Arvind SmartSpaces Limited ($ARVSMART)

Ladies and gentlemen, good day, and welcome to Arvind SmartSpaces Limited Q4 and FY '26 Post Results Earnings Con Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Kumar Sharma from Adfactors. Thank you, and over to you, sir.

Thank you, [indiscernible]. Good afternoon, everyone, and thank you for joining us on the Q4 and full year FY '26 Results Conference Call of Arvind SmartSpaces Limited. On the call today, we have with us Mr. Kulin Lalbhai, Chairman of the company; Mr. Priyansh Kapoor, Managing Director and CEO; Mr. Amit Chamaria, CFO; Mr. Vikram Rajput, Head, Business Development, MMR and Investor Relations; and Mr. Satya Prakash Mishra, Head, Investor Relations, Arvind Limited. Please note that a copy of the disclosures is available on the Investors section of the website of Arvind SmartSpaces Limited as well as on the stock exchanges. Please do note that anything said on this call that reflects the outlook towards the future should be construed as a forward-looking statement and must be reviewed in conjunction with the risks that the company possesses. I would now like to hand over the call to Mr. Kulin Lalbhai, for his opening remarks. Thank you, and over to you, sir.

Thanks, Amit. Good afternoon, everyone, and a very warm welcome to you all joining us today. Thank you for taking time to participate in the Arvind Smart Spaces FY '26 and Q4 earnings call. India today stands at the intersection of multiple structural tailwinds that are reshaping residential real estate demand. Sustained economic growth, rising formalization increasing household income, rapid urbanization, improving infrastructure, expanding mortgage penetration and growing aspirations towards global standards of living are collectively transforming the sector's long-term outlook. Residential real estate demand in India are increasingly being shaped by lifestyle aspirations, community preferences, wellness considerations and the desire to superior living environment. Even amidst global geopolitical uncertainty, evolving trade alignment and periodic economic volatility, India's domestic growth engine has remained remarkably resilient. The country continues to be amongst the world's fastest-growing major economy, supported by strong demographics, rising consumption and sustained infrastructure creation. Against this backdrop, the residential real estate sector in FY '26 entered a phase of healthy normalization and growing maturity. Demand remained fundamentally user-driven. Inventory levels across major markets stayed broadly balanced. Additionally, interest rate moderation and RBI repo rate reductions improved affordability particularly within the mid-income and aspiring premium segments that define our full core addressable market. Perhaps the most important structural shift underway is the accelerating consolidation of the sector in favor of organized and branded developers. Customers, landowners and capital providers are increasingly gravitating towards developers with credibility, governance standards, execution capability and balance sheet discipline. At Arvind SmartSpaces, we believe we are very well poised to participate in this opportunity. We are focused on building an organization capable of navigating economic cycles, understanding evolving customer aspirations, allocating capital prudently, attracting talent, executing consistently at scale and maintaining trust over decades. This is the architecture we have been consciously building at Arvind SmartSpaces. Over the past several years, we have invested patiently in strengthening every key growth driver for the company. Leadership debt, organizational capability, capital discipline, market selection product strategy, digital capability, governance frameworks and customer engagement. FY '26 was the year when many of these investments began translating into visible momentum. Today, we have an increasingly diversified portfolio across Ahmedabad, Bengaluru and MMR with growing strength across both horizontal and vertical development. At the same time, we have continued to strengthen leadership bandwidth, deepen city-level operating structure and build a more agile and execution-focused organization. We believe the organization we have built is now increasingly ready to scale responsibly, strategically and sustainably. The foundations have been built carefully, and we believe the next orbit of growth for Arvind SmartSpaces has only just begun. With that, I would now like to hand over the call to Priyansh to take you through the operating and financial performance for the quarter and the year, along with the business outlook going forward.

