Suraj Estate Developers Limited (SURAJEST) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Q2 and H1 FY27 earnings conference call hosted by Suraj State Developers Limited. As a reminder, all participle lines will be in a listen-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 now, please sir, by pressing star, then zero, on attached to your phone. Please note that this conference is being recorded. I would now have the conference over to Mr. Rahul Thomas, full-time director from Souris Estate Developers Committee. Thank you, and over to you, sir.

Good afternoon, everyone. I welcome you all to our Q2 and H1F earnings conference call. Along with me, I have our CFO, Mr. Sripal Shah, and SGA, our Investor Relation Advisors. I hope all of you have gone through our investor presentation, upload on the stock exchanges, and our company website. Before taking you through our performance, let me briefly touch upon the real estate market in which we operate. South and central Mumbai continue to be among the city's most established and premium real estate markets. These locations benefit from well-developed social infrastructure, strong connectivity, proximity to key employment centers, and an established commercial ecosystem. In the commercial segment, locations such as the CBD and Worley continue to see limited availability of quality grade-A office spaces, while Lower Perel remains as an active leasing destination, supported by demand from established corporate occupiers. This, coupled with limited development opportunities in these established locations, supports the premium positioning of the commercial market. On the residential side, South Central Mumbai continues to attract demand across the value luxury and luxury segments. Established neighborhoods such as Worley, Prabadevi, Lower Pharrell, Pharrell, Dadar, and Matunga remain preferred destinations for home buyers. At the same time, redevelopment is playing an increasingly important role in creating new housing supply, particularly given the limited availability of vacant land parcels in these mature locations. These are the markets where Surajay State has built its presence and developed strong execution capabilities over the years. Our understanding of these micromarkets, particularly our expertise in redevelopment and tenant settlement, position us to well capitalize on the opportunities emerging across the residential and commercial segments. Overall, we believe that the established nature of these locations, continued demand from homebuyers and commercial occupiers, and the availability of redevelopment opportunities will continue to support the long-term attractiveness of South Central Mumbai. Coming to our business performance, we continue to witness healthy sales momentum during the quarter. During Q2 at 527, we recorded a sales value of 206 crores compared to 153 crores in the corresponding quarter last year, registering a growth of 35% year-on-year. Sales area increased by 19% to 41,487 square feet, while collection stood at 104 crores, reflecting a growth of 46% over the previous year. On a half-year basis, sales value stood at 347 crores, registering a growth of 48% year-on-year. The sales area increased by 37% to 70,321 square feet, while collections stood at 190 crores compared to 186 crores in H1 of FY26. This performance reflects the continued contribution of our residential and commercial development and the healthy traction across our project portfolio. One of the key highlights during the quarter was the encouraging response to Soorage 1 business pay, our marquee commercial development in Miami. This project has witnessed strong market traction with approximately 500 crores worth of inventory sold since its launch. We have also completed the acquisition of development rights for the adjoining land parcel, which will further enhance the scale and development potential of the project. With this expansion, the combined project will have an estimated saleable area of 3.59 lakh square feet, taking its GDV potential to around 2,000 crores, compared to the earlier estimate of 1,200 crores. We believe this expansion will further strengthen our commercial portfolio and consolidate our presence in the Mahi Micromarket. In addition, we have received commencement certificate for Lobo Villa and Ellis Villa, which is now named as Suraj Nova, and work on the project has commenced. Located in Mayim West, this value luxury residential project is planned for the launch in Q3 FY27, with RERA registration also expected during the same quarter. Similarly, we have received commencement certificates for Suraj Moderna, a value luxury residential project in the other west, which is also targeted for launch and radar registration in Q3FY27. Together, two projects have an estimated combined GDP of 250 crores, and are expected to further strengthen our presence in the south-central Mumbai market. Moving to our overall project portfolio, as of September 26, our ongoing projects had achieved a cumulative sold area of 6.36 lakh square feet at an average realization of approximately 46,170 per square foot. Collections received from these projects stood at 1,770 crores, with a balance receivable of approximately 1,168 crores. In addition, our unsold area stood at 1.20 lakh square feet with an estimated GDV of around 708 crores. Taking together the balance receivable from sold inventory and estimated value of unsold, the total estimated receivables from our ongoing projects stand at approximately 1,876 crores, providing healthy visibility of future cash flows. Currently, we have 13 ongoing sites with a development area of 23.54 lakhs square feet and a saleable radar carpet of 7.57 lakhs square feet. In addition, our upcoming pipeline comprises of 18 projects with an estimated GDV, an estimated carpet area of 13.46 lakhs square feet. This provides us with a strong pipeline to support our growth in the coming years. Looking ahead, we remain positive about the long-term prospects of South Central Mumbai real estate market. The combination of sustained demand for premium housing, established commercial locations, and redevelopment opportunities continues to create attractive growth opportunities for the company. Our focus will remain on progressing our ongoing projects, bringing upcoming developments to the market, maintaining healthy sales and collection momentum, and selectively pursuing redevelopment opportunities that complement our existing portfolio. With our established presence across South Central Mumbai, strong understanding of the local market, and the growth pipeline, project pipeline, we remain confident of achieving our FY27 pre-sales guidance of 700 crores. With this, I would like to hand over the call to Mr. Sripal Shah, who will take you through the financial performance and the key operations highlights in greater detail.

