what we witnessed or suffered in FI26. And therefore, we have a greater confidence on FI27 sales value.

Okay, so Manjali could happen in Q2 versus the revised estimate, which is shown in PPT as Q3.

Q2 is what I think the transaction will happen. By the time RERA comes in, because again, a bit of uncertainty, so we safely took it as Q3 launch. Oh, I was meaning to close. Launch can be one more couple of months here and there.

Okay, so thank you very much, sir, and congratulations, and best of luck.

Thank you. A reminder to all participants, anyone who wishes to ask a question, may press star and one on their touchtone telephone. The next question is from the line of Divakar from Prudent Equity. Please proceed.

Good morning, sir. In the presentation, you have mentioned you are expecting accelerated handovers and even use recognition in S2. So can you put any number to this? I mean, what kind of acceleration are you expecting in this?

Sure, sure. It is there in slide 18. We are actually, based on the OCS received, we have pent-up handovers of about 410 units as of now. And in Q2, we are expecting OCs for two projects, which will add up another 400 units, so 800 units in hand. H2, we are working towards five hour more projects. These are Q3, Q4 handovers, or OCs, and that should add about another 2,000 odd units. So that's how in Mr. Pandey's presentation, it alluded to 2,900 units in hand. 2,900 plus units would be available for handover. And we've already done about 690 or something in Q1. Therefore, we have a good visibility of reaching this 376 or 62700 number. And this should be handed over in Q3 and Q4. The new OCs in H2 will also be handed over in this year.

Okay, so around 1,500 that is mentioned, right, in the remaining of the financial year. Yeah. Okay. Okay. And on the PBT reversal, your guidance is 280, yes, 250 crores by FI 28. So, this is cumulative, right, for FI 27 and FI 28?

No, this is what we want to achieve in FI 28.

Okay. And what is the guidance for this financial year? 10% PBT.

So this year, we might be in the 8 to 9 percent. And as I said earlier in the past, we would have at least a 20% growth in our revenue recognition, and therefore from last year. And actually, it could be slightly higher as well. And therefore, we believe we should be able to reach a meaningful growth in PAT during the year.

Okay, and sir, this growth will come from higher margin projects because this quarter year, the margin is due to product mix, right? So, how the product mix is going to change in the remaining financial year?

Yeah, I just want to highlight this is a really important question. Thank you for asking, Jivaka. I think I should have upfront said this earlier, but thanks for asking. So... The business is actually cannot be a stable flat margin quarter after quarter, depending on which market we pick up, which product segment we pick up from a handover perspective. So the volatility will be there in a quarter to quarter. On an annual basis, are we improving in terms of our margin profile? I think FI26 was a little bit of a slowdown in margin profile. FI27 will recoup some part of it. FI28 will be a more stable margin. Why this happens? There are three factors which is impacting us. One is the Kolkata, where if you recall, when we launched these projects, they were all, we were penetrating the city. So these are all sold at 18 to 24 lakh of ticket size for a two bedroom house and three bedroom houses. Those handovers are from Grand One, Sriram Grand One, which was our 2016-17 launched project, 2.4 million square feet. When they get handover, they have a very thin margin profile. Similarly, a legacy project called Sriram Shankari in Chennai, which is, they all would be having an average selling price of about 4,500 to 5,000 rupees per square feet. Now you understand why these deliver a very low margin after four, three and a half years. So these are, I think they are almost end of that curve once we complete the Shankari in Chennai. And Calcutta Grand 1 and Sunshine 1. Sunshine 2 and 3, which is a phase 2 and phase 3 of Grand Sunshine project, which is nothing but the second part of Calcutta development, which we embarked in 2019-20, and now we are handing over now. These are like in the range of 6,500 rupees per square feet, and off late, we are selling at about 7,600, 7,700 as well. So they have a high realization profile, and therefore, they will have a normal margin profile. Plus, all the projects that we launched post-COVID or around the 2019-20 onwards, Are the projects where we have consistently moved away from low ticket size or a low pricing environment to a better pricing environment where our selling prices are, you may have seen that in the earlier slides and maybe we will bring back that slide in future. We used to sell pre-COVID mid-market selling price average was about 5,000 rupees or less. Today we are selling about 7,600, 7,700 is our average selling price for our mid-market product. And therefore, that kind of evolution of selling price curve, where we are premiumization, as Mr. Pandey called it, or trying to narrow the gap between us and our peer group in the mid-market segments, is obviously going to provide a better margin profile. And those projects will come for handover, because 2020-21 launch projects have to come for handover in 2025-2026-2027. And those are the projects that will drive the margin up back to our more comfortable level of mid-20s EBITDA margin and about 9 to 10% PBT margin. This is where we are working towards, and you will see them may not be immediately in the Q2, but you will see them in second half of this year, and on FI28, you will see the margin tick up happening generically or organically.

