Godrej Properties Limited (GODREJPROP) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Godrej Properties Q4 FY '25 Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Kshitij Jain from Godrej Properties. Thank you, and over to you, sir.

Good afternoon, everyone, and thank you for joining us on Godrej Properties Q4 FY '25 Results Conference Call. We have with us Mr. Pirojsha Godrej, Executive Chair Person; Mr. Gaurav Pandey, Managing Director and CEO; and Mr. Rajendra Khetawat, CFO of the company. Before we begin this call, I would like to point out that some statements made in today's call may be forward-looking in nature. The forward-looking statements are based on expectations and may involve risks. The outcomes may differ materially from those suggested by such statements and a disclaimer to this effect has been included in the results presentation. I would now like to invite Mr. Godrej to make his opening the remarks.

Good afternoon, everyone. First, let me please apologize for the delayed start. We're facing some tech issues at our end. So extremely sorry to keep you all waiting. Thank you for joining us for Godrej Properties Fourth Quarter Financial Year 2025 Conference Call. I'll begin by discussing the highlights of the quarter and the year-end, and we then look forward to taking your questions and suggestions. I'm happy to share that financial year 2025 was another record-breaking year for Godrej Properties in which we achieved our highest bookings, collections, operating cash flows, earnings and deliveries. Our booking value in the fourth quarter grew 87% quarter-on-quarter and 7% year-on-year to INR 10,163 crores. This was achieved through the sale of 3,703 homes with a total area of 7.52 million square feet. This is the highest ever quarterly booking value achieved by GPL and is the first time that we crossed INR 10,000 crores of booking value in a quarter, which is also the 7th consecutive quarter in which GPL has delivered more than INR 5,000 crores of booking value. Sales in the fourth quarter were driven by strong demand in several key new project launches including Godrej Riverine in Noida, which achieved a booking value of INR 2,206 crores, Godrej Astra in Gurugram, which achieved a booking value of INR 1,323 crores, and Godrej Madison Avenue in Hyderabad, which is our first project in that market and achieved a booking value of INR 1,081 crores. All in all, 12 new projects and phase launches happened during the quarter across 5 cities. For the full year, GPLs booking value stood at INR 29,444 crores, a year-on-year growth of 31% and guidance achievement of 109%. This was achieved through the sale of 25.73 million square feet of area, a volume growth of 29%. This is the highest ever booking value and volume achieved by any listed developer in India in a financial year. GPL is the only leading real estate developer that has delivered 8 consecutive financial years of booking value growth. Our sales are the most widely distributed in the industry with only 27% of our booking value coming from our home market of Mumbai and only 13% of our booking value coming from the largest single project. NCR, Mumbai and Bangalore contributed INR 10,523 crores, INR 8,034 crores and INR 5,089 crores, respectively, to the booking value for the financial year. We sold homes with a value in excess of INR 1,000 crores across 12 projects in 6 cities during FY '25. Customer collections in the fourth quarter stood at INR 6,961 crores, representing a year-on-year growth of 48% and quarter-on-quarter growth of 127%. For the full year financial year '25, collections stood at INR 17,047 crores representing a year-on-year growth of 49%. This is the highest quarterly and full year residential sale collections announced by any real estate developer in India to date. GPL has achieved 114% of its annual guidance for collection for FY '25. The record collections also translated into record operating cash flow. Operating cash flow in the fourth quarter stood at INR 4,047 crores, representing a quarter-on-quarter growth of 559% and a year-on-year growth of 55%. The FY '25 operating cash flow stood at INR 7,484 crores, representing a year-on-year growth of 73%. This is the highest ever quarterly and full year operating cash flow announced by any real estate developer in India to date. It was also a strong year for business development. We added 14 new projects with an estimated saleable area of approximately 19 million square feet and expected booking value of INR 26,450 crores. This includes 2 new projects with an expected booking value of INR 3,000 crores added in the fourth quarter. GPL has achieved 132% of its annual guidance for business development in financial year '25. We delivered projects aggregating to 18.4 million square feet across 5 cities in the year, representing a year-on-year growth of 47%, is also translated into record earnings for the full financial year. For the fourth quarter, our total income increased by 36% to INR 2,646 crores. EBITDA declined by 2% to INR 634 crores and net profit declined by 19% to INR 382 crores. For the full year, our total income increased by 57% to INR 6,848 crores, EBITDA increased by 65% to INR 1,970 crores and net profit increased by 93% to INR 1,400 crores. The record operating cash flow of nearly INR 7,500 crores we generated in financial year '25, combined with the equity capital of INR 6,000 crores we raised through a QIP in December 2024, will enable us to continue to invest for growth. In FY '26, we plan to grow residential bookings to over INR 32,500 crores, a 20% growth over our FY '24 guidance -- excuse me, to our FY '25 guidance through the launch of over INR 40,000 crores of inventory, combined with strong sustaining sales. This, combined with strong project deliveries should allow us to maintain rapid growth in operating cash flows as well. With a robust launch pipeline, strong balance sheet and sectoral tailwinds, we are confident to continuing the momentum in FY '26. On that note, I conclude my remarks. Thank you all for joining us on this call. We'd now be happy to discuss any questions, comments or suggestions you may have.

