Arvind SmartSpaces Limited (ARVSMART) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 FY '25 Earnings Conference Call for Arvind SmartSpaces Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Smith Shah from Adfactors. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone. And thank you for joining us on the Q3 and 9M FY '25 Results Conference Call of Arvind SmartSpaces Limited. We have with us today on the call Mr. Kamal Singal, Managing Director and CEO; Mr. Avinash Suresh, Chief Operating Officer; Mr. Mitanshu Shah, Chief Financial Officer; Mr. Prakash Makwana, Company Secretary; and Mr. Vikram Rajput, Head, Investor Relations. Please note that a copy of the disclosure is available on the Investors section of the website of Arvind SmartSpaces Limited as well as on the stock exchanges. Please do note that certain things that said on this call that reflects the outlook towards the future, it could be construed as a forward-looking statement must be reviewed in conjunction with the risk that the company possess. With this, I would now like to hand over the call to Kamal Singal for his opening remarks. Thank you, and over to you, sir.

Thank you, and a very good afternoon to everybody present in this call. Thank you for joining us today to discuss operating and financial performance of Arvind SmartSpaces for the third quarter and 9 months ending December of 2024. Let me first briefly share with you my thoughts on the sector. Housing space sustained a very strong run in calendar year '24. The fourth consecutive year of buoyant demand where affordable segment took a back seat while mid-income and luxury demand surged. The performance follows the K-shaped recovery in the economy with the upper income segment of society doing really well, while those at the affordable end of the socioeconomic metrics witnessed gradual growth. Supply continues to be fully managed by the demand and it has resulted into inventory levels, which are near 14 years low. Looking ahead, as mortgage rates have been stable since March '23, any potential rate cut by RBI would drive demand higher, especially in mid-income segment. India's real estate industry reflects the broader optimism surrounding the country's economic future. We believe the sector is in midst of a long-term up cycle with structural drivers outweighing short-term fluctuations. Branded developers with a strong capital book, bringing the right product to the right micro markets will stand to benefit the most. Coming to the operational update for the quarter. Booking for the quarter Q3 FY '25 stood at INR 224 crores compared to INR 280 crores in the same period last year. This was largely due to lengthening approval cycles in Bengaluru real estate market, which impacted one of our profit launches in Devanhalli. This launch is now pushed to Q4 of this year. Collections grew strongly by 18% year-on-year, reaching INR 229 crores versus INR 194 crores the same quarter last year. Our 9 months performance has been best ever in terms of booking and collections. During 9 months, our booking value grew by 14% year-on-year basis to INR 890 crores and the collections for 9 months FY '25 stood at INR 725 crores, which registered a growth of around 10% on a year-on-year basis. Our continued focus on execution and customer deliveries remain a key priority. And the healthy collection reflects the trust and confidence our customers place in us. Our business development pipeline remains very robust. And year to date, we have secured projects with a cumulative top line potential of approximately INR 3,850 crores. Recently, we have announced a significant milestone in our growth journey as we marked our entry into MMR region with a INR 1,500 crore horizontal project multi-asset township. We are confident of the large opportunity the MMR plotted and villa market presents, and we look forward to bring our horizontal value position there. This project shall mark a significant step in delivering premium, thoughtfully designed experiences to one of the most vibrant markets in India. It will play a [simile] role in ASL's MMR journey as well as the region's horizontal development landscape. Additionally, we have further strengthened our presence in the horizontal development market of Ahmedabad with a signing of a mega industrial project with a top line potential of around INR 1,350 crores. This joint development project is one of the largest project of this kind in Gujarat, catering to the growing demand of high-quality industrial and logistics infrastructure in the region. Now moving to the financial highlights. The size and scale of P&L is catching up with our operational performance. During 9 months, we have reported revenue of around INR 550 crores, which is up by 146% on year-on-year basis. EBITDA for 9 months grew 166% to INR 152 crores and PAT for the 9 months grew by 208% and reached INR 97 crores. In Q3, we reported a revenue of around INR 210 crores, which were up 149% year-on-year basis. Q3 EBITDA grew by 188% on a year-on-year basis to INR 60 crores, and PAT for the quarter grew 331% on a year-on-year basis to INR 50 crores. Our balance sheet position remains very strong despite expanding operations, where net debt remained negative at INR 196 crores, a crucial parameter in real estate, reflecting the underlying business performance quite well with the operating cash flows. During quarter operating cash flows amounted to INR 74 crores and INR 277 crores during the first 9 months of the year. We estimate an unrealized operating cash flows exceeding INR 3,818 crores coming from the current pipeline of projects. This is expected to be realized during the next 3 to 4 years. Looking ahead, we expect supply to improve and buoyancy in housing seems to sustain. Our collections alongside strong sales performance and disciplined project acquisition has positioned us well for the future. We are currently gearing up for a vertical project launch in Bannerghatta in Q4, as mentioned earlier. As mentioned earlier, due to lengthening of approval cycle in Bengaluru, there remains a likelihood of this launch slipping into Q1 of next year. We look forward to add projects across our target markets of MMR, Bangalore and Ahmedabad in the coming quarters and strengthen our project pipeline for the next year. With that, I'll now conclude my opening remarks, and we can now start the question-and-answer session. Thank you.