Okay. Thank you for the detailed answer, sir. And I wish you a very good luck to interview all these numbers.

Thank you. Thank you. The next question is from the line of Swamil Shah from Parash Investments. Please proceed.

Yeah, hi, team. Good morning. Sir, we are planning to launch only one project in Q2. So what is the size of the project?

So it's close to about a million square feet. But we will have recently launched projects also available in sale, right? Because we launched a plotter development. We are launching a second phase of the plotter development in Kolkata. And the Coimbedu project will also be available for sale. And we have sufficient 3.3 to 2.5 million square feet of sustenance inventory. So there's enough momentum there in volume. But as you rightly pointed out, the big uptick will happen in our year-on-year delta will be in Q3 and Q4. That's why we called it back-end. It is always known that back-end our growth for this year would be a back-end growth.

Okay, my question was in terms of revenue. So, 0.91 million square feet, what could be the revenue retention?

No, that's not coming to revenue right now, no? It's just a pre-sales you're talking about.

Yeah, so just the figure, on this 0.91 million square feet, what is the pre-sales number?

Probably about 750 R2. That's just GDVs.

750 of the GDVs? Okay.

750 of the GDVs.

Okay, okay. And on the Kolkata land, you just mentioned to the previous participant that on this 105-acre land parcel, which we are planning for apartments or villas, what could be the cash flows for this project? I think your voice was not clear.

So, overall, as a Calcutta, as a site as a whole, we believe the cash flow potential is somewhere around 1,200 to 1,400 crores. Pre-cash over a 5 odd years period.

Okay. Okay. And so when we are seeing our, I mean, last year there were some tax writebacks during the year because this 78 crore PBT became 100 plus crores of PATH. So now when we are seeing 20% growth in FI 27, where do we see our PATH numbers? So even this year we could see some tax writebacks or this could be a normal year.

You know, tax write-back is difficult to predict because that depends. The tax write-backs happen only when there is a project where you are having a loss that is being recognized, there is a deferred asset getting created, only then the tax write-back happens in the joint, which is because, as you know, we operate two 20-yard subsidiaries, different projects, different companies. That's why the tax write-backs happen. Otherwise, there is no structured tax write-back which is possible. We are looking at the level. We should have about 8 to 9% PBT margin. And we believe at the PAT level, we are looking at this, I can't project the tax right back here. We are projecting at least about 20, between 20 and 25% growth in PAT.

Okay, so the 20% growth what you mentioned was for PAT. Yes, sir. Okay. Okay. And so just last question. So normally, how much time it takes for the plotted development to launch and then revenue recognition?

Plot launch is, of course, depends on which geographical location it is in terms of city-centric and go through the normal three, four months of approval timeline like any other apartment complex. If it is outside, which is typically an outside BBMP kind of outside the metro zone, so it can be slightly faster, but still it will take between three to four months to get the approvals to launch from the time you complete the transaction. From the time you launch, typically sales should not take more than 20 to 18 months, handover should not be more than 18 months. So the turnaround timeline in terms of cash inflow to cash outflow should be 18 to 24 months max.

Okay. Okay, correct. Understood. That's it from my side. Thank you, and all the rest. Thank you.

Thank you. A reminder to all participants, anyone who wishes to ask a question, may press star and one on their touchtone telephone. The next question is from the line of Divakar from Prudent Equity. Please proceed.

Yes, I hope. First one question. It's the market. How are the consumer demands, how are the consumer sentiment across Bangalore and other markets that you operate in?

