Brigade Enterprises Limited (532929) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '22 Earnings Conference Call of Brigade Enterprises Limited. We have with us on the call the management of Brigade Enterprises Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. M.R. Jaishankar, Chairman and Managing Director of the company. Thank you, and over to you, sir.

Thank you. Good afternoon, ladies and gentlemen, and thank you again for joining us for this call -- in this call. We hope all of you and your loved ones are doing well after this second wave of the virus. On behalf of the Brigade Group, I would like to welcome you to this earnings call for the first quarter of financial year '22. I'm joined by our Executive Director, Ms. Pavitra Shankar and Ms. Nirupa Shankar. Our senior management team is also present on the call: Mr. Atul Goyal, CFO; Mr. Rajendra Joshi, CEO, Residential; Mr. Vineet Verma, CEO, Hospitality; Mr. Subrata Sharma, COO, Office Leasing; and Mr. Om Prakash, Company Secretary. The second wave really hit the entire nation hard. It was distressing to witness the grief and despair that followed. We were all affected both directly and indirectly as a business. The lockdown stalled our plans but only briefly. Our team was better poised this time around. Now as COVID-19 continues to rear its ugly head, we believe we are better prepared to face the next wave of this pandemic. In fact, our team is back in the office and raring to go. We're all vaccinated. Despite the muted quarter 1 this year, the company was able to carry out a very successful QIP of INR 500 crores in June 2021, which was oversubscribed 6x. The funds will predominantly be used for acquiring land for the new project to grow the residential business primarily. Here are the remaining business highlights from the last quarter. Starting with our Residential business, our performance was good despite the severity of the second wave. We ended the quarter with 0.76 million square feet of new bookings with a value of INR 470 crores. This is a growth of 91% by area and 111% by value compared to the period of quarter 1 of the last financial year, during which there was a nationwide lockdown. The improved performance this year can be mostly attributed to the favorable macroeconomic dynamics to buy a home, thanks to low interest rates and higher disposable income and improved confidence regarding job stability and salary growth. The positive customer outlook was reflected in the second half of June '21, which recorded a sharp increase in site visits and bookings once the unlock guidelines came into effect. Our projects across Bangalore, Chennai and Hyderabad continue to deliver consistently high results. On the collections front, it was an all-time second highest at INR 531 crores, driven by continued strong sales performance and good construction progress at all project sites. We would also like to know -- like you to note the conservative approach followed in terms of reporting our operational numbers. Our preoperational -- our presales numbers are always shown net of cancellation of bookings done in current as well as prior periods. We also do not consider bookings towards presale numbers unless a minimum of 5% or 10% of the agreement value has been collected, along with all the required documentation. Our average realization is based on RERA agreement value of the customer and do not include any other expenses or transaction cost. On the revenue recognition front, we only report units where the customer has completed the entire registration process and not just taken position of the unit without registering the property. In our -- coming to the Office segment. We continue to focus on collections of lease rental and are happy to inform that we have achieved 99% cumulative collections in quarter 1 of the financial year '22. On the leasing front, there was increased momentum in terms of leasing inquiries; RFP releases, request for proposal releases; and site inspections, though decisions are still delayed, primarily because average physical occupancy levels are still below 10% across all office parks. Our outlook is positive, owing to robust hiring across IT and ITES sectors, which is likely to enhance the increased need for office spaces as companies commence work from office. We are in discussion for approximately 1.5 million square feet across projects. In addition, we have achieved a strong leasing velocity at the Brigade International Finance Centre, GIFT City, Ahmedabad. Our strategically located and well-designed projects, Brigade Tech Gardens, World Trade Center Chennai are attracting prospects because of their superior value proposition, and we are focused on transacting the remaining space within the next 3 to 4 quarters. Moving to our Retail business. The lockdown in the quarter 1 adversely affected our malls. Nevertheless, our focus was was on retailer engagement. We maintained a reasonable approach to renegotiation of leases by offering somewhat similar commercial terms as last year's rent relief during the first lockdown. In the quarter 1 FY '22, we billed 40% of the financial year '20 rent in the similar quarter in comparison to just 20% in the last year financial year, FY '21 of the quarter 1. After the malls reopened in July '21, we saw a sales consumption recovery that was over 90% of 2020 pre-COVID levels in comparison to just 20% sales recovery from last year malls reopening in June '20. This was primarily because of the improved customer confidence owing to the vaccination drives in Bangalore. We are expecting the retail business to normalize by the beginning of quarter 3 of [indiscernible] '22, particularly, if there are no more restrictions imposed due to any possible third wave, which we hope it will not happen. Almost 1.80 lakh square feet is freshly leased and under fit-out. That is 14% of the gross total leasable area across all our malls. These retailers are scheduled to open in phases by end of quarter 3 in this financial year '22. Finally, to our Hospitality business, in quarter 1, we witnessed an abrupt halt to the positive momentum built in the previous quarters and recoveries made post the first wave. The collective average occupancy achieved by our portfolio of 8 hotels was 23% compared to 43% in the quarter 4 of financial year '21. Nevertheless, it was still 5% higher as compared to the first lockdown in quarter 1 of financial year '21. ARR, that is average rent in the hotels, continued to remain stressed in quarter 1, having reached close to 60% of pre-COVID levels in quarter 4 of financial year '21. We saw a 14% gross operating loss in the quarter compared to a 22% gross operating profit in last quarter. The pent-up travel demand and [ driven ] tourism thereafter has enabled hotels to see occupancies bounce back to over 42% in July 2021. The hotels continue to strictly monitor operating costs and other overhead to ensure that we protect our bottom line as far as possible without compromising on the quality of our services. In fact, out of the 8 hotels, 7 hotels have had operating cash profit in the month of July. We are hopeful the momentum that we see, that we have witnessed in this beginning of quarter 2 across our businesses, continues irrespective of the challenges that come our way. Having said that, we sincerely hope the government's plan to vaccinate the entire adult population before the end of 2021 succeeds. Thank you for your patience. Now Mr. Atul Goyal, our CFO, will present the financial results in detail. After that, there can be questions and answers. Thank you.