Thank you, Kulin. Good afternoon, everyone, and thank you for joining us on this call. FY '26 has been a landmark year for Arvind SmartSpaces. Marked by record bookings, strong cash generation and strategic expansion across the key growth markets. During the year, we achieved our highest ever annual booking value of INR 1,550 crores, representing a strong 22% year-on-year growth. This performance was driven by sustained demand across our existing portfolio as well as excellent traction in our newly launched projects. New launches contributed nearly 60% of annual bookings amounting to approximately INR 950 crores, reflecting both healthy market demand and strong customer confidence in our offerings. Our performance demonstrates the strength of our brand, execution capabilities and ability to identify high potential micro markets aligned with evolving customer aspirations. What is particularly encouraging is the strong response we received in newer geographies which [indiscernible] both our market selection strategy and our product positioning approach. Bengaluru continued to be a key growth engine for us, contributing INR 485 crores and accounting for almost [ 21% ] of our annual bookings. Over the years, we have built strong operating capabilities and developed a deep understanding of several important micro markets within the city. We continued infrastructure-led growth and scale-up of our vertical portfolio in Bengaluru. We remain highly optimistic about the long-term opportunity in this market. Another encouraging trend during the year was increasing contribution from [ sustainable ] sales. This reflects growing customer confidence in our product quality, pricing strategy and execution track record. Over the past few years, we have consciously focused on improving sustainment sales performance, and we are beginning to see now meaning results from those efforts. Q4 FY '26 was especially strong for us. During the quarter, we achieved our highest ever quarterly booking and collections. With bookings crossing INR 600 crores milestones for the first time. We launched one project each in Bengaluru and Vadodara during the quarter. In Bengaluru, we launched Arvind Skycrest in Bannerghatta towards the end of the quarter, where [indiscernible] bookings of 164 units amounting to INR 262 crores, translating to approximately 53% of the total inventory. This was within a week of the launch. Similarly, in Vadodara, we launched Arvind Greenfield on Ajwa Road and achieved bookings of 323 units amounting to INR 178 crores representing nearly 42% of the launch inventories. These launch outcomes reinforce the strength of underlying end-user demand as well as our ability to execute differentiated products across diverse markets. On the business development front, FY '26 was transformational for us. During the year, we added projects with an estimated cumulative top line potential of INR 3,140 crores, significantly enhancing our medium-term growth visibility. We entered the Mumbai Residential apartment market through a premium redevelopment project in [indiscernible], expanded our Bengaluru footprint through acquisition in [indiscernible] and these strengthen our [indiscernible] presence at the [ high-rise ] development in [indiscernible]. These additions further deepen our presence within the vertical developments, which are becoming an increasingly important part of our portfolio. Subsequent to the year-end, we also signed our largest ever high-rise project in Mumbai with an estimated top line potential of approximately INR 2,400 crores. This further reinforces our conviction in the long-term opportunity within the Mumbai metropolitan region. At the same time, our approach towards [indiscernible] remains discipline and partnership led. We continue to focus on asset-light structures, redevelopment opportunities and micro markets where demand visibility, capital efficiency and execution feasibility remains strong. While discussing business development, I would also like to share an update on [indiscernible]. After a detailed evaluation, we have decided not to proceed with the project as we were not comfortable with certain technical and legal complexities associated with it. We continue to believe [indiscernible] remains an attractive long-term market, and we will [ always ] feature opportunities [ there ] selectively on a case-to-case basis. Let me now move to the financial highlights. For FY '26, we reported revenues were INR 564 crores as against INR 713 crores last year. Adjusted EBITDA stood at INR 156 crores compared to INR 196 crores last year. While PAT came in at INR 103 crores versus INR 119 crores in FY '25. The decline in annual revenue was timely due to the timing of the revenue recognition of some of the projects. Importantly, from a broader perspective, our profitability trajectory remains strong. with PAT margins remaining healthy and [ annual start ] continuing to sustain around the INR 100 crore mark for the second consecutive year. Q4 performance [indiscernible] was particularly encouraging. For the quarter, our revenue stood at INR 155 crores compared to INR 163 crores last year. Q4 adjusted EBITDA grew 26% year-on-year to INR 56.4 crores while PAT grew 103% year-on-year to INR 44 crores against INR 21.8 in the corresponding quarter last year. Strong collections and healthy profitability translated into net operating cash flows of INR 417 crores during FY '26, further reinforcing the resilience and quality of our business model. During Q4 alone, operating cash flow stood at INR 96 crores. Based on the current project pipeline, we estimate unrealized operating cash flow exceeding INR 4,970 crores, which we expect to realize over the next 4 to 5 years. Our focus continues to remain firmly anchored on creating sustainable long-term value for our shareholders. In line with this commitment, the Board of Directors has recommended a final dividend of INR 2.25 per equity share of [indiscernible]. Looking ahead, we remain optimistic about the long-term structural demand outlook for residential real estate, particularly for organized and trusted developers. With a strengthened pipeline, deeper business across key growth markets improving operating capabilities and a disciplined approach towards capital allocation, we believe we are well poised to sustain growth momentum over the long term and create value for all the stakeholders. With that, I will now conclude our opening remarks, and we can start the question-and-answer session.

[Operator Instructions] We will take our first question from the line of Amit Srivastava from 360 ONE Capital.