Thank you, Raul. A very good afternoon, everyone. I will now take you to the financial and operational performance of the company for Q2 and H1 FY2027. Starting with our financial performance, today, the total income for Q2 FY2027 stood at Rs. 171 crores compared to Rs. 145 crores in the corresponding quarter last year, registering a growth of 18% year-on-year. EBITDA for the quarter stood at Rs.56 crores compared to Rs.66 crores in Q2 FY26 with an EBITDA margin of 33%. Profit after tax stood at Rs.23 crores as against Rs.33 crores in the last previous year. For H1 FY27, the total income stood at Rs. 317 crores, registering a growth of 14% year-on-year, compared to Rs. 279 crores in H1 FY26. EBITDA for the first half stood at Rs. 111 crores, compared to Rs. 116 crores in the corresponding prior last year period, with EBITDA margins of approximately 35%. Profit after tax for H1 FY27 stood at Rs.46 crore compared to Rs.54 crore in H1 FY26. Moving to our operational performance, we continue to see healthy sales momentum across our portfolio. During Q2 FY27, we recorded a sales value of Rs.206 crore compared to Rs.153 crore in the corresponding last year quarter. Sales area increased to 41,487 square feet from 34,846 square feet, while collections during the quarter stood at Rs. 104 crores. H1 FY27, sales value reached Rs. 347 crores compared to Rs. 234 crores in the previous year. Sales area also increased to 70,321 square feet from Rs. 51,372 square feet. While collections stood at Rs. 190 crores. This reflects continued traction across our residential and commercial developments. Moving to our debt position, as of September 30 to 1926, our gross debt stood at Rs. 800 crores and net debt stood at Rs. 710 crores. The increase in debt was primarily driven by business development activities and capital deployment towards our ongoing and upcoming projects. Overall, we continue to focus on maintaining healthy, safe, and correction momentum while ensuring timely execution of our projects and strengthening our development pipeline. With this, I would like to hand over the call to the moderator for question and answer session. Thank you.

Thank you so much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star N1 on the touch-down telephone. If you wish to remove yourself from question queue, you may press R and 2. Pulsements are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a woman while the question queue assembles.

The first question is from the line of Mohit Mittal from JH Investments.

Please go ahead.

Hi, thank you for this opportunity and hopefully I am audible.

Sir, can you speak a little louder, please?

Yeah, am I audible now? Okay, so I had a couple of questions. The first being that with the H1, pre-sales had $347 crores against the guidance of $700 crores. Like, was it an expected contribution from upcoming launches and existing projects in the second half of the year to achieve the guidance?

Projects, but it will come mainly from the...

Okay, understood. And the second question being that, following the acquisition of the development rights for the adjoining land at Surin 1 Business Bank, what is the expected timeline for approvals, construction commitments, and also the execution of the expended project?

We've already received the approvals in terms of concession plans and also have obtained the environment clearance. So, beyond the process, we have casted some part of the basement and the raft. So, only the amalgamation of the two plots and excavation is pending of the additional component, which we expect within the next 60 days.

Got it. Thank you. I understood. Okay, I'll join by. Thank you.

Thank you.

A reminder to all the participants, you may press star and want to ask questions. The next question is from the line of Rohit Kumar from ADM Advisors. Please go ahead.

Yeah, thank you, sir, for the opportunity. Sir, in the previous call, you have indicated that FR27 launch pipeline was approximately 1,600 crores, with major launch expected across Q2, Q3, and Q4. Could you please provide us an update on the execution of this launch pipeline and indicated whether there have been any changes in the timelines?

To answer your question, the total project pipeline which we are going to launch is this F527 is 1600, out of which 800 is from the second phase of the commercial project, which we are expected to launch by the end of this quarter, for which I think we have already got the environment clearance. Major component is that we are very confident we will launch by the end of this quarter. Having said that, the balance 800 comes from the residential portfolio, of which 250 we are also targeting to launch this particular quarter, and balance should come in the fourth quarter.

Okay. That answers my question. Thank you.

Thank you. Thank you.

I have a couple of questions related to debt. So first one is like your debt debt has increased to around 700 euros. Could you provide an update on the cost of debt and the expected debt registry going forward? Secondly, what has been the primary recreation of the additional morons and how the companies plan to manage this when they will be coming for us?