Thank you. Good afternoon, everybody. On behalf of the company, we would like to welcome you to the earnings call for Q1 FY 2022. While we had witnessed the recovery in Q4 FY '21 in all our businesses, the economy was again hit by a second wave of COVID in Q1 FY '22, which slowed down the recovery phase. However, the momentum has picked up again and after lifting long-term restrictions when we expect a recovery in the coming months. On the company side, this quarter has been better than the same quarter ending last financial year, where we faced first lockdown into COVID in terms of business performance and experience has helped us to manage second wave better. Let me give you some key highlights of our performance in the last quarter. We successfully raised QIP of INR 500 crores, which was oversubscribed by 6.25x. I'm also happy to announce that our rating has been upgraded to ICRA A+, further strengthening the confidence of stakeholders of the company. We have recorded 83% (sic) [ 82% ] growth in real estate sales of 0.76 million square feet during this quarter vis-a-vis 0.42 million square feet during the same quarter last financial year. For Q1 FY '22, the sales registered at INR 480 crores, recording a growth of 92% over the same quarter last financial year. As of 30th June '21, Brigade has also -- has approached 18.11 million square feet of ongoing project, and we propose to launch 1.91 million in the next 3 quarters. On the leasing side, we achieved 99% rental collections with a gradual increase in reoccupancy in the operational portfolio. We achieved new leasing of 1 lakh during the quarter, and we have an active pipeline of around 1.5 million. On the retail side, the impact by lockdown during the second wave was severe, but footfalls have been improved considerably and mall occupancy has been around 85%, expecting faster recovery. While we have a significant uptick in the hospitality performance in Q4 FY '21, the second wave and renewed restriction impacted the hospitality business occupancy. Occupancy stood at 23% in Q1 FY '22, vis-a-vis 11% during the same quarter last financial year. It has witnessed a gradual recovery in July '21, but the long-term recovery is dependent on corporate and international travel amid COVID cases. On a consolidated level, there was an increase in cash flow from operating activities by 89% from same quarter last financial year. We have surplus liquidity and undrawn credit lines [indiscernible] INR 300 crores from banks. Our average cost of debt has been coming down consistently over last few quarters and was at 8.14% as on June 21 versus 9.56% as on June 20, a 142 bps reduction that would result in an annualized saving of around INR 60 crores per annum. Coming to consolidated financial performance. The consolidated revenues for Q1 FY '22 stood at INR 391 crores versus INR 240 crores for the same quarter last financial year, an increase by -- of 83%. The consolidated [indiscernible] other income for Q1 FY '22 stood at INR 120 crores as against INR 58 crores in Q1 FY '21. EBITDA margin, including other income, increased to 31% from 27% last quarter. The Real Estate segment clocked a turnover of INR 260 crores and EBITDA of 14% in Q1 FY '22. The Hospitality segment clocked a turnover of INR 20 crores in Q1 FY '22, and Leasing segment clocked a turnover of INR 112 crores and EBITDA of 77% in Q1 FY '22. The interest and finance charges for Q1 FY '22 stood at INR 22 crores. Consolidated PAT after MI for FY Q1 '22 stood at minus INR 40 crores. There has been a reduction of INR 80 crores in overall debt in Q1 FY '22. The cash and cash equivalents stand at INR 1,173 crores as on June 30, 2021. Consequently, the company's net debt outstanding as of June 30 stood at INR 3,047 crores, out of which, Brigade's share is INR 2,117 crores. That is, 75% of the debt pertain to commercial portion and for which 70% is backed by the rental income. I now hand over to the moderator for question and answers. Thanks.

