Sobha Limited (SOBHA) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to SOBA Ltd. Q1 F527 Earnings Conference Call hosted by ICSI Security. As a reminder, all participant 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 touch-tone phone. Please note that this conference is being recorded. I would now like to hand over the call to Mr. Athiris Satopadhyay from ICSA Securities. Thank you, and over to you, sir.

Yeah, good evening, everyone. Thank you for joining us on the Shobha Limited Q1-FI27 results call today. As always, from the management we have with us, Mr. Jagdish Nangineni, the Managing Director, and Mr. Yogesh Bansal, the Chief Financial Officer. I would now like to hand over the call to the management for their opening remarks. Over to you. Thank you.

Thank you, Ajit. Good evening, everyone, and thank you for joining us on this Q1-FI27 earnings call. I thank all the investors, analysts, and stakeholders for taking time to be with us today. Our operational update was earlier shared in the month, and the detailed investor presentation is available on our website. Today, I will briefly cover the key business and operational highlights for the quarter, and our CFO, Siyogesh Kansal, will walk you through the financial performance in greater detail. I am pleased to share that Q1 FY27 has been a landmark quarter for Shobha in terms of sales. We achieved our highest ever quarterly real estate sales, recording sales value of 3,666 crores, representing a 76% increase year-on-year. We sold 2.34 million square feet across 1,432 homes, with an average realization of 15,655 per square feet. Reflecting the strength of our product. Once again, Emerge does our strongest market, contributing 57% of the quarterly sales of about 2067 crores, driven by good response to our launches of Sofa One World. The NCR region also delivered its highest ever quarterly sales, with a sale value of about 1384 crores, mainly driven by a successful launch of Shobha Crescent in Gurgaon, reaffirming our strategy of expanding in high-growth micro-markets. Together, these launches significantly contributed to our record quarterly performance. In Shoha, one word, out of the overall 3,484. Thank you. Before the release, please. We are confident of launching nine projects.

Planned launches comprise We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Girish Chaudhary from Avendals Park. Please go ahead.

Yeah, hi, Jagdish. Congratulations on the strong pre-sales. I mean, firstly, if you obviously have had a strong start to the year, so if you could just give us the pre-sales growth or the booking value you're targeting for fiscal 27. And as a follow-up, you mentioned about 8 million square feet of launches for the remaining nine. So if you could give the GDV and also the timelines and the key projects, which we should look forward to.

The last quarter, I mean, like, end of the financial year, so we have guided for That I think we should. Probably we can do slightly better.

And secondly, what we noticed also collections were relatively modest considering the pre-sales. So was this primarily a timing issue because a large part of sales came towards the end of quarter? And should we expect material improvement from this quarter onwards?

Yeah, that's right. What you mentioned was right. One is the collections from new sales have come towards the end of the quarter, and hence there is a... I mean there is more collection that would be coming from these new sales, but part of the collections only have come in this Q1. Second is typically our milestone billing collections this time were relatively lower because some of the milestones we could not achieve due to labour shortage mainly in April and May, and hence the corresponding billing could not happen, and hence there is a small shortfall there also. Otherwise, in general, things seem to be good in terms of overall cash flow feasibility.

Okay, so we are on target to do the 2,000 crore, I think, which was guided in the past for the year.

2,000 crore of operating cash flow?

Yes, yes, yeah.

Yes, I mean, that is a... On an average for the next few years, if you take an aggregate level of what is the marginal cash flow, but we should, as we grow, we should be able to do, we should be able to touch that number.

Lastly, if I may, on the land payments, We have seen around 370 crores during the quarters, higher than the normal run rate. So if you could explain, I mean, for fiscal 27 and 28, what are the commitments and then from a business development point of view, what are you seeing?

Yes, I mean, this quarter, in addition to... We have invested in a couple of new lands. One small land we have bought in Mumbai and we have invested in it. So, put together, these are the two new ones. Otherwise, the rest are...

Got it, got it. Thank you and all the very best.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to three for participants. Should you have a follow-up question, we will request you to rejoin the queue. The next question is from the line of Puneet Gulati from HSBC. Please go ahead.

Yeah, thank you so much. My first question is one with respect to your disclosures on the forthcoming project, where you talk about potential sales value of $295 billion, and versus that, the margin that you talk about in slide 15 is $68.3 billion. This is a lot lower than what you had in the previous presentation at close to 86 billion of margin. And then, uh, Smaller, you know, sellable value for forthcoming project. What is the change here?