Yeah, so the net debt has increased by close to 96 crores. So, in that, majorly, we have done the acquisition of the development rights of the backside for a consideration of close to 85 crores during the tax period. And it is deployed towards the upcoming portfolio, which will be part, becoming part of the ongoing portfolio after the end of this quarter. In addition to the other debts, we have 5 to 6 projects which we are handling over this particular financial year, which will automatically bring down the debt by 150 crores.

Hello, Mr. Kalpesh.

Yes, sir. And sir, what is the cost of debt and how we are expecting the leverage in the coming quarters?

So, it will be close to 13.25% range.

Okay, sir. And anything on the leverage part, like how we are expecting the coming quarters?

So, we are targeting to bring the net debt to close to 600-odd crores.

Okay.

And I know financial years.

Understood, sir.

Thank you. The next question is from Malayana Prohip Mehra from SK Securities. Please go ahead.

Hello. I'm audible, sir. Yeah. Sir, my first question is, could you please provide an indicative timeline for monetization George,

basically the sole receivables on various sites, we can give you an indicated timeline on the projects which are closer to completion, so those will be coming immediately, and also, you know, the possible milestones where the payments of cash flow will come from the clients for the sole receivables. Which are the project which are under construction. So I think that we can ask our IR to send you roughly on the next one year what are the cash flows coming from the completed projects which are almost getting completed and the ongoing inventory.

Sure, sir. That will be helpful. And also, in the previous call, you indicated that a 527 launch pipeline of approximately around 1,600 calls, and major launches are expected to be after quarter two in second half of the year. Could you provide an update on execution of this launch pipeline and indicate whether there have been any changes in the timeline? That will be helpful.

So, as I think Shripal answered it in the earlier question, 800 crores over the 1,600 is coming from the commercial launch of one business, which we said we have acquired, and we expect that within this quarter itself, the current quarter, SQ3. We have already received CC, that's 800 crores. We've already commenced work in our project called Suraj Nova, which is shown as Lobo Villa in our presentation. That is approximately that and another project called Suraj Madona. Both these sites have already obtained the commencement certificate, which has a GDV of 250 crores. So 800 plus 250 is 1,050 crores of launch pipeline is already planned for Q3. And we have the others which we are expecting by Q4. So, that's roughly the bad, Alex.

Yeah, I got it, sir. And my last question is, Gripu, provide some color on expected cash flow contribution from key projects, particularly Surajwan Business Day, over the next few years?

So, we are following a very simple model of a construction link plan. So, it is, you know, between 20% to 30% on booking and 45%, 40-45% on the plinth and construction plinth plan. So, I think we're just following a very standard plan. There's no subvention or no payment terms.

Got it, sir. That's it for my side. Thank you and all the best.

Thank you. A reminder to all the participants, you may press star and want to ask questions. The next question is from Bhilayana Sakshi Pratap from Pratap Securities. Please go ahead.

Hi, sir. Thanks for providing the opportunity. Sir, I had two questions. Firstly, if you can provide some update on the progress of the Bandra project that we had, particularly regarding the completion of remaining land acquisition, legal formalities, and also what would be the expected timeline for taking this project forward as in convincing the launch?

Pipeline, in terms of acquisition, we have only one acquisition pending. The rest are almost approvals, which work is underway. So, I think barring one line, I think everything else is all right.

Oh, okay. And second question, sir, is apart from the projects currently under development, are there any other redevelopment opportunities that the company is actively evaluating, especially in South Central Mumbai?

We are actively looking at a couple of society redevelopments, which are prime locations, and also bill-to-suit commercial transactions, because we're seeing the commercial market quite, and we feel that there are some good opportunities in South. And so I think commercial, broadly, a couple of society redevelopments, and that's what we're looking at currently.

Understood, sir. Thank you, and all the best. Thank you.

A reminder to all the participants, female press star and want to ask questions. The next question is from the line of Rohit Kumar from ADM Advisors. Please go ahead.

Thank you.

So, we are looking at a couple of society redevelopments. In fact, we are in advance stages with a couple of them, which we shall announce in due course. So, I think society redevelopment and, as I said earlier, a few commercial opportunities.

Sir, my third question was basically, do you intend to remain focused on south-central Mumbai, or are you evaluating opportunities in other Mumbai micro-markets where redevelopment economics may be more attractive?

Large part of the land parcels form part of the inventory. You would like to explore executing these land parcels before we move out to a new micro-market as well.

Okay. Thank you, sir. That's it from my family.

Thank you.

There are no further questions from the participants. I would now have the contents over to the management for closing comments. Over to you, sir.

We thank everyone. We remain focused on our timely project execution, maintaining healthy sales and collection momentum, and strengthening our development pipeline. With our established presence in South Central Mumbai and strong redevelopment capabilities, We are confident about the opportunities ahead. We thank you.

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