[Operator Instructions] The first question is from Dhananjay Mishra from Sunidhi Securities.

Am I audible, sir?

Yes. We can hear you.

Yes. So congratulations on very good delivery side. And P&L was very strong in this quarter. And although it was contributed majorly by one project. So in terms of sales bookings, we are down 20%. And despite major contribution came from this AquaCity, so are we seeing any slowdown in terms of ongoing projects in terms of new bookings? What is the issue?

Yes, sure. So Dhananjay, good question. In the first 9 months, if you were to take the number as a cumulative number, we are at INR 890 crores, which is 14% up from last year. We have always been targeting a growth of around 25% thereabouts over previous years. And this year has been a similar year, and this is what we are trying to do. Although we just touched upon a small point in the earlier presentation, where we said that there's at least one project in Bengaluru, which is a large one. which is expected to be launched in last quarter, in the current quarter. That launch might get shifted into next quarter, but that's not reflecting anything to do with the demand. It's mainly to do with the approvals which are getting slightly delayed in a few micro markets of Bangalore. So except for this project, which might slip into the next project and which might have a couple of hundred crores rupees impact on our overall plan. The rest is on track, and we are quite confident that we'll be able to achieve the sales target.

So this 25% to -- 25% growth guidance, which we started with -- that is still intact or we will have some lower growth in terms of sales for FY '25?

So I mean, as I said, normally, we would expect a [25%] growth. And this one project slipping into maybe first month or second month of the next quarter will mean a loss of around maybe INR 150 crores, INR 200 crores, which will impact the growth by maybe 10-odd percent for the current year. But if we are able to launch it, which is the effort at this point in time, we'll be very comfortable in achieving the numbers and rather overachieve a little bit. But having said, this project is a little doubtful and the worst case is that we launch it the next quarter.

So next 2 months, we are expecting this Bannerghatta to be launched and Surat project will also slip in Q1 or it will be launched in this -- Q4...

The numbers it should happen if we are able to launch Bannerghatta, we're at INR 900 crores, the rest of the things are progressing well, and we are inching closer to the number of anything between [INR 1,400 crores to INR 1,500 crores], as we guided earlier. Bannerghatta if it is slipping out, then we have a problem of a couple of hundred crores. That's what I'm saying. Surat will possibly get shifted by a couple of quarters. There are some technical legal issues that we are trying to resolve at this point in time. It's a very large horizontal project, which involves aggregation and land conversion, et cetera. So overall time line and technical issues are taking longer than expected. So Surat, obviously, will happen at least a couple of quarters from today onwards and that's the time line on that...

So as of now, we are sure about Devanhalli future project. That is one project we are going to...

Yes, Devanhalli, for sure, yes.

Okay. And this -- in terms of new business development, we are already at INR 3,800 crores, and we had guided for INR 5,000 crores. So that number is likely to be achieved or it will be at this level only?