[Operator Instructions] The first question comes from the line of Parikshit Kandpal from HDFC Securities.

So my first question is on the guidance, which looks to be a little bit [ guarded ]. I mean you did mention on FY '24 guidance, there's 20% growth, but on actual numbers, the growth looks a little guided. So is it more like you were guiding conservatively and look to outperform to the 20% number? Or is it like because of the current market condition, you think that 10%, 11% growth is what we can achieve?

Yes. Thanks for the question. I think we always want to be very confident of the guidance we gave. This is an industry with uncertainties whether on the macro or with launch time lines and so forth. So we do tend to keep a reasonable amount of buffer in our internal plans over guidance. I think 20% over last year's guidance is actually a pretty strong guidance. We also have included in our investor presentation, our performance on guidance over the last 3 years, and I'm happy to share that we've been able to meet each individual metric of guidance that we have provided. Again, this year, the goal will be to outperform guidance. And on your question alluding to I think we're seeing continued strength in demand for all of our launches, we just came off our best ever quarter from both a sales and cash collections perspective in Q4. This quarters is off to a good start with a strong launch underway already for us in Bangalore. So we're not seeing any signs of concern at the moment and we'll certainly be looking to another strong year ahead. But yes, I think after 3 years of 55% compounded growth in sales, 20% growth on last year's guidance and 10% on actual we think is pretty strong guidance. And certainly, we'd look to outperform it as we have in the past.

Okay. My second question is on the sales we achieved in NCR crossing INR 10,000 crore and almost INR 8,000 crore in MMR. So do you think that even in this year, when we have guided for sales, so these 2 markets can grow? Or do you think now they are maybe at the optimal levels and there's no further room to grow from here on? And also in line with that, what kind of business development have you planned out for these 2 markets because these 2 are the major contributors this year on the presales. So what can -- and what are the buffer plans from other markets which can help us navigate and grow at 10% for this year?

Yes. Again, I think the aspiration will be to grow much faster than 10%. But certainly, we think in all markets that we operate in, there is a huge growth opportunity. We've looked at the data that suggests that based on prop equity data for the top 7 markets, our current market share would be about 4.3%. I think over the medium term, we'd like to take that to double digits. There is a strong opportunity for growth in each of the markets that we're in, our market share currently in all of these markets would be in the single digits. Somewhere like NCR, we already saw 2 consecutive years with over INR 10,000 crores sales and a small growth last year despite a kind of 200% growth the previous year. So I think NCR has demonstrated that ability to retain this kind of sales level and hopefully grow it quite a bit further this year. Mumbai has also been growing very fast at a compounded growth over the last 5 years of over 40% a year. We have a good portfolio lined up in Mumbai. So I don't see too much challenge in continuing our growth trajectory in Mumbai. And Bangalore and Pune actually benefit from a relatively low base. Still Bangalore -- Bangalore already saw very good growth last year. But frankly, it could have been even better. We got our RERA approval for 1 of our major projects in Bangalore that we'd hoped to launch last year on the 1st of April. So that launch is underway and should get Bangalore off to a good start. So both Bangalore and Pune we see good opportunities. So certainly, I think the plan will be to maintain the kind of growth trajectory we've seen both at a national level as well as in each geography. And we have separate P&L teams with empowered management in each of the regions we operate in, they obviously each have their own growth aspirations and targets. So we hope to deliver another year of kind of well-rounded growth across all the markets we operate in.

Okay. And just the last question on next year's profitability on the reported basis. So given the delivery guidance we have given, do you think that the mix is now moving towards more profitable projects and more recent projects? And next year, we'll see a significant turnaround in our resi margins reported in the P&L. And any thoughts on moving to POCM-based accounting?

Yes. I think we're following the project completion accounting system, and I think that we will continue with that. That's, of course, different than some of our peers in the industry are following and does create a lag in reported earnings. I think we will continue to see improved margins in reported earnings as more of the projects that are owned outright that we purposely launched at a more premium end of the market start hitting the P&L. So I think you'll continue to see that. We expect a very large uptick in reported revenues and earnings around FY '28 when these last couple of years, numbers start fully reflecting in the P&L. So that's when we expect the sort of step jump in the reported numbers.

The next question comes from the line of Puneet from HSBC Bank.