You're right, Puneet. Good evening. So the Majority, I mean, the mix of. The greater mix is towards joint development. Imagine your cash flow. For the marginal cash flow for forthcoming projects, we had...

Okay, so the GDV that you state is basically including the landowner share.

Yes, this is a gross value of all the projects, of the entire project.

Okay, that's fine. And secondly, you know, while you talked about potential, you know, two acquisitions this quarter, one in Mumbai and one, sorry, the other one I missed out.

In Greater Noida.

And have you paid for both of them?

Yes.

Okay. So how should one think about full-year allocation of capital towards land? What is a run rate one should assume?

We have done last year, I mean, from a land payments point of view, we would be roughly similar to land.

Okay, that's it. And lastly, your nine project launches, does that also include the balance phase of one world or that's separate?

We have taken the entire project of Shofa One World.

Understood. That's it. Thank you so much and all the best.

Thank you, Buneet.

Thank you. The next question is from the line of Pariksit Kanpal from HDFC Security. Please go ahead.

Hi, Jagdish. Congratulations on a great quarter on pre-sales. So my first question is, I mean, the way we were forecasting this quarter, the first half was a washout because of geopolitical issue. So just wanted to understand what led to this strong demand coming back towards the second half of the quarter, to both in Gurgram and Bangalore, and also wanted some color on how the Ravana has done after there were some delays you said this could have got pushed out. So just your sense on the demand, what has surprised, just surprised us positively, and where do you think the real estate cycle currently is?

Thank you, Parishit. So, like you have seen in Q1, or let's say Q1 of this calendar year, right, we had been preparing for these launches for some time, and hence the time advantage that we had got in terms of preparation is what I believe is a... But also the extent of preparation for that, so in that aspect, we were... Otherwise, the overall demand scenario seems to be quite. Also what we are witnessing. And it is a breeze. We have not seen much higher sales through. In the quarter, it has been quite steady.

My second question is on the 1,500 crore tentative, I mean, you said if the DEVs could get close, so 1,500 crore tentative may happen this year. So just wanted to break up of how much will be Bangalore and how much is the contribution from NCR and MMR on this, and whether is it right to assume that out of this 1,500, roughly 15,000 crores worth of GDV, 10 to 13,000 crores of GDV addition will happen.

Yes, I mean, from a remaining capital allocation, part of that is towards our current commitment, so for the 20.77 million square feet, that's roughly about another 400 crores, and our past commitments, those are also about another 200 crores. So those, I mean, those are about 600, because already we have done about 370. So remaining is about 600 pros. So that 600 or we will, we should look at the current opportunities that we are pursuing. Still a little early to disclose that, but it's at a good... Typically, in any new land buy, we see that the value of the land is between about 15% of the total. Thank you.

So, this will be largely in NCR, the 600-700 incremental beyond the existing in the past commitments, which you said. So, out of the 6-700 crores, how will be the geographical break-up of this?

It's part of it is, the majority is in Bangalore, and the remaining is split largely between NCR and a little bit portion too.

Okay. And there's a third question on this host quoted. So how much was the contribution from the Shubha One World out of the total 20, 2,000 odd crores of sales? So how much was the contribution? Because the numbers look a little lower than the numbers that have been had. So what's that if you know when you're going to hook in Q2 out of this? You just wanted the total cumulative sales on this and how much has been with the bank in Q1?

You have seen about 45% of the overall sale is from one world sale and the remaining is from both like Bangalore and NCR have contributed.

How much?

Bangalore and INSEA together have contributed about 8.7.

Out of the total 36,45% comes from your ShobaOne world. Yes. Is there any pending fees to be recognized? Because this number then looks slightly on the lower side compared to what you have released. It's about 1600. So was there, I mean, were you able to book the entire sales or there's a pass over which will happen in Q2 from this that you could not realize in the Q1 numbers?

Yeah, so like I mentioned, we have released about 3.4 million square feet of the total. And within that, we have done about 40%.

So that's about 2-3-1,800 odds. So 2-3-1,800 odds could be a spillover, which may happen in the Q2 quarter. No?

Yes, Pariksha.

So, there are some spillover into Q2, that means?

Yes, I mean, that is a characteristic of any new launch or ongoing operation. So, there would naturally be some spillovers. Okay. Thank you.

