Mahindra Lifespace Developers Limited (532313) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Mahindra Lifespace Developers Limited Q4 FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. We have with us on this call today, Mr. Amit Kumar Sinha, MD and CEO; Mr. Vimal Agarwal, CFO; Mr. Kumar Sriram, Vice President, FPA and Costing and IR; and Mr. Ravindra Basu, Head, Investor Relations. I now hand the conference over to Mr. Amit Kumar Sinha, MD and CEO. Thank you, and over to you, sir.

Thank you, Ria, much appreciated. Good morning, everyone, and welcome to our quarter 4 FY '24 earnings call. At the outset, I would like to thank everyone for participating in this conference call. Let me quickly cover a few things at the start, and I'll request Vimal Agarwal to jump in with the financials, and then we'll take questions. Let me cover, let's say, 5 things, just a recap of where we are in our growth journey. I'll touch upon sales. I'll touch upon launches, business development and update on IC & IC. So a quick refresh. The first one is on our strategy. As you all know, we continue to enjoy a very strong up cycle in the real estate industry. Post-COVID, the momentum continues in this market. And as you have seen through all multiple sources that this momentum is expected to continue for some more time. In fact, the GDP contribution from real estate sector is much lower than many other developed countries or even some of the other more developed or developing countries. So we expect the momentum to continue. The resi segment will continue to have some buoyancy driven by per capita income driven by the desire to own home across urban and nonurban centers. When we last spoke in the October earnings call, I shared a quick summary of our strategy, which is to achieve a strong franchise at Mahindra Lifespaces, which means taking our aspiration to where we were in FY '23 5x over, which meant we'll target a presale scale of INR 8,000 crores to INR 10,000 crores, a strong balance sheet, a strong IC & IC business, which has allowed us to fund a lot of our growth on the residential side, and also to become a target for our target customer segment, an attractive destination of our target customer segment. That journey has started in the last financial year. And we are glad to share that we are this year marked the first step in that direction, where we are trying to take Mahindra Lifespaces to a franchise that's respected, scalable and then doing great projects for all our customers. Keeping that in mind, I just want to cover the next part, which is the sales part, number two. We achieved quarterly sales of roughly INR 1,100 crores, INR 1,086 crores precise versus a number, which is 1/3, INR 361 crores in the last quarter 4 FY '23. Our full year presales stood at INR 2,328 crores, so just over INR 2,300 crores versus INR 1,812 crores in the last financial year, roughly, I would say, 30% growth over that period of time. We had a very exciting launches during the year, especially in the quarter 4. And some of those quarter 4 launches will continue to give us momentum in the following year, which is F '25 and even F '26. A very interesting data to share. Our new launch sales contributed INR 1,322 crores, so 57% of our INR 2,328 crores FY '24 sales came from new launches. The similar number was at 77% in FY '23. So it's quite interesting that we've not -- this is a year which marked the inflection point, the first 9 months, we had a lot of sustenance sale that held us strong. While in the last quarter, we have seen a strong momentum driven invariably by our Mahindra Vista launch. We have a very strong lineup for FY '25 and even for F '26, which we'll continue to share with you. But my big learning from the sales journey in the last financial year is that we are doing well to achieve our 5x aspiration that we set out at the -- in the last financial year. Number three, launches. Launches are an important part of our success story. In Q4, we launched Phase 1 of Mahindra Vista in Kandivali, which has seen amazing success. We -- as you may have seen in the news, which was very visible, we had INR 800 crores plus of sales in just 3 days. This is also to highlight that it's a critical project for our sustainability journey. It is India's first net zero waste and energy residential project. This is at the back of our Eden project in Bangalore, which was India's first net zero energy residential project. We've had other launches in March 2024, which was Mahindra Zen in Bangalore. We had -- which also received a lot of strong response. And I'll share more about how we think about launches going forward. We had our second plotted development in Chennai, which is -- which was on the back of very successful first plotted development in Chennai. This is our strategy to monetize these residential land pieces that we have in Chennai and all other locations, and Mahindra Codename Crown in Pune. This is the acquisition we have done in October 2023, so third quarter of last financial year. And by launching this in 6 months, we've been able to shorten the land to launch cycle that we typically see in the industry as well as in the past with Mahindra Lifespaces. We also had other launches. We had launched Phase 3 of Happiness Tathawade in Pune, and we are seeing strong traction across that project as well. We see a very strong FY '25 because the launches that you've seen that have come in the last 4 to 6 weeks, we want to make sure they are as successful as we can make them that requires us to ensure market warming participation and investment with the channel partner, digital media as well as many things that will ensure that the launch is a slamdunk super successful. And we'll see some of that impact come through in the following financial year, which is this financial year FY '25. We also have a very healthy pipeline of launches that from the project that we acquired in the past. You'll see more about them in the coming months. Number four, on the business development side. I think you may have seen that we've been very active there compared to FY '23. FY '24 had 4x, I would say, multiplier in terms of GDV enhancement. Obviously, it was driven by the Wagholi deal that we did in October, the Alembic deal in Bangalore Whitefield that we did there was a big one, and then we did another deal in Bangalore near Whitefield is our attempt to deepen our penetration over the 3 key markets that we are participating in. We also had, at the start of the year, the Navy Malad deal that we -- that was a society redevelopment, and we are hoping to launch it at the earliest, I believe, this quarter. We continue to have a very healthy BD pipeline, business development pipeline, anywhere from INR 5,000 crores to INR 6,000 crores. This is in addition to the INR 4,400 crores that we acquired last year. It is in addition to Thane, which is INR 8,000 -- around INR 8,000 crores. And this INR 5,500 crores to INR 6,000 -- INR 5,000 crores to INR 6,000 crores BD pipeline goes through very diligent financial assessment as we are very well aware of the fact that we're acquiring land at the -- at the peak of the cycle. So we want to be very careful in terms of signing the right deals for us. On the Thane deal, we have -- we had shared in the past quarter that the IITT policy is very healthy from a size and scale point of view. We've also been able to secure some of the much-needed approvals in the last quarter. Now we are probably applying to IITT and other approvals. These -- this is given. This is a very large piece of land. The requirements are we need to ensure that we are fully compliant and ready to launch at the earliest. Our 2 redevelopment projects, I touched upon maybe Malad already and West Era are moving along, and we are hopeful that at least one will launch in the next 3 to 4 months. And the second one, we are closing some of the outstanding issues with the society. It's a little bit tricky because they are 2 different societies, and this requires more approvals, more work to bring alignment with all those stakeholders. The fifth part is about IC & IC business update. This is -- continues to benefit from the tailwind that we see in favor of India as a China plus 1 alternative. We also see strong momentum for domestic consumption. So IC & IC business is gaining a lot of momentum through these 2 sources, external as well as internal driven. We had scaled up our IC business significantly in FY '23. We also had a strong year in FY '24, and our pipeline will allow us to secure a strong FY 2025 as well. Overall, we finished IC & IC in FY '24 with INR 370 crores. Jaipur giving us a very strong 76 acres of land, which culminated INR 234 crores. And Origins Chennai and World City Chennai together roughly INR 145 crores -- INR 135 crores to INR 140 crores. So very, very good momentum that we see on the IC & IC business as well. So then I covered 5 things. One was the overall recap market of the context we're operating and our strategy to scale up our business significantly. And this year marks the first year in that direction, a strong year, I would say. Our sales momentum has been very good. Launches, we are getting a lot of solid launches with very good sell-out kind of levels, not really sell-out completely, but to the level that you want to so that you manage the velocity and pricing. Business development has started to pile for us. We are seeing good amount of deals. We are closing the right deals for us to secure our future. And finally, IC & IC business continues to give us the much needed cash that allows us to fund our resi business in a healthy way. Let me transfer to Vimal on financials, and then we'll come back for questions.