[Operator Instructions] The first question is from the line of Aditya from ICICI Securities.

Most of my questions will be on the Rental business. First, the quarter's rental revenue -- our rental revenues have been flattish quarter-on-quarter, in spite of the waiver we have given for the mall renters. So was the deficit being made up by incremental leasing revenue? Or you have taken higher CAM charges for the quarter? Just some clarification on that.

Yes. So the rental has started coming from [indiscernible] impact of straight lining. So of course, we will be receiving rentals in this year. Already Amazon started there. So this rental increase will be there going forward.

For the Chennai, would have contributed how much for this quarter for Chennai rentals?

Quarter will be around, say, INR 15 crores to INR 20 crores, yes.

INR 15 to INR 20 crores. Sir -- and based on -- okay. And for Chennai for the full year, like what is the sort of rental you would expect to collect now considering current [indiscernible]?

We would not like to give guidance, but it should be about INR 450 crores is what I can say.

No, sir, I'm referring especially to Chennai, the Chennai property. I mean how much rental based on current -- whatever leasing has happened, as per current leasing, what would be the sort of run rate, assuming no incremental leasing happens during this year?

This year, we will do around INR 75 crores of rental by year-end.

Okay, INR 75 crores rental by year-end. And the next question, obviously, you mentioned about a 1.5 million square feet leasing pipeline. So could you give us a color like when is the closure of this transaction is expected and in which property is the breakup, which you usually do?

So this is Subrata. See, overall, the pipeline -- active pipeline that we are having currently is 1.5 million. And out of this, 0.8 million is at Brigade Tech Gardens; 0.5 million approximately would be for WTC Chennai; 0.1 million is at BIFC Ahmedabad; and rest all together is 0.1 million approximately. Now [indiscernible] quite positive pipeline. As far as the transaction closure time line is concerned, it would also depend upon like how the companies move towards reoccupancies, but a significant portion of these will actually get accelerated. That's what we are getting to know.

Okay. Sir, just to clarify, you mentioned 0.9 million in Tech Gardens or a different number? Sorry, I missed it.

0.8 million.

0.8 million. Okay. Sir, so in terms of our target, right, and you're seeing 0.5 million for WTC. So you're expecting WTC to be fully leased out, is that the target we are hoping for [indiscernible]?

Yes, yes. As far as the target is concerned, we are actually expecting WTC to get fully leased out, okay? The only thing is, as I said, the re-occupancy also will drive the leasing business because, see, as far as the site inspection and RFP re-lease momentum is concerned, we are seeing significant increase. But as you are aware, since -- unless and until they get an understanding that when people will come back to office, they may not actually want to lock into the premises because from that day the count will start for the rent-free period [ again ].

Sure. So you said WTC, you're looking to lease out fully. And for Tech Gardens, then similar like we're almost -- yes.

[indiscernible] it would be at least 4 quarters because, see, as I speak, currently, [ we appointed ], but as recently, we have also entered into a discussion wherein a few more requirements are coming by, okay? Like a few of our existing tenants, they have actually increased significantly as far as the manpower is concerned. Now when they reoccupy, there would be a need from them also, okay? And 1 tenant to actually withdrew last year. They are still having a license -- SEZ license in BTG, they are again coming back with the same requirement. So all these positive developments are there. So that's why we feel that, as we go forward, this pipeline quantum will also increase.