Sir, my first question is regarding the BD, which we have done for the FY '26, around INR 3,200 crores. Can you share how much is the cost spending equity investment for these projects. And what would be the guidance for the BD product coming here in [ FY '27 ]? And if you can give the breakup also to [ which ] geography or more aggressively looking, which [indiscernible] or you want to maintain the mix currently, what do we have?

Thanks, Amit, for the question. So for FY '26, like you said, we have done BD, which is approximately about INR 3,200 crores. We've generally not been giving breakup of capital deployed across each project. And there is a very specific question we can probably take it off-line and you can reach out to the team. Give the BD guidance for the new financial year FY '27, we have a strong momentum, which has continued in the current year. And as you know, we've already got one project in Mumbai with a top line of about INR 52,400 crores. We believe, I think, this year, we can have a [indiscernible] about INR 400 crore to INR 5,000 crores for the financial year.

Sir, I just wanted the total commitment sir not the breakup project-wise.

So last year, if you see across the portfolio, we have actually got investing activity exceeding about INR 600 crores. So that is the amount which is actually going towards the BD, which has been done.

And if we look at our Mumbai project pipeline, which is around INR 4,200 crores. Where we are looking implied OCF of around INR 750 crores whereas in [indiscernible], we have a INR 2,800 crore of pipeline. There, the OCF would be around INR 1,300 crores. So is this primarily to do with redevelopment project or any other specific reason why there's a OCF generation as significantly...

[indiscernible] correctly identified. So Bengaluru or quite a few of our recent acquisitions, as you know, were outright in nature. And Mumbai -- so the 3 projects that we have [ won ] is a joint development. The other two are actually redevelopments. So hence, the OCF numbers are actually lower than now, right, projects.

So how could we see this going ahead that [indiscernible] because two years back, we have already a strong OCF generation as a percentage of collection, if you look at last two years, we are around 36%, 37% of the collection. Can we expect this is a sustainable number? Or it will further go down because project mix are changing?

See, I think if you see in terms of generally the OCF as a percentage of collections [indiscernible] have been doing exceedingly well. In the long run, you expect it to be closer to the margin profile of the portfolio that we have. And our guidance is we are looking at projects which are 22% to 25% EBITDA margin. In the long run, we do expect it will start getting closer. I think today for us because the [ logic ] portfolio is also a fairly large part of our offering. So the percentage is on the higher side. Second, with the last few years of cycle that we have seen, our percentage has been slightly more impact because of the pricing advantage. In the long run, our guidance remains closer to the 25%, but I think for now, we might be somewhere in the 25% to 30% range for the next few years.

And sir, for the next year pipeline, if you can explain us how the pipeline would be there for FY '27 launch project wise, if you can [indiscernible] on a quarter also if you can -- that will be...

Launch [ vector ]?

Yes, launch [ vector ].

I mean, we are expecting in the current year, we are looking at almost 6 launches across our portfolio. So while it's difficult to break it quarter-wise, but in terms of market, our expectation is that we'll be launching one project at least in [indiscernible] so that is a project in [indiscernible] we are looking at 3 launches in Bengaluru and we are at least looking at two launches coming up in Mumbai. So that is currently our expectation. We think put together, we might be putting out inventory of about INR 3,000 crores to INR 3,500 crores with these 6 launches. Some of the launches which are [indiscernible] will be broadcast in the market in phases.

And this year, we are expecting 30%, 35% growth in bookings, sir?

Yes, the long-term guidance remains at 25% to 30% CAGR over the 4 to 5 years. I think this year, we have a chance of being able to do better. So I think we have a chance that we can do about 35% to 40% in the current financial year.

Okay. And sir, last one clarification. Regarding the [indiscernible] Bangalore project, which was launched 2, 3 years back, despite the strong overall market environment that time [indiscernible] project still appears to have 50% of [ unsold ] inventory. And in FY '26, we have seen a cancellation also, there is no incremental sales. So can you give some idea what is happening in that project? What would be the strategy to liquidate the [indiscernible]?

Actually, you're right to [indiscernible] early on the numbers front, it looks like there is less movement on the sales, but I think there was a conscious strategy we wanted to have. Some readiness on the side from an experience perspective because these are essentially [indiscernible] projects. So we wanted to create some sort of a customer experience to be able to get the right kind of pricing and right kind of appreciation from the customer. So that work is on where we are creating some [indiscernible] site experience with [indiscernible] and some landscape, which has actually taken quite a few months to get ready. I think we expect it to be ready over the next 3, 4 months and then we will be going forward with a stronger sales activation so that we are able to convey the -- I would say, the premium reposition that we are offering in this project. So we do expect the sales will be far better in the current year, and that should start [indiscernible].