Thank you, Amit, and good morning, everyone. Moving on to the financials. As you all know, many of our key operating entities, from residential as well as IC & IC business, are not consolidated on a line-on-line basis. I'll read out the key financial numbers for your reference. The consolidated total income stood at INR 279 crore in F '24 as against INR 660 crores in F '23. The consolidated EBITDA, including share of profit from JVs and other income, stood at INR 75 crores as against INR 61 crores in F '23. The consolidated PAT after noncontrolling interest stood at INR 98.3 crores as against INR 102 crores in F '23. The company has net debt of INR 680 crores at consolidated level as per Ind AS, while cash in hand and bank balance and investments was approximately INR 193 crores. Our cost debt stood at 8.58% on a consolidated basis while standalone cost of debt for MLDL stood at 8.57%. Net debt to equity stands at 0.36% as on March 31, '24. Net operating cash flow without land-related or land acquisition-related outflows was at INR 639 crores for F '24, which reflects our strong collections in residential as well as on our IT part of our business. With this, I'll request if the floor can be opened for questions, please. Thank you.

We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Rohith P. from Mahindra Lifespace.

Sorry, I think there is a mistake. I am from Marshmallow Capital. So my first question, sir, is it's interesting to see the momentum in the business. Curious now going forward with the target of INR 8,000 crores to INR 9,000 crores, do you think you would need to raise capital?

Yes. So Rohith, we didn't hear you very well. Could you say where are you from? It will be useful for the team also. But what was the question that you said, capital?

Yes. So is it better right now? Am I more audible?

Yes, yes, Please go ahead, please go ahead. Yes, yes.

Yes. So I am a long-term investor. I have been invested for 4-odd years now. I mean, I follow the company closely. And basically, in a news article it came across that you've been looking to raise capital for growth. Just wanted to get a sense of do you think you need capital to grow from our current [indiscernible] to INR 8,000 crores to INR 10,000 crores that we're planning to hit in the next 4 years?