Congratulations on great performance. Very happy to see cash flows coming in nicely. My first question is to start with the pre-sales guidance, which is 10% growth. Do you think this would this time be driven more by volume or there's still room for value to grow on these levels, for realization to grow?

If you actually see FY '25 as a base, we grew 31% from a booking value perspective. And from a volume perspective, we grew to 29 -- sorry, 25.7 million square feet at 29%. So largely, we feel that the trend will more or less continue. It actually finally depends on the underlying projects, what APR are we launching. So it's not necessarily always premiumization or APR hike. It also is about -- we launched more of golf course source projects, suddenly you will see a very big jump in the blended APR, right? And vice versa, when you see more of plotting development, you tend to see. But ballpark, if you ask me, we should be able to see a similar trend of both volume and price growth.

Understood. So in your plan of launches, it would be reflected as somewhat equal mix?

Yes. I mean, but very honestly, it's very difficult to sort of predict which all launches will perform how much. So that's where the mathematical anomaly lies. But yes, I mean, let me answer this way, do we see good volume growth and good price growth? I would say, yes, largely for most of our projects.

Understood. That's helpful. And secondly, if you can also comment on how your construction cost is going to trend from current levels, collections you've given a guidance. Should one think of construction costs rising at a similar level? Or does it need to increase substantially given that a lot more work needs to be done now?

See, I would say if I were to give you a sense of what we are seeing cost inflation in the last, say, 2 to 3 years. I think this has been a very stable period of time, where most of the cost inflation in business has been controlled, yes in since some markets Aluminum costs have increased, but steel prices also dropped. Some markets have been flattish to drop. So I think most likely, the cost indices will be -- Sorry -- am I audible?

Yes, yes. I can hear you, yes.

So for most markets, cost inflation, I would say, is going to be within that range. But yes, I mean, there is, of course, finally, how would oil prices behave. Will that would be sort of a thing to watch out from a risk point of view. And I think interest rates getting into a sort of a lower cycle, this could really benefit if it continues because the CapEx cycle will see a boost. So this could have sort of a net positive effect in the long term. But very frankly, cost indices sort of depend a lot about the government policies and how the allied sectors tend to behave.

But just to add to that, I think some of the global macroeconomic uncertainty due to tariffs, et cetera, depending how that plays out, it could lead to further benign cycle on the cost side, we're already seeing economies from China, U.S., all underperforming. So of course, the situation is not stable and could change, but oil prices are at a low. These are all indicative of relatively low commodity inflation period, which would, of course, benefit us as we enter this heavy execution several years ahead. But of course, we'll keep our eye on that changing. But as of now, the cost pressure environment looks relatively benign.

From your spend perspective, is it likely to increase materially or similar levels as last year?

I think the overall construction activity will, of course, be increasing in line with the sales uptick we've seen. So absolute spends will certainly increase. But of course, so will absolute collection.

Understood. That's helpful. And lastly, on the business development side, I know it's quite difficult to give guidance, and you've given a INR 20,000 crore guidance, which looks pretty low compared to what your aspirational sales would be. Any thoughts on how I should think about it?

Yes. I think, honestly, we wonder whether having something like business development guidance, really, makes much sense. But since a few of you have asked us to provide it, we've tried to do so. I think what we think is that certainly we should never come under pressure to meet business development guidance. We should only do deals if on a stand-alone basis, they make sense. So frankly, I would say this, in our view, is a bit of a low ball guidance. We'd be very surprised if we don't significantly surpass this. I think we've, on average, over the last 3 years, surpassed the BD guidance by about 60% on average. And we're continuing to see good opportunities and continue to see good results from the launches of those opportunities. So I think both the intent is still there. The availability seems to still be there. So I think we're quite optimistic that we can do better than this. But again, we don't want to provide a number and then feel that we have to do deals to get there. This is a kind of generally a quite uncertain environment for the sector. So we'd rather kind of hopefully underpromise and overdeliver here.

And just to double-click on it, from a leading question could also be from a growth risk point of view. The good thing is the fantastic was of last 3 years, we have a series of projects and phases that we will launch of a cumulative booking value of about [ INR 50,000 crores, INR 55,000 crores ] because a lot of assumptions have -- from what we were launching, those projects have seen price hikes. So there are a lot of unlaunched phases and a lot of new deals we've acquired last 1.5, 2 years. So close to INR 50,000 crores, INR 55,000 crores worth of inventory we have. And then overall, we anyways have INR 1 lakh crores. So the need for business development is to when we see opportunity for an even stronger S-Curve to drive. So like Pirojsha rightly mentioned, it's not something out of desperation we want to do. But yes, this is something more like a hygiene minimum [ BD ] would like to have.

The next question comes from the line of Rahul Jain from Elara Capital.