Next question is from the line of [indiscernible] from Equirus Securities.

Sir, my question is mainly on the presales part. So as you guided that for the next 4, 5 years, we will be targeting 25% CAGR. This year, we might bring in like a 40% growth and on the other hand, we are saying that the launches will be upwards of INR 3,000 CR, INR 3,500 CR. So just wondering [indiscernible] on this part, launches would be [indiscernible] largely maybe in the second half, given that the current geopolitical situation, there might be some even say, issue with the footfalls and all. And [ it's a conversion ] into the launches has been great across the projects where we execute 70%. In that case, the 30% to 40% number is conservative in terms of presales guidance? Or we are, let's say, not sure if few projects might roll over to the next year?

Thanks, [indiscernible]. And so a good question. [indiscernible], I think it's a combination of both one. I think while we are looking at 6 launches in the current year and -- but I think we have a stronger pipeline towards the second half of the year than actually first half. So among all the projects, our project in [indiscernible] is probably in terms of approval time line, it is looking like more like an H1 launch right now. But then we are looking at most of the other projects, we are looking somewhere closer to, I would say, H2 from a time line. So when we have given this guidance on the sales, we have considered that as a key factor. And second, of course, this risk of some slippage always remains in our business from an approval standpoint. While [indiscernible] today when we are guiding, I think we are reasonably sure we are not very, very late in the year. But I think we're just trying to maintain that guidance keeping in mind that H2 [indiscernible] is stronger than H1.

Got it. Sir, from a costing point of view, given that few of the commodity costs have increased, how are you seeing the realization for our existing project going forward? Are we being able to pass on this to the customer or we are not yet, you can say, passing it on and taking it on our own books as of now? [indiscernible] smaller in business?

So [indiscernible], yes, we are -- I think your question is about the commodity price increase, right?

Yes.

We are noticing an increase across the [indiscernible] and the material that we are procuring so there is an increase across the portfolio. So what we have seen actually [ prewar and postwar ] if I were to compare it immediately. Across our portfolio, we are seeing almost a 4% increase in the costing of the product that we are actually offering to the customer. Having said this, in our own budgeting, we have taken a sufficiently large cushion in the form of contingency and inflation has been normally budget as a part of a practice. So we are not worried about at least today of passing this on to the customer because it won't be needed with the kind of budgeting [indiscernible] that we have followed. However, we have to continue to watch this particular situation very closely and how the prices of commodity and material moves over the next few quarters will be quite important for us to determine what needs to be [ filed ] down in terms of increase to the customer.

Got it. And if you can just throw some light on the new platform that has been created with the HDFC capital and the already existing platform, what's the status over there?

So [indiscernible], so currently, we have been using, in fact, the current platform quite actively. And the idea of this new platform is also -- it's an extension of that. I would request Amit to share maybe numbers of how much have we used from the current [indiscernible].

Yes. So [indiscernible] we have currently -- so we had a platform of about INR 600 crores with HDFC. From that, we have already used INR 350 crores. So the idea is to kind of backfill that number and create additional capital available for us as we expand and grow. So we're creating those lines which are each are available for us on call essentially.

Got it. But nothing on -- you can say the projects specific in line [indiscernible] maybe affordable, something like that. So for that, we have not created the [indiscernible] it's more of a line of credit for the future projects?

Yes. This is not specific to any particular product type. This line is available to us for any kind of products that we get into.

Next question is from the line of Bajrang Bafna from Sunidhi Securities.

Congratulations for a good set of numbers. Sir, my first question pertains to you. Your unrecognized revenue is close to INR 3,700 crores as on 31st March. So last year, we have seen our P&L revenues have seen slight dip though our margins were better. So how do you see the -- basically, the delivery in the FY '27 in terms of recognizing this revenue in the P&L. So what sort of delivery pipeline of this number is there for [indiscernible] for FY '27.

Right. Thank again, for the question. So currently, we've not been giving exact guidance on the revenue target because, as you know, that is largely real estate accounting works and again, the impact of binary approvals on being able to recognize the revenue. So largely, I think this year was a [indiscernible] because some of the operation certificates that we were expecting probably will defer to FY '27. So if you are expecting FY '27 numbers to be better from a reporting accounting perspective. I don't want to give an exact guidance on this particular thing, but we do expect to show strong growth over what we have reported in the FY '26 financial year.

Any band is possible -- within that band, it is doable? If that could help us to...

We'll take this as a feedback, Bajrang. Maybe if you feel I think this needs to be added in the guidance, we will probably consider in Q2.