Sure. And one final clarification, Sir. As Atul mentioned, that assuming with no incremental leasing of INR 450 crores sort of rental is achievable, assuming no incremental for the rest of the year. Is that correct?

Yes, overall. Overall, yes.

The next question is from the line of Parikshit Kandpal from HDFC Securities.

Congratulations on a decent performance during the quarter. My first question is on this 1.5 million square feet of pipeline. So how many approximate inquiries are -- would be covered under this? So I could find [indiscernible].

In this pipeline, it is a kind of mix, okay? There is 1 major oil company who are looking at a bigger quantum that is approximately 0.6 to 0.7. It means together, okay, out of 1.5. But apart from that, there are smaller inquiries, midsized inquiries as well as anywhere between 1 to 2 lakh square feet as well. It again depends upon the properties and locations, okay? So like, see, in BIFC that is Ahmedabad [indiscernible] is majorly from many companies. The cumulative of it would be approximately 0.1 million, okay? So approximately 12 to 13 companies.

Sir, these RFPs -- the nature of the RFPs for the underlying segments, are you seeing a change in the trends like typical earlier [indiscernible]. So is it like seeing more demand coming from financial services or other companies like manufacturing? As you pointed, oil and gas is one of them So if you can just highlight a bit more color on the nature of RFP being floated now versus a year back pre-COVID. So has there been any change in the [indiscernible]?

Sorry. I couldn't get your question. Can you please repeat it?

Yes. So I was saying that these RFPs which are being quoted in the market, so demand for leasing RFPs, so are you seeing any structural changes in the nature of the underlying segment which are looking out for space? Is it like traditional IT, ITES which is looking space? Or is it more getting inquiries coming in from financial services or manufacturing sector? So any comparisons, sir, the trend which was there pre-COVID and now? So any change in that trend on demand from the customers segment-wise? Just some color on that.

See, as far as a pattern is concerned, though in this first quarter, what we actually know is pan-India leasing, the majority of the leasing portion came from engineering and manufacturing sector. But as far as the RFPs are concerned, we still see that majority of this is driven by IT, ITES as far as the requirement -- overall requirement is concerned. So still, it's more than 80% IT and ITES.

My question is on the...

That we all know that out of -- I think it's in sync with the kind of trend that we are seeing in market because majority of the hiring has happened in IT, ITES, okay? Now as soon as they come back to office, even if a portion of them are work from home, they will still need the additional space. And with the post-COVID scenario, I think they will not want to densify. So it is in sync with the market trend. And it's quite natural that the majority of the RFPs will be from IT, ITES.

Okay. Because the ones you highlighted was more from the oil and gas segment, large part of almost half [indiscernible].

So initially, I mean, in the first quarter, we are seeing the trend. So it is majorly -- it was mostly driven by the engineering, manufacturing because now the IT, ITES are not in office, okay? Now as soon as they come back to office, the requirement from that sector will increase significantly.

Just my second question was on the Residential business. Now we have about INR 1,100 crores of cash. First of all, whether how much of this value [ is unencumbered ]? And how much of this would be landing [indiscernible] accounts? And even if you adjust for that, what would be the cash quantum? And how do you intend to [indiscernible] employees in this in terms of land payments and land acquisitions? So have you finalized any land parcels on development sice? If you can give some highlight on the [indiscernible] this year? And how much of this money will go towards the land payments over the next 2 years?

So this Residential collections are mainly RERA accounts. So we cannot take out that money and use for land. But we have taken that QIP money, and we'll be using that money for buying on land. There are some prospects which is being looked into, and we'll come back as and when we finalize those land deals in coming quarters.

But [indiscernible] ballpark CapEx this year on land, this and next year. So cumulatively, we can highlight how much you intend to spend on land acquisition.

The voice is not clear, Parikshit.

Sir, I was asking that cumulatively this year and next year, how much of land [indiscernible] target is from your perspective? If you can give some ballpark sense on that.

No. See, currently, there is an active consideration for land parcel of about INR 150 crores. We have entered into some kind of term sheet. But the balance are under different stages of negotiation. We may utilize maybe bulk of the money if the right opportunities come back. Everything is dependent on the right opportunities. So it is more like the purpose was to have some kind of a war chest to seize the opportunities that come by.