A couple of questions. First one is on the INR 40,000 crores of launches...

I'm sorry to interrupt, Rahul, could you please be a little louder?

So my first one is on the INR 40,000 crores of launches. Does this include Ashok Vihar and the Bandra project. If you can update on both the projects, please?

So both of those would be in our launch plan, but not -- as I said last year as well, I think in this industry, giving guidance, you should expect some things are not going to go exactly according to plan. So we do have buffers in the guidance we gave on all parameters. So for example, last year, we gave a guidance of INR 30,000 crores of launches and actuals were INR 36,000 crores, even with INR 36,000 crores, several projects that we would have liked to launch didn't get launched like Worli, like our Bangalore project, in Devanahalli, like Ashok Vihar itself. So there is considerably more than INR 40,000 crores that could get launched if everything goes perfectly. But I think the number we are confident of sharing with all of you that we will meet, even if a few things don't go right, is this INR 40,000 crore. So Ashok Vihar is something we plan to launch this year. But if it doesn't happen for any reason, that doesn't mean that we will not be able to do the INR 40,000 crores of guidance.

Got it, sir. And on the Bandra project?

That I think we'd be happy if that launches, but if at all, it would be towards the end of the year. So I'd say that we should probably assume we need one more year for, but the teams are trying to do it by the end of the financial year.

Got it, sir. So second one is on how are you seeing the conversion rates in FY '25 relative to FY '24? If you can give us the year-on-year comparison versus specific to the markets as well where you are operating?

You're talking about conversion rates as a walk into conversion, you're saying? I mean, how the customer is...

Yes, yes.

I mean it's very, very diverse and to be very frank. I mean it can go as low as, say, 7%, 8% and can go high as 22% to 23% and sometimes even 25%. It depends upon very frankly, the value proposition that the person coming into the site see from price, product and payment plan, right? So generally, as a rule of thumb, when you see anything which is slightly lower in APR, generally as a rule of thumb, like plotted and all the conversion rates can even be higher. But yes, when you look at a ticket size of INR 10 crores, INR 5 crores, INR 15 crores, it's an informed call, so it can be between 10% to 15%, yes. But like I mentioned, the range is quite diverse, but rule of thumb, you can say 10% to 15%.

Got it, sir. And one last one. I think lately in the market, we are seeing a lot of buildup subvention coming into play in terms of new launches. If you can just share what is your share of subvention in the percentage of total sales?

See, we don't tend to push much of subvention other than, say, negative units as in the units that don't have great views and the likes of it. And if they hover in typically low single digits at any point of time. And usually, we tend to push wherever the last stage of completion of project is coming. So it looks more like optical subvention, but say 1.5 year or 2 years, you were going to see OC. And you just want to sell the units which have negative view, say, placing a railway track or the C category inventory as we call it.

The next question comes from the line of Pritesh Sheth from Axis Capital.

First, a very strong performance in Q4 and overall for the year. So see, I think while industry has been flattish to marginal decline in terms of volumes, we have clocked 29% volume growth. What do you think is driving customers out of their existing homes to buy these new homes from you? Anything specific you want to highlight? Because I mean, do you think market has got tough and it needs some additional sales push to drive these kind of sales. So your thoughts on that.

Thanks, Pritesh. Actually, if I be very candid and honest, we've been reading for the last at least 1-plus year, negative. A lot of negative chatter on newspapers and market is slowing down. But to be very frank and honest, when we see our launches, our numbers move up and down mostly our ability to get launch approvals on time and bring it to the market. So if you see quarter 1 last year, we had very good launches, so the number was very big. Unfortunately, in quarter 2 and quarter 3, some launches were spilling over. We had a reasonably decent quarter. But quarter 4, we could get most of our launches and still some actually, frankly, slipped -- still we got a sort of a say fantastic INR 10,000 crore number and ended the year at a very good number. So for us, I think, because we are very diversely spread and our products are also not in one city or in one micro market of a city, we're seeing very strong demand. That being said, your macro question on what is driving demand? I think it's simple wealth creation and aspiration in India, right? If you just look at some data points, depending on which report you refer, give or take, India's GDP is going to get double in the next 5 to 7 years. We would get into a sort of a, again, IMF, World Bank, which report you referred to, we could grow about $30 trillion, $35 trillion in the next -- by 2047. And the discretionary income is creating a lot of aspiration, right? I think some of the macro factors, of course, impacts your concurrent demand in a particular quarter and the year, but I think the macro environment looks a little bit more positive in the last 3, 4 months than say what it was, say, 12 months back because when the government is pushing a lot of thing for the improvement of the disposable income, like the INR 12 lakhs kind of a thing will increase demand for the consumption-led sectors, which will create a dominant effect by those people feeling secure about their jobs and therefore buying homes, as well as things like monetary policy, reduction of interest rates. So I think a combination of wealth creation, economic looking good, government bringing some real strong action in the short term, I think, it's amplifying. But I do feel that for customers, one trend I've noticed in the last, say, 2 to 3 years gradually changing is consolidation is, again, becoming more dormant, right? So I think with time and maturity and products becoming more selective, customers would want more predictability of their occupancy coming on time and what reputation the builder brings. So I think there is going to be sort of a gradual shift in the next 4 to 6 quarters where each quarter, you'll see a better sort of consolidation story for corporate developers or large developers in India.