Yes, sir. And if you see the cash flows from all the ongoing and the future projects is close to INR 5,000 crores right now which is shown in the latest presentation. So just to get a sense what could be the average time period within which this is expected to be realized, some ballpark guidance on that maybe 3 years or 3.5 years or maybe 4 years. So because now you have entered into the residential projects also which are little lengthy in terms of your earlier model. Just to get a sense on that, what could be the average cash flows that we could see for next -- out of this INR 5,000 crores.

Right. So I think when you look at the current portfolio, I think largely, we're expecting to monetize most of this in the next 4 to 5 years. That is what we are currently targeting problems.

Okay. And just to -- from a product perspective, I think you have already guided on the presales numbers. How do you see this year? But just from a strategic perspective, like you have entered into the Maharashtra also and you want to be asset-light model. So how the debt situation? Because we have already moved from negative cash to right now, INR 167 crores of debt. So considering next 2, 3 years, you have the HDFC platform availability also where [ later ] funds are still there to be utilized. But broadly, how do you see the debt position to move over FY '27 and '28?

Right. So Bajrang, currently, our debt position is in -- right now remains very comfortable we are at 0.26 net debt to equity ratio, as you see. So we are quite cautious in terms of what we want to add. Having said this, we do want to have some good mix of debt because we also believe that the structural demand in real estate is strong and there might be also opportunities to be able to add good assets keeping in mind the current market situation. So -- but our guidance remains that we will not exceed our issue of 1:1. So that is our net debt-to-equity ratio that we have already guided for. So we'll maintain that discipline throughout.

Okay. And just my last question, sir, broadly, because we are hearing a lot of adoption of AI and a lot of -- most of the larger companies, not only in India but across the globe, we are hearing that a lot of firing is happening and layoffs are pretty much high. So since you are there in Bengaluru, which is the IT hub of the country, so what is your prognosis and sense considering these situations are also happening in India also. So how do you see the ground experience and the ground reality? Because -- are you seeing some sort of -- because earlier we used to see whatever projects that we had launched in Bengaluru within the first few hours, everything was getting sold. So now we see 50%, 60% are getting sold in the first week and all. So just your sense on that. Of course, we know that now these are larger projects. So earlier projects were pretty small. So obviously, that point is well taken. But just your ground reality, what you are sensing in terms of demand when we see a lot of layoffs are happening in the IT sector.

So I think, Bajrang, we are also continuously tracking all the markets that we are in quite clearly. So something definitely we also want to keep a watch on. But today, at least our interpretation is that markets have become more stable. So maybe the euphoria of the last 4-, 5-year cycle, the level at which the market was growing probably is not definitely at the same level. But we are not seeing, I would say, any major [ wearing time ] because of the structural demand being quite strong from our perspective. Second, like we have said in the past, I think the locations that we have picked up are very, very, very strong. So I think real estate still [indiscernible] a very micro market and location-driven business. I think that the locations that we are looking at, we still believe there is a strong enough interest coming in. The [indiscernible] is also -- it's not actually a quarter of absorption. This project got its approval in the last 7 days of the quarter. So it is actually not a quarter sale [indiscernible] frankly this 50% close absorption is [ slightly ] one weekend that we were able to get within the financial year. So we do believe, I think interest remains strong. Having said this, I think the euphoria probably [indiscernible] may have one more towards the stable and more, I would say, organized demand. And if you see even our sustainable sales is actually reflecting that. So we have done more than INR 600 crores of sustaining sales in the last financial year. And even the last quarter, we did almost close to INR 180 crores from sustainment. So that is reflecting that even when people are actually taking their time valuating effort. There is strong enough demand coming in. And even on sustenance, this will be one of our much stronger quarters what we've managed to deliver in Q4. So I think stable and that is what we are currently seeing, but we are very watchful of the [ numbers ].

[Operator Instructions] We will now take our next question from the line of [indiscernible] Capital.

Firstly, congratulations on a good set of numbers. I know [ there's one of ] a statutory financial standpoint, you are not reflecting that. But that's the nature of business. Quick couple of questions, and this is in continuation to what my earlier friends have also asked. One is on account of the EBITDA margins or profitability margins. You mentioned that you are uncomfortable giving update guidance on FY '27 top line number. But my question is that are you going to hold on the EBITDA margins, more especially considering because we are into a Middle East crisis, and we have seen inflation should go up considering the fuel price increase, which we have seen recently, and there will be more also coming in? Which obviously will have an impact on cost of raw material for you. So what kind of margin of safety or cushion you have created so as to continue giving healthy margins? That's one. Second is I see some negative on forest rail project in [indiscernible], some INR 11-odd crores, 5-odd units. So I assume these are cancellations in FY '26. If yes, how are you reading it? Is it a matter of concern for you? Because any way if it's more than 50% of the project is still unsold. And we see cancellations on top of it. Is it really worrying you? Or maybe you may like to add some color on that.