Thank you, thank you, thank you, thank you, thank you.

Thank you. The next question is from the line of Viplak Dev Barma from NK Global. Please go ahead.

Hi, Jagdish and team. Congratulations on the great start to FI27. First question is on the Mumbai and Greater Noida business development you did in this quarter. Could you give us some details like are these outright projects and how much you paid for this project? What would be their GDP when they are expected to be launched?

The Mumbai project is about 1.3 acres, and we bought the land for about 180 crores. And the Greater Noida project is a joint development for which we have paid certain dues for the authority and for the landowners. So, both, so each one, both put together, the GDB for this would be about. About 2,700 to 3,000 pros.

And they would be launching this financial year?

The Greater Noida one, we are envisaging to launch this financial year. Mumbai one, we would endeavor to do it, but considering the approvals, uncertainty, A clear timeline from there is a lot of work to be done there. And hence, although our endeavor is to launch it this financial year, so currently I have not included that in the And second question is on the margin.

I mean, last quarter, you mentioned that margin will see revival from the second half of this financial year. The margin continues to be low, sir. Do you maintain that margin will see uptick in second half of this financial year? And what kind of margin do you think we'll see in the second half of financial year, reported margin?

Right. You're right. I mean, I still expect the margins to be significantly better in the second half. Sequentially, it should start looking better. Q2 might be similar or depending on the number of completions that we can do, Q2 might be similar. But Q3 and Q4 sequentially should become better. Some of our high margin projects. The question is that by Q4.

The remainder of the year, you said 8.2 million square feet launches. They are translated into how much of GDP?

At the current average of 15,000, it should be...

Thank you. The next question is on the line of Penel Brambach from Choice Institutional Equities. Please go ahead.

Hello. Hello, Phine. Congratulations for the good set of numbers. I have two questions for you. First is for on August, approved NCDs of 1000 crores. So when we are planning to issue these NCDs in the next quarter or there is any timeline, so if you can throw some light on that, that would be helpful.

Yes, we envisage the usage. I'm up to the acquisition. So it's not, it need not be at one shot, but...

Okay, not bad. And I just want to understand the project completion for FI 27-28. So, which projects are at the finishing stage or we are planning to deliver in next three quarters or next remaining FI 27? And if possible, you can give some highlights for FI 28 projects as well.

Thank you. In 1987, like you mentioned, we would endeavor to complete about...

Okay. Yeah, that's all from my side. All the best for the next quarter. Thank you.

Thank you. The next question is from the line of Pratesh Sheth from Axis Capital. Please go ahead.

Yeah, hi. Thanks for the opportunity and congrats on a great start to the year. Just developing some more on launches again. So, second phase of Shobha Crescent is planned for next year or this year? which you said is basically second phase of Crescent and the Noida project. Bangalore, uh, Now converted into those apartment projects, also included in current years pipeline.

Okay, okay, perfect.

Just in Mumbai, I can't see, you know, the new latest addition in our forthcoming or subsequent pipeline, or rather there is one acre of Mumbai, but I thought that's the second part of the... Is it included in the current pipeline, or since we are not sure of the timeline, we are not included in the forthcoming and subsequent land right now?

Right. So, the one that you are seeing in the forthcoming pipeline is the second phase of the current project. The one that we have just acquired, that we have not yet included, basically timeline once it gets formed.

And one last question on launches. I think last time we had a 6 lakhs square feet of commercial project in Gurgaon that I don't see currently in the pipeline. Has the plans been shelved for that commercial project now, or has anything changed there?

Good observation to this. That particular project will be the endeavor to launch and develop it. We have, in fact, They're selling it, but retaining for us. Thank you.

Perfect. That's pretty helpful. That's it from myself, and all the best.

The next question is from the line of Shubham Salvadia from Tikri Investments. Please go ahead.

Good evening, sir. Sir, my question is regarding labor law. Sir, in Karnataka, recently in May month, there was a hike of 60% in minimum wages. So, have you evaluated any impact on cost?

But, largely, our technician course that they have.

Oh, okay.

Thank you, sir.

Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments.

Thank you, everyone, for participating in today's call. I hope we have answered most of the questions that you had. In case of any further queries or more details, you can please reach out to us and wish you the very best. Thank you and have a good evening.

On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us and you may now disconnect your line.