Sure. So I understand the macro part. And just specific for you, the consolidation, which is driving the demand for a brand like us or anything specific, you are able to...

I think diversity, Pritesh. I think diversity of being very strong operative teams on grounds in all the markets, right? So if you see some of our peers have struggled entering a new market by the understanding of local laws or consumer demand, right? I think for us, we've had a share of learnings 15, 20 years back. So having operative teams on ground makes the predictability of the product price proposition is very accurate, right? And just being very focused on our launch calendar, seeing that every market has backup plans because there is strong demand, right? The only challenge could be our ability to bring a launch into the market or not?

Got it. That's helpful. Second is on the micro market or market-wise contribution, which is baked into your guidance. do you think large part of the growth that's going to come next year is going to be Bangalore and Pune driven because they are still at low base. I mean Bangalore, Pune, Hyderabad all these other markets while NCR and MMR remaining kind of flattish? And beyond next year, I think initially, you mentioned about having a double-digit kind of market share. Right now, as your presentation points out, we are a INR 7 lakh crore market, then our results should be around INR 70,000 crores in future, let's say, if market doesn't grow. Do you think the current scheme of markets are enough to contribute that INR 70,000 crores? I mean can you pull off like INR 10,000 crores -- INR 10,000 crores, INR 15,000 crores each from in these large markets? So your thoughts around that.

Yes. Thanks for the question. No, I don't think that we will depend only on the smaller markets for growth this year. I think there's a good opportunity to grow strongly in both NCR and Mumbai, it will depend a little bit on the launches there coming through. But certainly, we have a very healthy pipeline in both of those markets. As I mentioned, NCR has seen 2 consecutive years of INR 10,000 crores sales. Mumbai has grown fast now for 3, 4 years in a row, and we hope to do that again this year. And certainly, Pune and Bangalore also represent opportunities. I think the double-digit market share is, of course, not a very short-term aspiration. It will take us for a while to get there. But our view is that we can consistently outgrow the market given the strength of the brand, given the strength of being perhaps at least for now the most national real estate developer in the country and with a very moderate market share in all the markets we operate in. So I think what's very exciting for us is that if you look at all of our top 4 markets this year, for the first time, we would be either #1, which we were in Pune or #2, which we were in Mumbai, NCR and Bangalore by sales value. And in all of those, despite being one of the leaders, we would have a single-digit market share, implying to us that there is opportunity for significant growth in each of those markets. And of course, there is, over time, also an opportunity to enter new markets as we have with plotted development and even as we entered Hyderabad with group housing. So I think the opportunity landscape to us looks very exciting, and it's not just 2, 3-year sort of time frame we have in mind, there's a couple of decades a very strong growth opportunity ahead of us. And I think that's the exciting part of being in residential real estate today. It is a fast-growing sector. But quite aside from the sector's growth, there is this huge market share gain opportunity, which we have been consistently able to tap into over the last several years. And I think one of the things we've been happy about and we also included a slide in our investor presentation, is that we have seen the ability to grow the business across various cycles. So last year, it was our 8th consecutive year of booking value growth that includes years such as when COVID started, when some of the major reforms like RERA were introduced, the NBFC crisis. So I think the advantage of having a strong presence, a strong brand, but a relatively small market share is that irrespective of how the market performs, there is a market share gain opportunity that remains. And if we're able to execute well against our plans, we do see that ability to year-on-year grow market share.

Got it. That's very helpful. And just one last on the cash flow. So we had a surplus cash flow for this quarter despite spending around INR 2,700 crores on BD. How do you think the next year would be in terms of the surplus cash flows as well as the net debt? I mean, so are we now going to continue this trajectory and be cash flow positive with the FCF level? so yes.