Broadly, yes. We are a shade lower than INR 4,000 crores, and we still are left with a couple of months, and we are quite on track on that, and we should hit something like INR 5,000 crores thereabouts for the year as a whole.

And lastly, on -- in terms of this industrial park in terms of -- we will be creating SPV, an entire investment will be done by SPV. So -- I mean who is the other partner? And what is the arrangement over there? So can you throw some more light on that?

So specifics, we can discuss later offline, and you can get in touch with the IR team. But this is obviously a joint venture kind of a structure and specifics, maybe you can discuss with the team offline.

Okay. But the investment will be done by us only.

Mr. Mishra, I'm really sorry to interrupt, but maybe request you to rejoin the queue as there are several participants waiting their turn. The next question from Amit Srivastava from B&K Securities.

Am I audible?

Yes, Amit.

Yes. Sir, I have a couple of questions. One is that Surat project now we are talking about, earlier, we were talking about Q3 launch. Now we are talking about it will get delayed by a couple of quarters, because of technical reasons. So are we running at a risk also that because our demand trend for the plotting business is also now getting some kind of issues because the market is saying that some demand slowdown is witnessed. So have you witnessed the plotted business slowdown into the market? And you have also highlighted that luxury has done well in the past, now the affordable mid-premiums sort of do well. So it is now running at risk when we launch, we don't know how the demand trend will be there into the Surat project. So any feedback on the Surat project, demand trend and the channels which you have done on that?

Sure. So Amit, Surat, when we say that the launch would happen in a couple of quarters from now, is mainly due to technical, regulatory and legal issues. Nothing to do with demand side of the market at all. In fact, there is a very robust demand on ground that we are getting on horizontal side. One launch, which is expected to happen very soon within this financial year is in Bangalore on the horizontal side. And we are very hopeful and we are very excited about that launch, and we are hoping that this gives as good a traction as we've been getting in all other horizontals. So in our understanding, there is no slowdown in horizontal at all, and things are moving pretty handsome there.

But sir, in a similar line on a Sarjapur project, which we launched at the peak of when the cycle was doing very well. And still, we have managed to sell only 30% of launch inventory, whereas the other players manage to sell across all the inventories, whatever they launched. So why we are going slow on that project, if you can highlight on that?

Yes. Sarjapur micro market in villa specifically, has not done that great in general. The high-density horizontal, which is row houses, actually, which basically compete with apartments only from the segmentation point of view, although it is horizontal against a vertical comparison that we are trying to make here, but this is not plotting, this is not large villas with large land parcels, et cetera. These are very high-density, almost like 1.2, 1.3 salable asset size being achieved on the piece of land, but in the form of row houses. That project is -- has not done that strong as compared to the rest of the horizontal in the category that we're talking about. In fact, we have observed that in specific micro markets that kind of a product has not been doing that great as we've been expecting. But for us, this project is still great with the kind of investment we made, the kind of cumulative cash flow we got already, et cetera, et cetera, on those parameters, it still ticks the box. But yes, it has been slower than the rest of the products that we do. But this is the only product that we have in a row house category. So to compare it with the rest of the horizontal which are plotting and very different kind of development, et cetera, will be a little unfair. But yes, this particular project has not done that great in that sense.

And sir, last one, basically on launch pipeline. So this year, in Q4, we have one project in Bangalore, which you highlight, other than everything will be on a sustenance sales, which we'll use towards whatever the quarter guidance which we are looking at, maybe missing by INR 100 crores or so. But for that also, we'll have a significant jump up we have to do in Q4. So how do you think -- which are the projects which can contribute in the coming quarter?

Yes, I mean there is one big launch that will give decent numbers for us. Sustenance, there's a very specific focus that we've put. We achieved some good numbers of late in the last couple of months. But from here onwards, we are pretty sure that sustenance coupled with this one launch at least. And of course, we are trying to launch Bannerghatta as well within this quarter per se. Even if that slips, we'll lose a couple of hundred that's a different story. But otherwise, the rest of the numbers, we are pretty confident of achieving. Apart from this, there's one another small launch, which is expected to happen, almost certain to happen. It's the new phase of orchards. So there also, we are opening new inventory and that launch will also happen within this financial year. So to say, 2 launches, horizontal launches of new phases in Bangalore are happening this year. And we are trying to launch Bannerghatta. If Bannerghatta happens, we'll exceed our target. If that doesn't happen, then we're talking about the kind of numbers that we just discussed. But 2 launches, not one.