Sir, just the last question on retail. So last quarter, 4 quarter, we did about INR 1,000 crores, just INR 1,000 crores of retail. Monthly, about INR 300-odd crores plus. So when do we expect it to start hitting that run rate again? How much did you [indiscernible] for you? If you can just give some sense on that.

So Q1 certainly was muted. We were nearly at about 47%, 48% of what we were of Q4. But July, fortunately, seems to be doing better. But all of it really would depend on the restrictions that we get imposed because the residential real estate will pick up and do well only if the customers visit the site and particularly in the weekends. I think those are extremely important in this business. While we have geared up for virtual selling, et cetera, I think the customer visiting the site is important. We do see that there is demand, there is potential. But these hindrances or road blocks will obstruct the growth if they continue.

No, how about July month, sir? [indiscernible]

As I said, it's an ongoing month. I would say that it was much better than the last year July.

The next question is from the line of Yash Gupta from Angel Broking.

Sir, first question is on the residential Bangalore market share. So what's the presales share we are having in the market? And how it's changed in the last 1 year?

So I would say the contribution of Bangalore to our total sales in the last 1 year has come down. It was about 80% in Q1 of last year. It has come down to 60% simply because the new launch in Hyderabad and the new launches in Chennai have done quite well. Today, between these 2 markets, they contribute nearly to 40% of our total sales.

Sorry. Sir, my question is what is the share of our presales Bangalore in the overall Bangalore market. So is that we are gaining the market share in the Bangalore in the presales number or not in the last 1 year?

So in the last 1 year, we have gained market share in Bangalore. We estimate -- see because the residential real estate market, there are different agencies which put out different numbers. We expect that our market share is in the region of about 6% to 7% in the city of Bangalore of the total [ presales ].

Okay. Second question is on the Brigade Tech Gardens in Bangalore. Since very long time, we are talking about the hard options. And -- but all in all, still the leased area is at the same level. So what's the major issue that we are facing in the Bangalore -- Tech Garden Bangalore?

So as far as the hard options are concerned, a portion of it is -- should be confirmed in about a week or 2. We are in discussion with the tenant. This is because they are also expecting their employees to come back. They still want to go ahead with a hard option. They have the requirement because their hiring has been very robust. But at the same time, they have to phase the take-up based upon the re-occupancy trend, okay? Apart from that, Brigade Tech Gardens, we have recently closed out market transaction, plus 2 transactions are, in principle, confirmed, okay? So we are seeing the velocity. Again, I would like to reiterate that unless and until people come back to offices, note this velocity will still be slightly low. But the interest is there, like we are seeing site inspections happening, we are seeing the RFPs actually coming by. So it's just a wait for another, say, 1 quarter or so.

Okay. Sir, last question on the residential -- real estate residential market. So in the presentation, we have written there is strong pipeline on -- of the ongoing project of 18.11 million square foot. So it will be launched pipeline for next 3 years?

That's correct. That's correct.

We'll move on to the next question that is from the line of Pritesh Sheth from Edelweiss Wealth.

So my question is on the residential side. So last quarter, you highlighted about 7 million square feet of land deals across Bangalore, Chennai and Hyderabad. So those are still under active discussion? And I mean, what is the status on that? That's my first question.

As I mentioned in the earlier question, we have signed a term sheet for 1 of the properties in Chennai, which should give us about 1 million square feet of the salable area, and it is under due diligence process. And once that is done, we will go through with the transaction. Rest of the things are under various stages of -- still under various stages of negotiation.

Okay. Okay. And just on the leasing part, so 1 lakh square feet you have leased out in this quarter. What are the rentals that you are getting? Is still near to the market? Or are there any pressure in the rentals?

So as far as this 1 lakh transaction is concerned, about 50% of it has come from Ahmedabad market, the BIFC. So there, we have been able to push the rentals higher than our weighted average earlier. So we achieved a kind of around 5% premium over there. And apart from that, whatever transactions we have closed, it's in line with the market. I wouldn't say that the rentals, we are actually stressed in terms of the rentals. We have achieved greater rentals, higher rentals than the weighted average rentals for the respective properties.

The next question is from the line of [ Shivan Shah ] from [ Saral Management ].

So my first question is what is the average occupancy rate in our GIFT Ahmedabad for the office building?

See, BIFC, as on date, so far as I remember, it would be around 28% as per the last quarter. But as we speak, we already have in principle confirmation for another 22%. So we should cross 50% in this quarter. And we are expecting around, say, 70% by the end of this financial year. So that's how it is progressing. BIFC has been robust, too.