I think it will entirely depend on the quantum of business development we do, which, as I was saying earlier. We want to measure business development more project by project rather than looking at abstract numbers at the company level. Each deal needs to make sense on its own merits. We need to be confident that the risk reward for each deal makes sense. If that -- if we are confident we would be happy to double our business development target for the year, which, of course, would require a different amount of cash investment than if we do INR 20,000 crores. But certainly, if we were to only meet our business development guidance, I think we would be operating cash flow post BD positive this year as well. But I suspect we'll do a little bit better than guidance and therefore, are happy to invest capital into growth as we have over the last few years. And of course, having raised the QIP, the goal is to deploy that capital. The constraint we've set ourselves now is that we'd like to keep net debt below INR 10,000 crores instead of looking at our net gearing target, we're looking at an absolute net debt cap. So I think we can use that for the maximum that we will go to. But within that, it will be more a question of the scale and quality of deals we see. We've guided to INR 21,000 crore collections, which is 40% higher than our last year's guidance and 20% higher than actual. So hopefully, we can do that or better on collections, operating cash flow should therefore be extremely healthy. The question of whether they are post BD positive or not is a question of the amount of BD we do. Honestly, my hope for this year would be that we'd continue to find good deals, continue to find opportunities to maintain the small rapid growth trajectory we've seen. I think a lot of value unlocking can happen for the business by sustaining the kind of rapid growth we've seen. If you look at our imputed numbers, these are very, very high returns on equity, returns on capital. So we're quite happy to deploy further capital if we see good opportunities on an ongoing basis.

The next question comes from the line of Parvez Qazi from Nuvama Group.

Congratulations for a great set of numbers. So 2 questions from my side. For FY '25 as a whole, what percentage of our sales would have come from like available inventory or sustenance sales? And what would have been the contribution from new launches?

Okay. Very frankly, I wouldn't have the number off hand. But yes, I mean, if you largely look at the calendar, we would have every quarter, give or take about 55% to 70% numbers would be coming out of launches and residual could be a phased launch or sustenance, give or take.

Sure. And did I get the number correctly? You said we have about INR 55,000-odd crores of available inventory across phases available for sale going ahead? Did I get the number...

So let me maybe reclarify. So for the acquisitions we've done, say, from FY '23 onwards till now, we've launched some projects and yet to launch, and the price growth has also happened. So between INR 50,000 to INR 55,000 crores worth of inventory we have from this fresh inventory of acquisition which are largely outright in nature. And then a total inventory of -- even we have some township projects like Panvel and all, total inventory would be in excess of INR 100,000 crores, about INR 110,000 crores.

Secondly, I mean, there has been a very strong growth in collections and OCF, but also has been accompanied by an equally strong growth in our land and approval related outflows from about INR 5,300 crores in FY '24 to about INR 9,000-odd crores. Now that we are sitting on a very strong inventory, where do we see this trajectory going ahead in terms of land related outflows?

I think if you see most of the launches. So we have -- in our entire portfolio, we have different sorts of projects, right? So we have some projects, which are townships projects. So in places like Pune and places like Panvel, part of Mumbai portfolio, we have huge inventory. But again, the idea is to create value in the long-run, we have some inventory even in Ahmedabad for that matter, right? So these are large-scale projects where the endeavor is to create value in the long term. So more like a land banking strategy we had with, frankly, very, very low invested capital. And then the second strategy, which is largely about buying land and doing churn very fast and unlocking and creating high PAT margins where the market opportunities continue to exist. So some of it is through the acquisition right now. And we would continue to buy land where we feel that our ability to turn them around within 6 to 12 months is very high and our ability to improve our overall margin profile exists. So if you look at some examples like in Bombay, we bought something in the Kandivali by the name of Godrej Reserve. And if you see, it is a very, very sizable land parcel, very sizable investments we did. But in the last 2-odd years, first year we sold INR 2,700 crores. And last year, we sold INR 1,600-plus sort of crores. Similarly, in another market of Bombay, we bought a project and launched in Mahalakshmi, we did about INR 1,100 crores just last year. So again, these are coming out of the investment thesis that, yes, these projects can be churned very faster. And these are places where the demand -- organic demand is very high, these are city-centric project, unlike the township project, which is slightly off city centre. There, I think, the idea is to add more projects.

The next question comes from the line of Kunal from Bank of America.

A couple of questions on your imputed margins. The first one is given that you have INR 50,000 crores, INR 55,000 crores of inventory available from some of the recent projects, is it fair to assume that the visibility on achieving imputed EBIT margins of give or take 26%, 27%, still exist for the next 2-odd years? And then just as an extension to that, as you would undertake the next phase of business development, INR 20,000 crores plus, the margin profile that would come alongside that new business development, would it be very different from what you're achieving currently?

I mean the first question is a very quick one. I mean, yes, the endeavor will be to continue maintaining and improving our margin profile. And I think like Pirojsha was mentioning, the reason for having, frankly, a very conservative business development target is to actually look at these, which at least meet this margin profile, if not more, and that to in a way that we feel capital churn can be very fast. So yes, I mean, we expect that this should be a long-term trend that we would like to maintain.

Got it. And just a quick clarification. Again, is it fair to assume that the numbers reported is all sort of all operating margin profile and devoid of any onetime benefits for the year?