Okay. Got it. And sir, recently signed projects of MMR in Ahmedabad, if you can give some of the highlight on that, what kind of equity investment is required in these projects? And in industrial park, what exactly we are going to do into that JD actually?

So MMR is a JD project. We are not investing anything significant. It's going to be one more asset-light kind of a project as usual. So we'll just pay some very moderate amount as a deposit, which will be recoverable. Then the construction has to be done by us, and we'll share the revenue. That's the structure there. And Ahmedabad industrial will have an LLP kind of a structure, where we partner in the entity itself. And we broadly share revenues the way the revenues are projected to happen, et cetera, et cetera. We'll be broadly 70%, 30%. 70% of the revenues will come to us and 30% will go to the land partners.

Next question is from Shreyans Mehta from Equirus.

Congratulation on strong financial performance and BD. Sir, my first question is on the industrial park...

Shreyans, you are not audible. Yes, a little louder please.

Hello.

A little better now.

Yes, sorry. So sir, my question is related to the industrial park, which is the new vertical which we started. So from scalability perspective, how should one look at it? I mean once this is successful, will we add more projects? Or this is just one-off of a kind which we are doing? And secondly, in terms of margins, will it be better than the current residential portfolio on horizontal vertical we are doing?

So it's a great question. This one is a project which in itself is a pretty large, in fact, one of the largest in our state thus far. And hence, it has a very significant element of having multiple products within one development. So in the process, we have done a little bit of industrial in the past, but nothing of this size and scale. Experience of selling industrial plots with a beautifully developed infrastructure has been great for us. But anything on the built-up side of industrial is not that great an experience. So we are building on our experience on horizontal plotted development for industries where we provide all the amenities and value-adds and infrastructure. To us, that market is growing. And Ahmedabad is growing quite a bit of crowd, quite a few industrial setups to put up newer and newer industries. Ahmedabad is gearing up for the next level of urbanization, where all industries which are sitting in the heart of the city are looking at spaces outside. The entire focus of the government has been to provide better spaces for industries in the outer periphery so that the inside of the city can be cleaned up, et cetera. So these are the drivers, which we thought give us a great opportunity. We have some experience of doing that. And we've got a land parcel, which is very, very appropriate given the size, the scale, et cetera, that we can achieve. Having said that, this is a normal proposition. On top of that, we want to bring in innovation the way we have been bringing innovation on our residential horizontal side. Quite a bit of it is unexplored. Quite a few value add can be brought into industrial space as well. That's what the team feels and that's what we are trying to achieve here. And depending on this experience, we always have been conservative in adding new geographies or new product mix, et cetera, et cetera. And hence, this is an important one that we want to do at a skill that merits our attention. And based on this experience, of course, idea is to replicate the same thing in various other cities of Gujarat and even outside.

Got it. Got it. Sure. And sir, any guidance on margins from this business?

It will be as good as a plotted residential project. For us, it is also broadly controlled and structured the same way and the revenue shares are very, very similar in terms of shares, et cetera. So these will be pretty healthy in terms of margins.

Got it. Got it. Sure. And the second question is on the MMR. When should we expect that project coming on stream in FY '26 second half?

Also H2, next year.

H2 next year. Half 2?

H2, half 2.

Next question is from Eesha from Axis Securities.

First of all, congratulations on good numbers and good announcement. My question -- most of my questions are answered. One which is remaining is on the cash end. Basically, are we utilizing any funds from the HDFC platform in the upcoming quarters? And secondly would be since MMR and Ahmedabad both the projects announced our asset-light model, do we have any plans for the cash that we are sitting on of around INR 1,000 crores cash, including the debt and the HDFC platform. So do we have any plans for how we are utilizing that cash?