That's great. And also, sir, one more question on the Bangalore front. What is the incremental revenue rent realization? In terms of percentage, how much has the rent been increasing year-on-year?

So see, as far as the overall rentals are concerned, this year, we would -- our -- from the existing, it would be somewhere around INR 400 crores. And whatever the additional will come from the new leases, particularly WTC Chennai. See, as we go ahead, even in Brigade Tech Gardens, Bangalore, whatever we close over the next 3 to 4 months, okay, another 3 or 4 months would be the rent-free period for the fit-outs. So the new lease rentals will actually be bigger. It will all hit in the next financial year.

No, I'm asking in terms of rent realization. As in terms of rent realization, how much is the year-on-year increase in terms of...

[indiscernible] if you are just asking for about increased delta, so it would be somewhere around 4.77%. If we just -- because in many cases, we have 5% per annum. In many cases, we have 15% every 3 years. And we haven't seen a kind of withdrawal or renegotiation in the rentals, okay? So it would be on an average 4.77%. Of the existing leases.

The next question is from the line of Karan Khanna from AMBIT Capital.

So firstly, on your residential portfolio, you launched Cluster III of Xanadu in Chennai during the quarter. Can you briefly comment on the pricing here and how is the pricing behaving here? Because what we understand is that unlike Brigade Residences at WTC Chennai, projects at the Mogappair location, including Xanadu, are not seeing anything [indiscernible]. So if you can comment on that.

So I didn't get the last part of your question. Are you asking on the pricing at Xanadu Chennai?

That's right. Pricing and how is it behaving compared to Brigade Residences at WTC Chennai over the last quarter or so.

So, clearly, these 2 are very different micro markets, Mogappair and Old Mahabalipuram Road, where the IT sector is located. The Xanadu Chennai is performing extremely well, has performed very well in the last quarter -- in the last few quarters. The average realization there is in the range of about 7,000, 7,200. The volumes have been quite good. We have done about 25, 30 units a month in the last quarter. The residences, which is on the IT corridor, also have seen quite good traction in the last quarter, and the realizations there are in the range of about 10,000 to 10,500 square feet.

Sure. And continuing on your residential portfolio. We've been hearing about shortage of construction material in Mysore. So any thoughts on the same? And whether this can impact your ongoing and upcoming projects like Topaz [indiscernible]?

Look, currently, there is no shortage of raw material. There is no issue in that. That's what you said, shortage of material?

Yes.

Currently, there is no shortage of material. And the Topaz is almost complete. We are in the process of obtaining the completion certificate. And that should happen in this quarter for sure is what we expect. And there is no issues at present on material availability or labor availability for that matter.

Sure. On the commercial portfolio in the previous call, you mentioned that Brigade Southfield has been completed with fit-outs underway and rental is expected from July. However, your Q1 FY '22 presentation shows it's under construction with a balance CapEx of around INR 25 crores. So can you help us understand that aspect?

So it is -- the project is complete, and the rentals will commence from 1st of July. So the documentation is complete. And whatever little bit of expenses to be incurred, to be incurred is based on, see, when clients occupy. Some equipment we need to install based on their timing, their requirement and a bit of coordination will be required. But as far as Brigade is concerned, it is leased, and rents will commence from 1st of July.

Sure. And lastly, on your retail portfolio, can you help us understand the current consumption trends? And at what level of consumption do you expect the rentals will normalize? And also, as a follow up, will it be fair to say that built-in or contracted escalations over FY '20 to '22 would be materialized once the rentals normalize? That's my last question.