Yes, yes, you're right. All operating margin.

The next question comes from the line of Akash Gupta from Nomura Research.

My question is on the imputed EBIT margin for FY '25. So despite having higher economic interest on our presales, our imputed EBIT margins have declined from 26.8% to 26.2%. Just wanted to understand why? My second question is that why is there a delay for the Ashok Vihar project and the Bandra project?

Yes. Thanks for that. I think the imputed EBITDA margins are essentially flat, 26.8% and 26.2%. This is largely led by individual project-led mix. For example, in the base year, which is FY '24, we had gotten a couple of Noida launches where the land cost to booking value was 8% because of the tremendous movement in the market that year on the very timely acquisition. So I think -- we think it's broadly in line. And actually, at the PAT level, we had guided 10% to 15% margin. We're actually slightly above that this year. So I think reasonably happy with the margins achieved during the year. And again, don't really see them as very different than the previous year. And the reason for the delay in Bandra, the site clearance, et cetera. This is some redevelopment project has taken more time than anticipated. It's not a process that we are directly involved with. It's a partner working on that, but there has actually been tremendous progress during last financial year. So I think there's much better visibility now than ever before. And we're hopeful that we can do it by the end of this year. But I think one should assume next year is probably the safer bet for that. Ashok Vihar, there has been an issue that affects the whole market where there are a lot of trees on the site and the relocation of that tree requires significant approvals. And given the environmental issues in NCR, this has become an issue taken up by the court. So we're again hopeful that we'll see good progress this year. The only silver lining in Ashok Vihar is, of course, our underwriting terms have now drastically changed as the market has improved. So, if we are able to now launch it this year, actually, this delay may have ended up being a benefit. But of course, we don't want to stretch that logic too far and of course, are looking to launch the project as soon as we possibly can.

Understood. And just a follow-up question on the imputed margin. So if I understand the prices at which we are launching our projects versus the prices at which we have underwritten our projects, there is a difference. I mean, we are getting benefit of price appreciation. So why isn't that flowing into our EBIT margins?

I think it partially is. These are also estimates of cost to completion. There would be reasonable buffers in those estimates.

Yes. We've also been maintaining because as you would appreciate that these are forward-looking numbers, and we just want to be a little bit more cautious on the contingency and escalation, that may or may not happen from a cycle point of view. So we've just build some buffers before releasing out these numbers so as to sort of not give a sort of an over-optimistic figure. But yes, if things remain what they are in terms of cost indices, this has been upside risk to it.

The next question comes from the line of Kunal Lakhan from [ CLSA ].

Just on the -- just one bookkeeping question first, what's the value of the unsold inventory that we have on the books?

Around INR 53 crores -- INR 53,000 crores.

Okay. Just going to the guidance of INR 40,000 crores. Like if you just go by what we did in, say, FY '25, like almost out of the INR 29,000 crores of sales, 2/3 came from our new launches. And if we plan to launch about INR 40,000 crores of inventory next year, assuming we have a very similar run rate -- we are just being a little too conservative either on the unsold inventory monetization? Or how should we read this?

Yes. I think, again, our philosophy on guidance to be conservative. You can read that how you'd like to, we've provided kind of our track record on guidance. This is an industry that's inherently uncertain. I think some of our peers have, on occasion, badly missed guidance by kind of probably disclosing what their internal plans are as guidance. We don't want to do that. You're right that if we are able to launch almost everything that we can launch even close to on time and we see even the same sell-through rates that we've seen over the last 2 years, there will be significant overperformance of the guidance we've given, as there has been in some recent years. So we're quite hopeful and that will be the endeavor. But we don't want to be talking to you guys in 6 months and feeling very sheepish that we are at risk of missing the guidance. So we are confident of meeting this, of course, in a very bad scenario given this -- it's not like this is lower guidance. It's 20% over last year's guidance after a period of 50% plus CAGR for several years. So I think this is, at the end of the day, also a number that has never been delivered in terms of sales by any developer in the country. So it's not that we're giving very low ball guidance by any stretch. But certainly, you're right to assume that if we are able to deliver the same performance on launch time lines and the same performance on sales through sales of throughput, we will exceed this number.

Sure. That's helpful. Secondly, on the cash flow side, if you look at our spend on construction even for the full year, it's about INR 5,500 crores for FY '25. Considering like we are selling 25 million square feet this year, we sold 20 million square feet last year. This spend on construction seems a little lower. This should materially ramp up, I presume. In absolute context, how should we look at cash flows, operating cash flows also?