Yeah, thank you. Thanks for asking again. Another good question. Gives me an opportunity to share our top one market. I think the underlying four markets that we operate are still very strong, doing well. May not be as robust as post-COVID where everything was flying. To that extent, yes, there is more realistic growth happening in the market on the ground. New launches are getting picked up well, as long as it's priced well and product is of good comparable configurations and quality. And therefore, I think most large players are doing well on new launches. Bangalore launches are still slow. It is going through the same, it takes its own time in Bangalore for whatever reason. But every large player have evolved or learned from whatever happened in calendar 25 or FI 25 and 26. So I think everybody is planning their own activities well. So supplies are getting absorbed. Customer confidence level, we don't see, I see a lot of research, I see a lot of articles in newspapers, business magazines and papers about AI, customer confidence, job loss. We are not seeing on ground where customers are backtracking. We haven't seen the conversion rate going down in a material way. Therefore, we are of the belief, and even my industry checks with housing loan companies, they are not seeing any slowdown in application momentum, which clearly tells you that the on-ground momentum is there. A bit cautious, yes, but momentum is there. And the new excitement like global, what is it called GCC, Global Capability Centers, other areas are, I mean, the revival of some of the export-oriented sectors in our core markets, like, as you know, Bangalore survives on IT, pharma, startup ecosystem, Chennai survives on manufacturing automobiles, to some extent IT. Pune is again IT outsourcing, GCC, automobile engineering, and Kolkata obviously is a local centric trading and some amount of manufacturing. The underlying sectors are doing well. So one sector going through a little bit of uncertainty or nervousness is not really impacting the overall momentum and vibe. This is correct. It's not just my view. If you look at the published research of industry experts or IPCs like JLL, Anarok, after a bit of a slowdown in pan-India absorption in December quarter last year, the subsequent quarterly reports seem to suggest that they're all growing between 5% and 8%. And each city at their own rate, pan-India has been growing meaningfully. So we think that residential demand will continue. Mid-market self-use home demand will continue longer than the normal rescue cycle. Upper end of the market may have some slowdown because they receive their capital from investment demand. That's why specifically said end-use consumption oriented segments will do well. Investment-oriented segments depend on an alternative source of capital, and that source of capital, like stock market gains or others, have tended to remain volatile over the last couple of quarters, and therefore, that demand may slow down, taper off a little bit. But otherwise, in the normal mid-market induced driven segments, we haven't seen a big slowdown in footfall or conversion rates. That's a good news for, and this is common trend which we have seen, Pune still remains the second largest, second fastest growing market in India. So we have seen this across our core market at least. Some markets like Hyderabad has seen some demand trapping off according to the published research. We are not there, so I don't have an on-ground feel on it. But Bangalore, Chennai has shown a very steady traction or very steady demand. Pune has shown reasonable growth, reasonable momentum increase as well. So that's our feedback on some of the markets.

Okay, thank you for the answer.

Just to close the loop, sorry, Divakar. On the pricing side, I don't see a big jump in price. I just want to clarify. So, like the post-COVID, we saw like 10%, 15% annual increase. That may not happen. On an average, we are seeing roughly about 4-5% increase in selling price, and of course, launch prices are obviously evolved based on what the competition is doing in the micro market. But sustenance sales price are going up by 4%, 5%, not more than that, which is good enough to capture the inflationary pressure if there are any in the cost side. And therefore, I think the margin contraction will not happen because of selling price or inflation or cost inflation. Therefore, the profitability enhancement will be more from scale economics, the operating leverage than price alone.

Thank you. The next question is from the line of Tia Jain from Sapphire Capital. Please proceed.

Hi, sir. Thank you for the opportunity. So, just want to clarify the 20% growth that you said that's in revenue or PAP?

We expect both, ma'am.

Both. And can we expect similar for FI28 or should we aim for a bit higher?

Sorry?

Can we expect the same for FI28?

Yeah, we are fairly confident, but one step at a stage. We'll deliver our FI27 and then, because we've had some disappointment last year, so we would like to be a little cautious, deliver FI27 and then talk about FI28, but there will be a time during this year to discuss FI28 how robust it can be. It will give more confidence to you also when I deliver halfway through the year, when around Q3, Q4, when we discuss this, it will be much more appropriate.