Sure. So great question. And you very rightly pointed out that I mean this year, these 2 large projects have once again come on a JV/JD basis and hence, they remain asset light. And this also means that we consume less cash for the kind of top line and the bottom line that these projects are expected to be creating. The same thing happened last year also and that resulted into we, sitting on cash as on the last year-end, et cetera. But having said that, on the 3 sources of cash, first is, of course, internal accruals. Second is the normal bank debt, which is the low-cost debt more in the region of single digits, high single digit, et cetera. And the third source is HDFC, which is a kind of a quasi equity kind of a structure where you pay when you are able to pay, et cetera, et cetera. It carries a certain amount of risk for the investor, et cetera. I mean this is the third one. Of course, the third one is the most expensive given the risk that we take, et cetera. So to that extent, that remains in our priority at third place. First, we want to consume our own internal funds, then the bank debt and then this one. As of now, there is a healthy line of bank rate also made available to the company. And that is why we say that unless we consume these 2 first sources, we don't want to really catch on to HDFC. HDFC money is a money on tap. Unless we need it, we don't need to draw it. That's the kind of comfort that we have with that line. Hypothetically speaking, if you were to get into some larger scale acquisition, then this incremental money will be very, very healthy. But at this point, as you very rightly pointed because we are sitting on cash and because we've been acquiring asset-light kind of projects, we still have surplus money. The idea is to consume everything that we have apart from HDFC in the next 6 months, that means an investment of more in the region of INR 500 crores to INR 600 crores to happen, which is [sum] total of bank debt and the surplus cash we have at this point in time to be consumed in the next 6 months.

so this investment will be in vertical projects apart from Bannerghatta?

Both, both. So I mean, while acquiring projects, the idea is to acquire both kind of projects. There is a specific focus on vertical as we went into this cycle of acquisitions, et cetera. But we are open to both, and we are investing in both kinds of projects as such.

Okay. And one last question. Sir, going forward to achieve our booking guidance, our main contributors towards the presales numbers would be AquaCity and Bannerghatta, if it's launched in the next quarter. Am I right?

So yes, Bannerghatta, we are trying to launch in this quarter itself, it can slip into next quarter. But apart from that, I mean, within this quarter and next quarter, we have Orchards next phase, we have Greatlands next phase. We have AquaCity current and next phase sustenance et cetera. We have a few other -- I mean, you're talking about this and next quarter or you're even talking about things beyond that?

End of financial year.

End of next -- end of this financial year?

Financial year, yes, yes.

So it's only Orchards and Greatlands new phases. And if we are able to achieve it, Bannerghatta. Otherwise Bannerghatta will slip into next quarter, that's it, new launches.

Next question is from Ritwik Sheth, from One Up Financial Consultants.

Sir, a couple of questions from my end. Firstly, just continuing with the last question. Total launches you mentioned in Q4 will be Devanhalli, Orchard and Greatlands, right?

Yes, correct.

And what would be the total GDV of these 3 projects?

The launch top line will be more like 472 -- INR 800 crores...

INR 800 crores cumulative for all these?

Yes, yes, correct.

And sir, so since Surat and Bannerghatta possibly could be in FY '26 and with MMR project also coming in FY '26 and already we have a decent amount of pipeline. So what could be the launch potential of FY '26?

So FY '26, we look at it in 2 ways. One is projects which are already announced and which are already there as a pipeline. There, we are hoping that at least INR 2,500-odd crores should be launched from that inventory. At the same time, there are a couple of things which are very close to materializing in the existing acquisition pipeline. And we are considering this pipeline also in a way that we acquire and launch within next financial year, at least some part of these acquisitions. Put together, we should be able to exceed INR 3,000 crores, next year, that launches.

Okay. Right. Yes. So my -- actually, my next question was on the acquisition bit only because you mentioned in the presentation that we're looking to add new projects across Ahmedabad, Bangalore and MMR for the remainder of the year. So what is the kind of projects that we are looking to add? Is it vertical, horizontal? And what kind of GDV are we looking to add?