Okay. Nirupa here. See, basically, what we are seeing is that the FY '22 -- the Q1 of FY '22 is again significantly better than what we witnessed in Q1 of FY '21. So for instance, if in FY [indiscernible] we recovered only about 50% of the rentals from FY '20. But in FY '22, we are projecting a much significantly higher recovery. Currently, we are projecting only 65%, but it could be much higher. For -- in July has been extremely positive. So if I just look at the month of July, even though the footfall was just about [indiscernible] pre-COVID levels, the sales consumption in terms of what the malls did was almost 90% of what it was pre-COVID levels, if I look at -- if I compare like-to-like stores that were open. So we are seeing a fairly healthy recovery. Some amount of rental relief in, obviously, Q1 when there was the lockdown. Maybe about 75% of the stores will have some sort of rental relief in Q2. But by the -- 50% of the stores will have some sort of rental relief in Q3. We're looking to sort of stop all the rental relief because -- or maybe just 10% to 15% of the stores might have it based on whatever negotiations we've had. But by and large, assuming there's no further shocks to the system, we should be on track to get back to the -- to 100% lease deed rentals from next fiscal year. But like I said, 85% to 90% will be back to lease deed arrangements in -- by Q4 of FY '22. Generally, we have quite a bit of stores that have come to -- come for churn or come for renewal. And I'm happy to say that, on average, the rentals that we were able to negotiate with the tenant is, on average, I would say, 23% higher than what they were before. If it's just a renewal, on average, that amount has actually gone up to 30%. So suppose somebody was paying us INR 100, it's gone up to INR 130. So we've been able to get significantly higher rentals for whatever vacancies that there are or any churn that's there in the malls.

The next question is from the line of Mohit Agrawal from IIFL.

My first question is on the business development. So you mentioned that significant portion of the INR 500 crores QIP money will go into business development. Could you share what kind of delivery addition or top line addition you are looking at with these proceeds? So that's the first part. And the second part of that question is that can you take more leverage considering that on the residential, you have very low debt? Can you take more leverage on the resi side to add more projects considering the market is pretty stretched for [ unorganized ] developers?

Yes. See, on a generalized basis, we can say from -- based on the funds raised, we will be, depending on whether a particular project is purchased, land is purchased, whether it is taken on joint development, it is -- it all depends on that. If it is purchased only, it may add, say, 5 million, 6 million square feet. If it is not purchased, if it is only for joint development, it has the potential to add even 25 million square feet. So that way, it will be a combination. But you also -- you rightly mentioned that we have the potential to increase our debt because the debt-to-equity ratio has come down due to a combination of reasons and which is increasing our overall equity by raising the QIP and also by reducing our debt due to performance of the projects. So that way, there is a good opportunity there. Just the residential itself, it is 0.3:1 debt-to-equity ratio. Those -- and the overall debt-to-equity is about 0.86:1. There again, CFO -- our CFO has said several times that part of it includes the joint venture partners' debt. If you remove the joint ventures partners' debt, we are sub-0.6:1 is the debt-to-equity ratio. Yes, I think Atul, CFO, will add a few more points.

Mohit, you are right that our debts are low in residential. But for buying land, we'll not prefer doing a debt because land financing is one of the most expensive financing. So we'll be effectively using the QIP money to buy the land and maybe the construction finance will do through the debt. So that is our strategy. But if there is a good land, we don't -- we can look at that also. But right now, we have enough QIP money, and we would use our residential debt only towards the construction financing of the new projects.

Sure. Any top line estimate that you have, let's say, from INR 500 crores, if you're investing INR 300 crores, INR 350 crores, what is the top line that investment can generate in terms of rupees crores?

So see, Atul mentioned earlier, if it is going to be purchased only, the entire money is used for purchase, then the -- in terms of revenue, it can add INR 3,000 crores to INR 4,000 crores, anywhere between INR 3,000 crores to INR 4,000 crores. And if it is the entirely joint development, it can add INR 15,000 crores. But if you take a combination, but I suppose INR 9,000 crores to INR 10,000 crores is possible estimate.

Sure, sir. That's helpful. Sir, my second question is on -- you alluded last time around that you have taken some price increases in your project. Could you throw some light this quarter? Have we seen the realization going up 5%? Could you explain how much of it is like-to-like price increase and how much would be due to mix change?

So we did take a price increase a little during the quarter. During the quarter, we were a little careful because lockdown was still operative. From 1st of July, we have taken a price increase. But the increased realization has been a mix of the changed product mix and in certain cases, pricing.

And sir, how much of this realization increase has happened since July -- in July?

So in terms of price increases across [indiscernible] took about 2% to 3% price increase as the first step. So clearly, there is a pressure on costs due to increase in cost of commodities like steel and other metals. So we did take a price increase. We do see that prices will firm up due to this cost pressure.

Sure. And sir, my last question, this is for Atul. We have about INR 1,000 crores of debt as CapEx debt in our -- [ 18 out of ] a total [ INR 2,200 crores ] gross debt. So once WTC rentals start coming in fully over the next 1 to 2 quarters, how much of this INR 1,000 crores CapEx debt gets converted into LRD?