Okay.

But we are confident that our sales value can reach that 5000 mark approximately in FI28 and revenue recognition of 2000. Because as you know, revenue recognition is more to do with what we have done so far and what we are doing on the ground in terms of execution. That also we are fairly confident of reaching the 2,500 number.

Okay.

Thank you and all the rest. Thank you. The next question is from the line of Raj Mehta, an individual investor. Please proceed.

Yeah, so thank you for this opportunity. I have been tracking the company since long, and what I feel is market doesn't like surprises from SIRAM, and they don't trust the execution capabilities. Each quarter when we give results, the market reaction to those things. Is because of the capabilities and the deliveries which we are not been able to do due to XYZ reasons which we have faced in last couple of years. So do you think that in next couple of years, this Thing can be reversed and market can get surprised with the quality of earnings and the momentum which you are trying to achieve. Since the last IPO price, which you launched four years back, we have not even touched that thing. So is there any surprises on a positive side or a negative side, which I think you might not be factoring in right now? And second thing, with respect to the sales value which you have given the guidance, in that we have not considered any development related to Kolkata. So if we are able to meet any significant development related to land sale or the plotted developments, whatever the product mix which we are trying to do. Will that be a surprise element in your figure or it is somewhere, certain amount has been included in the figure which you have given?

So let me try the first one, try to answer. So yes, I think markets, somehow, we believe market is not taking, giving us full credit for what we have delivered so far. I am not so sure whether I agree with the comment that we have not delivered on our promises completely year after year. Otherwise, we wouldn't have reached the revenue growth or the number of units handed over from FI 2021, 2022, all the units to 24, 25, 26. We have moved up in our curve. We have moved up on our delivery. When PIPO, we had minus 40 crores PAG. Last year, we delivered 100 crores PAG. And the volatility will always be there, Mr. Raj, because this is the nature of business, depending on when you get the completion done. And it is true for most players in the industry. If that's the case, an entire real estate industry should not get that same credit that it's getting from the market. We are working our best to deliver the performance, and we are also trying to communicate our results to our performance and initiatives to large institutional holders to concerted efforts. We will do our job well, be assured, and I'm sure at some stage market will take note of this and give us some credit for the delivery, because if you look at, I'm sure you're tracking, like Sriram, you're tracking the other real estate sectors. If you look at the last couple of quarters, not many real estate companies have the same stable margins and earnings profile. It is the nature of business. You should see the cash flows of the business. That will show you underlying picture, is it actually delivering cash or not? Our company has been delivering cash flows, which means that on-ground work is actually happening and is releasing cash flow from projects. Earnings also will be following and will continue to follow. So we will try our best. But we take your feedback as a very fair comment. With regard to the surprise, I don't think any surprise has been built in our earnings here. Some part of development of Bengal is already part of the FI28 mission that we took it in terms of whether it is developing the apartments or developing the plots. If you do any bulk sale, it can be an additional kicker in terms of accelerated sales. If you do, it can be a kicker. But accelerated sales of land by just selling it to a warehousing company for 3.5-4 crore rupees per acre does not seem to make economic sense from our shareholders' perspective, especially when the plots and villas can deliver 6 crore contribution. Why should we sell 3.5 crore minus some development or filling cost and all that cost that will be associated with that? Because that industry cannot pay more than that, be it data warehousing companies or be it data center companies, they cannot pay more than 3-4 crores per acre, 3.5 crores, maximum 4.5 crores. So why should the company undersell this for accelerating cash flow? Instead, can it embark on products which are faster selling? And try and accelerate the cash flow from a 5 year to 3 year or 4 years. That's what we're working towards. If any acceleration happens, these numbers can change. But FY28, I don't think materially will get changed through this acceleration. So I think we are, I don't, as of now, we don't have any surprise element in our hand up our sleeves that we will pull out later. But if there are macro-related surprises there, it will remain a surprise. I also don't know that. But we are working towards overcoming any macro-headwinds, if there are any.