The last 2 years, I mean this year and the last year, put together has been INR 9,000 crores to INR 10,000 crores of total acquisitions. And we can hope that we'll continue with the same trajectory, very, very similar trajectory, adding 5 to -- maybe INR 5,000-odd crores next year again. That's on the acquisition side, new project acquisition side.

Right. Right. Because, sir, already, we have INR 10,000 crores of projects in hand, which are to be launched and assuming that we add another INR 4,000 crores, INR 5,000 crores next year, we'll be at INR 15,000 crores with INR 3,000 crores launch. So where are we comfortable to take this project pipeline on our balance sheet? And what kind of launches do we need to do in FY '26-'27 for these to get monetized? '26, you mentioned around INR 3,000 crores. And so what is the kind of churn that we would see from the projects that are already acquired?

So our idea is to grow on these parameters to the extent of maybe 25% to 30%. That trend continues. So I mean everything builds from there onwards, the acquisition plan, the launch plan, the fresh sales plan, collection plan, et cetera. So everything derives from this trajectory and fresh sales is at the center of everything. So if we are targeting 25%, 30% this year, even if there's a delay within a block of 2 years in this year and next year put together, we'll have a CAGR of 25% to 30% is what we are trying to achieve here, fluctuation is apart. And this trend should continue beyond that also. So '27, '26 all these financially years should see 25% to 30% growth in fresh sales. And that will always mean that we'll have to launch cumulatively with that kind of a growth in terms of launches as well. And of course, this will be a combination of vertical and horizontal. Our vertical today is a little lean as compared to what we think is the ideal. And hence, you will see a little more action and little more of investment proportion going into vertical as a segment. Balance sheet size vis-a-vis the inventory size, et cetera, is actually not a worry for us because last 2 years have been such that, almost everything has come through JD and asset-light model. So we've been able to create top line and bottom line, et cetera, without really investing much and that is why we are sitting on cash that we just talked about. And hence, balance sheet size is not looking to be of any major concern for us next couple of years. But the growth trajectory is very important, and that is what we are working towards, which is 30%, 30-odd percent growth.

Right. And sir, just one last question. Have you seen any change in behavior from landowners in terms of pricing and in terms of negotiation in the last, say, 6 months versus previous 12 months ago?

So I mean, I think in my understanding, it varies from market to market. Bangalore has seen prices going up to a certain extent in almost every macro market. But having seen so last 3, 4 months have been slightly different. I think they have now come very close to what the market can absorb. And hence, expectations are not that high now. I mean they are not expecting them to continue to rise in the proportion that we've seen last 2 to 3 quarters. So that's Bangalore for us. Ahmedabad is the other way around. I mean, prices were always decent and reasonable. It was about how much value the developer can add on the land that exists. It's also the trust that you can fetch from very, very large-scale land partners. Arvind has been in a very, very sweet spot on the land side, and hence, we continue to get and attract some very, very large land parcels. I mean if you just recollect last year, we've had 3 very, very big-sized projects acquired and launched which was AquaCity, Upland 2 or Upland 3, et cetera. And this year, again, apart from these 3, we have been able to tie up on a very, very large scale industrial development. Everything is on joint development, joint venture basis. So Ahmedabad is behaving very differently. The brand has a very, very special traction. We make lot of sense to the landlords and we'll become a kind of a preferred, I mean, development partner for most land partners. And Bangalore is a little tighter in terms of competition. Prices have gone up. At the same time, expectations have gone up. But my understanding last 3 months have seen a little bit of a tapering in terms of expectations of the landlord there as well and prices possibly have come close to or very close to peaking out.

[Operator Instructions] The next question is from Akshay Kothari from JHP Securities.

Sir, I just wanted to understand what are the problems you are facing in Surat? You mentioned that there is some delay?