Right. Thanks, [indiscernible] EBITDA margin, when we -- of course, the margins that we had visible outside are more accounting margins because that is what gets reported. But if I talk about what we are -- when we look at the margins for the new sales that we are doing, so we are fairly concerned that we can continue to maintain the trajectory of 22% to 25% even in the current year. And the way we started and what we are actually seeing in quarter 1, we don't feel that there is any margin [indiscernible]. For the -- like I mentioned, that while we are seeing some cost increase, but we have -- in our budget, we have taken sufficient cushion to be able to absorb it. So I think -- this is not very, very long drawn, and this is -- this commodity increases probably for maybe a quarter or more, I think, quite comfortable for us to be able to manage within the current P&L comfortably without even passing on the increase of prices to the customer. So that is something we are confident about. On forestry, I think just -- like I mentioned to the earlier question, so forestry, some of the projects across the portfolio, I think some cancellations are a part of regular business. So for projects which are, I would say, sustainable stage. Most of the cancellations are not visible outside because we also have fresh sales, which are focused from the new sourcing and new activations that were going in. So forestry, we have been trying to get the customer experience ready. So we -- this is [indiscernible] project. So we have been taking time to complete, I would say, what we believe will add to the customer experience. So we wanted a certain readiness in. So last financial year, we have not been able to take a very large aspiration on that particular aspect. And especially the new launches coming in, we've actually now planned that coming in FY '27. So once the site experience is ready and we start getting new sales coming in, I think this negative will not be visible in FY '27. So we believe we are quite confident of the product there. I think it's simply about just restarting the team's activation after getting customer experience to a level where we feel it is justifying the premium product that we have tried to bring to the market.

Next question is from the line of [indiscernible] from Motilal Oswal.

My first question is on the sustenance sales. So while we have seen improvement in velocity there in the recent quarter. So what measures have we taken at the corporate level to keep this engine running because as our base is growing and we have 6 launches also lined up for the current year. I think it will be also important for the sustenance sales to keep growing. So what measures have we taken on that front?

Right. So [indiscernible] this is something that we have been tracking now quite regularly as a part of our strategy because this -- we understand brings greater stability and certainty to what we do on a quarterly level. So -- and I think the results are actually quite visible. So in terms of strengthening the team, ensuring that they have the right tools and are focused on looking at all the key inputs that translates eventually into the customer buying, so whether it is experience, whether it is digital tracking, lead management and lead generation. So all those things we are quite focused on. So we believe, I think we can continue to show good sustained growth even in the new financial year.

Sir the -- I mean, the growth target that we have given, 35% to 40% for this year. So what kind of proportion is expected from the sustainable sales?

Then we are -- while this, of course, will change depending on the mix of launches and the sustainment inventory also that is available because some of the inventories in sustenance also comes to a market stage-wise. But when we are looking at our current mix today, our understanding in sustenance can show a growth over 15% over what we have delivered in FY '26. So 15% of growth can come from there. Of course, when we are guiding for total sales growth of 35% to 40%, that means launches will be growing faster. So that is something which is a function of the inventory that we will be bringing from the [indiscernible].

Understood. And my next question is on the new launches. I think you highlighted that in Mumbai, we are planning for a couple of launches. So which projects would this be?

So we have 3 projects right now, as you know, in the portfolio. So while we are working on all the 3 at the same time, and we are hoping to work of them to see the market. I think today from a [indiscernible] I would say approval process and getting us perspective, maybe the [indiscernible] project in [indiscernible] is actually ahead while the other one probably either between the [indiscernible], that is what we feel we should be able to launch in the current year.

Understood. And finally, on the [indiscernible] project, I think we have a JV partner, then can you throw some color on who our JV partner is and what kind of arrangements we have?

So as we know, I think we've taken this project from a partner who have been working with the -- this is a [indiscernible] redevelopment. So -- and there are [indiscernible] tenants from [indiscernible] who are actually there. So there is a group called [ Oxford Sigma ]. So they have actually worked with these tenants in the past, and they have got the project to a certain stage. So our joint venture is with them. So there is a profit sharing agreement that we have with Oxford. So they have a certain responsibility in terms of managing the site, bringing approvals to a certain stage. And of course, once we bring into that particular [indiscernible], Arvind SmartSpaces plays a larger role in terms of the development, design, sales and construction to pick the project [indiscernible].