You're absolutely right. I think -- so as you would see that many of these launches were fairly high-rise buildings. So a lot of time goes in your piling work, excavation work. In places like Hyderabad, you also have to do now something like controlled blast because the terrain is very rocky. And most of the first 30%, 40% so that the quality of sale is very high, especially 20% to 30% is more time linked so that the quality of sale is very high. But fortunately, with most of the things on the excavation, piling and foundations then. I think the COC figures will jump. And the exciting part is that we typically have 20% to 30% plinth level and about -- from regulation, you can normally connect 70% up to structure and then the [ residual ] post structure, which is finishing and all. So the exciting part is we now have a lot of good opportunity to accelerate construction, which will benefit both COC jump, but also will improve our collection trajectory significantly, which is why if you notice on the back of close to 49% growth in collections from INR 11,400 crores to INR 70,000-plus crores. We are now guiding INR 21,000 crores kind of a collection figure. Now operating cash flow, very difficult to really put up a number, but I think the long-term average, you can always assume that we are consistently increasing year-on-year on operating cash flow and becoming a more self-sufficient way. So I see that trend will continue now frankly depends upon our ability to execute all the projects well. So if we do everything well, this could be even higher than this year. And with some degree of this could be slightly lower also. But yes, I mean it's all going to be in the most likely rising trajectory as we move from 1 year to next year.

The next question comes from the line of Manoj from Geometric Capital.

Congratulations on good results. As you said, you have an aspiration of double-digit margin on the macro markets. And you have always told that you are bullish on real estate in a longer way also. So it is a good pretty dominant to the double-digit money in the macro market. So what more you would have to do for that? And what better you have to do what you are already doing?

I think we like to in one step at a time. I think, Pirojsha was rightly mentioning that this is a massive opportunity for us to target towards from a long term. But if you just try and see from what happened in 3 years from INR 7,850 crores now. Our market share has more or less moved from 2.5% or thereabouts to about 4.3%. So just moving 1 or 2 percentage in a fast-growing market, has a huge massive impact from a booking value. So I think we're actually doing sort of a reverse engineered question for ourselves, which is that what do we do to execute this project extremely well so that the profit that we've already locked in to begin with that gets into accounting, point number one. And point number two, we have 4 massive big markets where some markets have started performing to a sort of a good potential in INR 8,000 crores to INR 10,000 crores, like Mumbai and North, how do we grow this? Internally, the aspiration is to continue grow them at 20%. But at the same time, how can we especially grow markets like South, which has a huge potential and Pune, which has started firing for us. So yes, I mean, which is why how we've given you guidance. So I think the guidance that we've given from a sales perspective is something we would like to achieve as a hygiene -- and with that hygiene, I think the real challenge and focus will be to speed up execution. And layering that with good BD, good launch pipeline or can we be beat these in the medium term to long term, each year-on-year is going to be the aspiration. So I think we are on the right track. We're not really targeting immediately to get into double digit. We're already clearly #1 give or take at least 30% to 40% than our nearest competitor. So it's not a booking value give, at least for us. It is more of a margin expansion and execution gain from here on. Growth is a sort of hygiene now for us, yes -- I'm saying growth is more or less hygiene for us now. It's to look at other buckets of performance.

Okay. Great. So as we were talking about the margin, so I understand margin is 360-degree of course, from many things, sales volume, at what price the land was bought. And you talk about how fast the project has been turned around. That is also one factor while doing a BDA. But how to -- how much there is a minimum balance, okay, there is a project which you can faster turnaround, you may have a lower margin, but what should be the minimum base margin you target while doing a BDA -- is that much margin we should have even if the project is a early turnaround because every risk the project carries, is there any something on that?

Yes. I think Pirojsha sometime back mentioned that generally, we've historically been saying 10% to 15% margin. But I think of late, we have been targeting up to 15% PAT margin. And I think the kind of deals we've been able to secure, there have been many projects where, in fact, we're delivering slightly better than even 15%. So I think give or take 14% to 15% PAT margin is what we're looking at. Of course, there are plotted development where this goes up to between 20% and 25% to 30% of PAT margin. But at a portfolio level, I think 15% is what we want to consistently do.

And out past BDA and unsold inventory carries that kind of margin, which we sell in future in the next 2,3 years?

So depends, the project that I talked about from FY '23, the inventory, that should be mimicking this then the land parcels that we bought are like in Panvel, could be in similar range, but in Ahmedabad, it could be slightly lower. And places like Ashok Vihar, this could be significantly higher.

Thank you so much, sir. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for the closing comments.

I hope we've been able to answer all your questions. If you have any further questions or would like any additional information, we'd be happy to be of assistance. On behalf of the management, thank you again for joining us today, and apologies again for having started late. Thank you. Have a good weekend.

Thank you.

Thank you, gentlemen. Ladies and gentlemen, on behalf of Godrej Properties Limited, that concludes this conference. You may now disconnect your lines.