So Surat is a very, very large size of project and generally, this size and scale will attract multiple kind of milestones to be achieved. There are multiple partners, as is the case in most of the land deals that we've had. Lands need to go through the processes of conversion, through the process of approval, environment and everything. So there are quite a few technical legal things that we need to sort out. It has taken longer than what was anticipated earlier. But hopefully, next year, a couple of quarters, it should all happen and we should be able to launch this project. This is going to be our entry into Surat as a market. So we are very excited about it, and we are working very hard towards achieving this objective of launching this product as early as possible. Having said that, we are also working on other options in Surat. Surat, we've identified as a key market. It's not about 1 project or 2 projects et cetera. It's about we deciding that we'll be there in that market as a serious player, and the efforts are ongoing to also acquire and try to do a few other things in that market. And that's how we are planning to develop the overall market as such.

Okay. And sir, second question is on the mega industrial park, which we are doing at Ahmedabad. So is it that [Dishman]land, [Dishman] infrastructure land?

No, I'm not sure about [Dishman] land. I don't see any connection here.

Okay. So sir, just wanted to understand the economics of this. Generally, there's also this another land parcel Origins over there. So is it near to that land parcel?

I'm very sorry, but even Origin, I'll not be sure about. We are at the highway itself, and we will be -- this project, otherwise, is in the vicinity of AquaCity itself. Yes. It's very close to AquaCity.

Sir, what is the time horizon for completion of this after the launch?

So obviously, such a huge development will at least have 2 or 3 phases. We are right now elevating it, whether it should be 3 phases, at least 1/3 of this will be launched in one shot or we should be launching half of it. That should materialize very soon, but at least 2 phases will be happening.

And we will be selling the industrial plots, right?

Correct Yes. Yes.

Okay. Because, Origins is by Mahindra and they generally lease the land?

No. No, we're not -- we don't have this leasing of land model. We will have outright selling model. Mahindra also had a project in our understanding in the similar direction. That's far away. We are much closer to the city, and we are much better connected, et cetera. But yes, we don't have any plans to lease land. We have a buy and sell model.

The next question is from Aditya Singh from RoboCapital.

Sir, can you please share some guidance on how much revenue are we going to recognize in FY '26 and FY '27?

So this year, as you've seen first 9 months, itself have been very, very healthy. So this year, obviously, is going to be great. I think revenues given the accounting standard, will always have a little bit of a peaks and troughs happening. But on a block of 2 to 3 years, we'll see a terminal growth of similar proportion as we sell in terms of fresh sales. Ultimately, whatever we sell as fresh, has to enter into books of account with some consistent gap. So I would rather say that in the block of next 2 years, once again, we should see a healthy growth in the number that we'll achieve this year, which is to start is going to be very high. So in case next year is going to be a little low, then it will be compensated by next year or vice vera. That's how it works. It depends upon when and how much gets completed, BOs received et cetera, et cetera. But in a block of any 2 years, I think we'll start seeing fair amount of consistency in terms of growth that we see otherwise in fresh sales.

Next question is from Amit Agicha from HG Hawa.

Am I audible?

Yes, yes, please.

Congratulations for good set of numbers. Sir, my question was connected to like -- are you seeing any margin pressure due to rising material and labor costs?

Not really, Amit. Material cost has not really gone up. I mean within a very acceptable level of fluctuations on either side, they have been fairly consistent. Labor cost also is not going up in any significant way, which could be called as something of an exceptional type. And hence, the overall cost model is pretty stable. Our land deals are as steady as they have been. So our margin model looks to be stable from the BD that we have announced till date.

Sir, one last question, what proportion of sales are you seeing from NRI buyers? And how is the company targeting this segment?

So I mean, we are majorly into retail sales. Our sales to direct customer is possibly the highest. We don't focus on investor-driven kind of segment. Generally, our NRI sales should be in the region of 8% to 10%, but you could just connect with the team off-line to get the specific number. But it's in high single digits to around 10% thereabouts, in my understanding, NRI.

Next question is from Rahil Shah from Crown Capital.

Can you hear me?

Yes, yes, please, Rahil.

Sir, my question is also on the margins. Like if you can please explain what are like steady-state margins one can factor in given the overall picture, how it differs in business like in terms of joint development once you own outright and which has more margins? And as your share of projects, leaning more towards the joint development, so just general outlook, what kind of steady-state margins one can expect?