Mm-hmm. One more option we have, I've been saying this a lot, that the earnings call and the results both are on a very later stage of the, once the quarter gets end. Till the time we don't get any quarterly updates to be an investor-friendly company, I would request that you start giving quarterly updates once the quarter gets completed. Many listed developers give the quarterly updates related to the collections, related to the sales value, because those things are not going to change. I can understand the audited numbers can change, but the quarterly numbers which we are presenting, those doesn't get changed, and it would be a very investor-friendly issue. Keep doing those things and show to the investor community that you are transparent in the way and Secondly, I advise you to do the investor calls also related to the institutional investors, and I think now ICIC Direct and many institutionals have started tracking the company and started giving you the research because it would be very much better if we can start to do more roadshows. Enter into more conferences where there are real estate conferences too, where you can present the company because the company has a huge potential, but the market is not still rewarding that potential because they have doubts in the capabilities and the execution. And in real estate, everything brings down to the collection and to the execution portion. And since I think today, Paul, once you said that you sold certain properties in the Kolkata in the year 2021, which does not have a good margin. And since right now we are at the stage where the real estate cycle which might be in the middle of the middle or the somewhere near to the top. So if we can plan in such a way where we can bring certain bigger developer. To do a JV with us, where we can give this land, and we can build it, and we can recognize the revenue on a faster pace by compromising a little bit of portion of your margin, which you think you can do by your own self. It would be great if we can recognize those, because markets will reward based on the cycles, and once the cycle gets... At the end of the cycle, if you start building this thesis, we will be too late for that. This is what my suggestion is for the specifically related to the Kolkata land also.

We always listen to your views and suggestions with a lot of interest. I just want to update you that post your earlier suggestion, our team is visiting institutional investors on a quarterly basis after the results. I think this will be the third or fourth quarterly roadshows or one-on-one meetings they do with institutional investors through our IR partner SGA. I'm sure the team is continuing to do. So we do take your suggestions very seriously, and we implemented it in the past, and we will do. On the update, yes, we will resume this. We used to provide this update earlier. At some stage, we just felt marketer is anyway not noticing or recognizing any of this. What's the point in rushing to do that in fifth or sixth of next month? But I think it's a fair comment. We will try and resume the process. As you know, we used to do that till about 2024, 2025. And when many of the other large players were not doing it. But we just pulled back only because markets were just not looking into it. Or we felt it was not looking into it or not really listening to it. But it's a fair comment. We will do our best. Irrespective of what the market thinks about us. We'll try our best to communicate the story going forward, and we'll provide the monthly quarterly updates in advance of financial development.

Thank you, sir. And one last question with respect, with related to the industry dynamics, since we are now entering into Pune markets also, and we are very much into Bengaluru. So, due to AI related fear, which market had, that the IT might face huge job losses, and which might turn bad for the real estate players who are specifically into Bangalore and Kolkata. So we have, as you said, you are not facing any headwinds on ground where the buyers are not rejecting the proposals or deferring the purchases. So are we in a state where we are confident of? Either increasing or maintaining the margins in which we are right now present, the markets in which we are present, and can we increase the realization curve in such a way that even though the cycles turn in an opposite way, but we can hedge those margins and hedge those realizations. Because if you see your Kolkata also where you said that our margins were lesser at that age. So whenever we launch this project and when the revenue start getting recognized after three years, four years, our margins are getting squeezed. At that particular time, you thought that this would be the best price to sell. But after three, four years, when there are so many uncertainties going around due to the input costs. Are we plugging into certain margin protection, which can give us certainty whether this much particular margin can be easily achieved, which I think would be very much better for us to analyze that there is a margin protection, even though there will be a product changes, but we may get surprises on the upside, but there should be no surprises on the downside of the margins. Thank you, sir. Thank you, Raj.

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

Thank you all for joining us on a busy morning, for listening to our performance outline, and also sharing our opportunity to share our confidence on our FI27 outlook. We remain confident that we will deliver on our plans with a back-ended growth in sales. Thank you for taking your time. And if you have any further queries, please feel free to reach us through SGA or our own team directly as you feel appropriate. And we look forward to interacting with you all again in another call very soon. Thank you. Thank you. Thank you, everyone.

Thank you. On behalf of Freedom Properties Limited, that concludes this conference. Thank you for joining us and you may now disconnect your hands. Thank you.