Understood. And finally, on the quarterly project, I think it's a large INR 1,500 crores worth of projects. So what proportion of inventory will we be launching in the first phase?

So we -- I think our sense is we might be baking into 3 phases, most likely. So I think while the first phase should be somewhere between INR 500 crores to INR 600 crores is currently, but we think that it's going to be a function of also the execution logistics. So today, we have made our plans ready and we are just probably there is a [ fine work ] there. So this is a function of how the approvals and also how the construction logistics work. But INR 500 to INR 600 is what we believe should be the first phase.

Next question is from the line of [indiscernible] Financial Services.

So a couple of questions from my end. So firstly, what is the BD targets for FY '27?

So beginning FY '26, we are looking at about INR 4,000 crores to INR 5,000 crores of GDV to lock in for [ FY '27 ].

Okay. And the spend will be similar in FY '27 versus '26?

Sorry, you are not clearly audible. Can you [ slightly ] louder?

Okay. This is better?

Yes, much better.

Yes. So the spend will be similar to FY '26?

So I think slightly more because last year, as you know, we [ learned ] about INR 3,200 and our spends are closer to INR 600. So we may probably have slightly more than last year, but it was a proportion of how much we actually get in the JD and how much in the outright structure. So it could be slightly more. One positive I would say the first project perspective that we've [ longed ], it is actually a joint venture. So probably has a lower amount of outflow that goes for the top line. So slightly more than INR 600, but maybe not a very [indiscernible].

Okay. Got it. And what can be the OCF trajectory in FY '27? We've done a very good growth in FY '26 of close to 25% which is tracking the presales. So FY '27, can it track the presales as well?

Yes. So I think our OCF has been extremely, extremely strong. But I think there could be -- are two forces that are going in. And if you also see our results will display that our construction spend have really got very good speed in quarter 3 and quarter 4. So we want to continue the trajectory in FY '27. So while we're expecting growth on collections, but at the same time, we do expect, I think, quite some rapid growth in terms of our outflow and focus on construction. So somewhere, I think we are looking at maintaining the same trajectory for OCF that we probably delivered in FY '26 in terms of the absolute numbers.

Okay. So OCF will be flat in FY '27?

Largely, but again, I think very difficult to probably give an exact guidance because it's a function of how much outflow goes towards construction. But we will be quite happy if we are able to maintain the same number actually. So because that will reflect that our construction speed has also been at a level that we are comfortable with.

Got it. And sir, one final question from my end on the inventory. So we have about INR 3,000 crores from launch projects, which is unsold. And you mentioned in the previous question that 15% to 20% of sustaining sales is possible in FY '27. So would it be a fair assumption that this unsold inventory will take anywhere from 3 to 4 years to get sold the current unsold inventory?

[indiscernible] sorry I could not get the question very clearly.

Okay. So let me try again. The unsold inventory right now is approximately INR 3,000 crores from the launch projects. And you mentioned that we are looking at 15% to 20% sustenance sales in FY '27 also. So would it be fair to assume that we can liquidate this unsold inventory, which is already launched in the next 3 years?

So that's a fair assumption. So I think from a [ client ] perspective, I think when we are also talking about our current projects, most of the large -- that we are seeing 4 to 5 years for the overall inventory. So what is launched, I think 3 years is a fair assumption to make right now.

Next question is from the line of [indiscernible] Housing Finance.

Sorry, I just wanted a -- first, I wanted to ask again sir, you're standing at a net debt of [indiscernible] approximately [indiscernible] Sir, what are your best plans for the future in FY '27 [indiscernible] and FY '28 specifically, like if you want to bifurcate between '27 and '28 for [indiscernible].

Thank you, [indiscernible], for that question. We are generally not giving a guidance on our debt positions. But like Priyansh was mentioning earlier, we have internally defined a threshold for ourselves where we will always try to keep the debt equity ratio to below 1:1. Having said that, we -- like Priyansh mentioned, we will be generating a healthy OCF next year as well. So that is the first source that we happen for our BD deployments. And then over and above that, there will be some amount that would be required, which will be generating externally through bank and [ NBFCs ]. We have also taken an internal sign-up on [ NCD ]. So that is something that we are keeping as an option available for ourselves as well. So we'll be utilizing all of the 2, 3 different avenues is available for us, but our first source will always be the OCF that we are generating.

Understood. Sir, are there any future investments or equity that we are expecting to [ lose ] so that to keep that [indiscernible] 1%?