So Rahil, on a weighted average basis, everything put together vertical, horizontal, JDs and outright, et cetera, we are working on a margin threshold of around 25% at EBITDA level. That has been pretty consistent. We generally have been performing a little better than that. You would have seen this from the last few years' trend. This has been our clear focus. We are also a company which says that return on effort is as important as the top line per se. Growth without bottom line is -- I mean, it does make a little less sense to us. And hence, this clear focus on profitability and cash generation, et cetera, et cetera. And that's how the whole business is driven. That is how we'll acquire projects, that's how we'll launch the project. That's how we'll segment the product. That's how we'll price the product et cetera. So everything flows from there, very clear focus on cash flows and profitability. So as of now, as we speak, 25% threshold, that remains the same. I mean, going forward, as we scale up, et cetera, et cetera, this will remain a very clear focus. Couple of percentage points here and there could always happen. That's not something which is cast in stone. But broadly speaking, the focus and the levels of profitability should remain very similar to what we've been achieving.

So what had helped you last year, FY '24, I think you recorded 33% or so EBITDA margins for the full year? So...

You can just presume that some fluctuations within the numbers and the long-term trend of around 25% that happens. I mean that may possibly reflecting some project to project variations and which project comes at what point in time is something which is more important. And for example, in this set of numbers, a very high proportion of Greatland came, Greatland was a little disproportionate in terms of profitability. And hence, we jacked up the numbers on an average basis. But I'd rather request you to look at it more from a long-term trend and more from a steady-state basis. And these kind of fluctuations on either side can happen. On a long-term basis, we are very clearly focused on EBITDA 25% and anything everything else flowing from there.

Next question is from Amit Jain, who's an individual investor.

My question is already answered.

Next question is from Dhananjay Mishra from Sunidhi Securities.

Sir, just one follow-up on industrial park project. So once we complete all the 3 phases let's say 3 years down the line, and sell plots to industries. So we will be managing these -- so what kind of annual O&M opportunity you see in this project?

Dhananjay, even for industrial projects, we will broadly be focusing on buying and selling. So generally, we would rather prefer to exit the project once everything is sold out and hand over the maintenance, et cetera, to a specific purpose, SPV or society or any association of the occupiers there. So we don't look at it from a steady state -- I mean, steady, consistent stream of flows to come to us.

Okay. So this is just a real estate thing for us, right?

Yes, for us, it's real estate, it's like a plotting project that we...

We take the last question from Ritwik Sheth from One Up Financial Consultants.

Sir, my question is on the fund raise enabling resolution that we have taken. Earlier in the call, you mentioned that we have enough capital to deploy INR 500 crores to INR 600 crores in the next 6 to 8 months. So will this just be an enabling resolution or we'll go ahead and raise funds?

As you very rightly pointed out, we are sitting on some very healthy cash position, and we've got task cut out for ourselves to deploy what we have already in terms of internal accruals and also the bank line, which we just created at a very, very competitive rate. So these 2 funds, and these 2 sources are absolutely great for us, which optimizes our overall deployment and cost of capital, et cetera. QIP is an enabling resolution. We've got all the processes done. And as I understand, we've got a year to finally hit the market and get this money in as a further investment source. Of course, today, the target and the challenge is to deploy what we already have, given the kind of fluctuations and volatility that we've seen in the market. And given the comfort that we have on the need of funds to be invested at this point in time, I think we're placed very comfortably, and we think we can time it better. And the time is an appropriate sort of this thing and hit the market and get this money. But we've got enough and more time. It's generally 1 year, that money is supposed to be completed in the process, and we've got that kind of a time already with us.

That was the last question. I would now like to turn...

Sure, Sayam, please...

Yes, sir, if you'd like to give any closing comments?

Yes, Great. I mean, thank you. I mean, I'll just say thank you to everybody for participating in this earnings call of Arvind SmartSpaces. I hope we've been able to address most of your queries. However, if there is anything missed out on any of your questions, kindly reach out to Vikram, and he'll connect with you offline and clarify and give further information as may be required. Looking forward to interacting with you in the coming quarter. Thanks a lot for your time. Thank you.

Thank you very much. On behalf of Arvind SmartSpaces Limited, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.