[indiscernible], I think yes, the stage at which it is needed, I think we will definitely evaluate that. But today, if you see we are at [ 0.26 ] from a debt equity ratio perspective. So we are quite comfortable. So I think the rate is -- we are seeing the trajectory for at least the current financial year, very unlikely that we will be getting to that particular threshold. So at this stage, this question is probably not arising. Maybe subsequent financial years when this is applicable, and we are near that the threshold, it will definitely -- we evaluate it.

Sir, there are many projects in Bangalore where you have HDFC as a partner. Sir, are the partner that have met or may have for the equity in the project, sir? And to throw some more light on it, sir, which are the projects in which HDFC is a partner?

So the projects that HDFC is a partner, we are already disclosing that in our slides, if you just refer to the [ project-wise ] details and the economic interest, you will be able to see there are currently 3 projects where they are involved. And yes, and the structure is, again, is an [ OCT ] kind of a structure. So that's where they're investing.

Next question is from the line of Biplab Debbarma from Antique Global.

Congrats on the excellent results. Sir, first question is on the deal pipeline in MMR. How does the deal pipeline in MMR look like currently? And are we targeting smaller projects, I mean relatively smaller projects with GDV of say around INR 500 crores or larger projects around INR 2,000 crores or opportunistic, whatever you get, we'll do INR 3,000 as well as INR 2,400 crores. So that is my first question.

Thanks, Biplab. So the deal pipeline in Mumbai still remains strong first. So there is, of course, a lot of deals that are coming in. But having said this now, in Mumbai, we are moving to the next stage [indiscernible] bringing some of our projects that we've already locked to the market. At the same time, we continue to evaluate the right kind of deals that are coming and getting discussed with us. As a strategy, I think our sweet spot is somewhere between INR 500 crores to INR 1,000 crores, that is, I would say, our sweet spot where we are actively sourcing deals in the Mumbai market. Having said this, like you said, the business development is one area in Mumbai you have to take a call, which is deal by deal, looking at the economics of that particular project in [indiscernible] and also the location that is available. But INR 1,000 crores maybe as sweet spot plus or minus maybe 20%, 25% in Mumbai. That is what we're looking at. So actively, the focus is in this particular [indiscernible].

Okay. Great. And second question is on -- you have seen quite a few additions in your team. So just wondering how many senior executives have been added to key roles in the last one year?

So it's quite a few, in fact. So a lot of CXOs who have actually joined in the last one year. Maybe I think if you look at almost close to 50% of the team that is now working directly with me has actually come in the last one year. So that is what we have managed to [indiscernible]. And I think we are very happy with the quality of the talent now we are adding and that is reflecting in the way we are building the organization.

So the bandwidth might have increased. I mean, earlier you may be doing 4, 5 launches a year. So does it mean that we'll see a ramp-up in launches going forward as well as execution?

Biplab, I think these are all actually steps to build the organization in the [indiscernible] and strengthen our ability to execute, which will reflect in the number of launches, the quality of execution, the quality of product, quality of sales that we bring in. these are steps in that particular direction. And I think at the same time, I think we want to -- we have a very clear defined internal [indiscernible] in the way we are looking at growth. So the quality of talent is bringing in the foundation first for the organization. And this, of course, in the subsequent year will allow us to change completely the orbit also that we are trying to aim as an organization.

That's it. And the final question is on the [indiscernible] project, the JV structure. I thought it is JD. So the JV structure, can you give us like some color on the structure? What is your profit share? What is his responsibilities? And is the partner contributing any incremental capital to the project? Or going forward, all the capital would be brought in by you and the project debt?

So it becomes -- see, this becomes effectively a 2-level structure because we have a partner who has already brought the project to a certain stage. And the way we have structured the deal, both of us actually have the right to be able to invest. So there is some investments that have already happened from the partner in the past, and we are clear about what investments we need to make in the future. So after, I would say, looking at the full nature of the deal, our economic interest, like you mentioned, comes to about a 44% kind of profit share. But good thing is that actually also ensures our investments are commensurate with the kind of returns we are taking. And the way -- I think all the responsivity in terms of how the critical areas are also managed by the partner. We've already given...

Sorry, sir. So just to clarify, and your share is 44% of profit share?

44% profit share. That's correct from the [ overall market ].

Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Priyansh Kapoor, Managing Director and CEO, for closing comments.

Thank you, everyone, for participating in this earnings call of Arvind SmartSpaces. I hope we have been able to address most of queries. However, if there is anything [indiscernible] on any of the questions, kindly reach out to our IR team, and we will be happy to connect with you off-line and clarify and give further information as we may be required. Looking forward to interacting with all of you in the coming quarters. Thanks for your time.

Thank you. On behalf of Arvind SmartSpaces Limited, that concludes this conference. Thank you all for joining us today, and you may now disconnect your lines.