Yes. Yes. So let me cover that. So I think our aspiration requires a GDV of roughly, I would say, roughly INR 45,000 crores. So very, very healthy aspirations, if I can say so. 1/3 of that with Thane in our JDV included, we have 1/3 in our hand already, probably actually closer to maybe INR 20,000 crores. The remaining would be split into 2 parts, let's say, 1/3, 1/3, 1/3. 1/3 will be, let's say, alternate business model like society redevelopment, et cetera, which are slightly less capital heavy. But the remaining 1/3 will be a very -- it will require a decent amount of capital. Our estimate is to achieve our aspiration will need something around INR 7,000 crores to INR 7,500 crores of capital. Half of that is available to us through our accruals, our IC business, our debt to equity. We want to be very careful and thoughtful about our debt to equity, but that should be made available to us through our internal accruals, through collections, et cetera, which Vimal covered. For the remaining, we are in the process of doing some discussions, fundraise at a platform level, where even our parent is quite open to participating given their desire to grow Mahindra Lifespaces into a growth gem and support our growth aspiration. Those discussions have started. The step 1 for us was to be very clear about our strategy. Step 2 was to demonstrate operational execution on the ground including presale, GDV, launches, et cetera. And those things, as we can see, we start to see they are settling well and they are shaping up well. And we'll also be looking for any external partner, and there is an interest in working with us. So will bring those pieces of information as and when they become a substantial and material. So yes, we need capital, and these are the ways we are solving the capital challenge.

Sir, this is very helpful. So just a follow-up to this. So did I understand correctly when you said that the capital will be raised at a platform level and not at the company level, number 1, is that question. And second, when we set a target of INR 8,000 crores to INR 10,000 crores presales, inclusive of IC & IC, is that the total presales that brand Mahindra Lifespace will do? Or is that the presales that will -- is net of the presales that will be attributed to the partners and the platforms and other spaces?

Yes. So capital source could be anyone that is aligned with our long-term growth. So it can be at the platform level, it could be at a parent level, it could be [indiscernible], it could be QIP. They are all open. As long as aligns well with our long-term investment philosophy, as well aligns well with the partners. So no constraints on that. The presales part would be cumulative. Like so if you have a platform which is, let's say, we have a platform with Actis, we have a platform with HDFC, but we are the 1 who owns that platform or we are running that platform. So we show the presales for the total platform as part of our numbers because that's how we are operating them. If it's any different structure that doesn't allow us to capture, we will follow the industry norms.

That was helpful. And just to confirm that the Thane, you said the GDV potential there is INR 15,000 crores to INR 20,000 crores. Is that right?

No, no, no. I said Thane is around INR 7,000 crores to INR 8,000 crores. It has potential, which is quite big. But given the economic factors as well other factors, we can only achieve that. But our total GDV that we have in our hands is approximately INR 15,000 crores inclusive of Thane.

Understood. Okay. So my last question is, I mean, you are -- sorry.

Rohith, sorry to interrupt. Request if you can come back in the queue.

Next question is from the line of Pritesh Sheth from Motilal Oswal.

First, on the sales performance for this quarter. While we did well in Kandivali, just wanted to understand, was it a deliberate strategy to hold on to the inventory in other ongoing projects. And because like I can see projects like Citadel, et cetera, which are doing well in terms of success and sales have not contributed much in this quarter. So I just wanted to understand that strategy.

Thanks, Pritesh. I think let me -- so we follow -- we are starting to follow a very, very disciplined strategy for any launch. So the -- while the RERA came through for a couple of projects, like Codename Crown and even Zen in the month of March, we wanted to make sure that it's not a launch. It's a very, very successful launch. And very successful launch is reflected in the velocity as well as pricing so that we get the benefit to our business. Since they came in March, these are the 2 decent launches in the quarter 4 apart from Vista, we wanted to make sure that the digital marketing, channel partner, execution on the ground, our own sales teams readiness, our own assessment of and where we're going to land the pricing, all the intelligence required, all of that needed to be done. And I think this started to happen. But we wanted to make sure from a launch to a successful launch, all these things have to go very, very well. So there was -- you can call it a deliberate strategy of making the launch super successful, but it was not driven by any other reason. But just that how to make them successful because it's where every launch needs to be done, and we're building those muscles to make sure they're successful every time. And this is a great time for us to be launching because market is strong. But what happens when the market slows down. We need to rely on those muscles to make a launch successful launch, right? And that's what we have been doing. You'll see these -- the presales of those projects come through soon. But I think we followed the successful launch effort rather than anything.

So are we on the new launches, the timing part. But what would be your comment on the ongoing projects? There also, we have seen some minor dip in velocity. Generally, our sustained sales every quarter has been around INR 250 crores, INR 300-odd crores, but not the case this time. So just your comment on that would be helpful.

I think if you touch upon Citadel briefly, I think we -- this was one of those years in the first 3 quarters we benefited a lot from our past launches or the phase launches, right? And they were in line because the amount of inventory that we released was only small. So I would say that they are in line with what we had expected and what we wanted to realize on the pricing side because this is important for us to always balance velocity and pricing. I don't want to be saying that, oh, we had high velocity, but we gave away too much on pricing given where the industry is. Or I don't want to be a situation where we achieved pricing, but we just didn't sell much in terms of number of units. So we're always dynamically evaluating how we should have a view on the launch and the velocity and the pricing. So in Citadel and some of the other launches that we had in the past, we achieved what we wanted to and that will be reflected in our revenue as well as profits in future years. So that's what I would say. I don't think -- and we can have a follow-up discussion to share with you any more detail. But we felt that this year 1 in our new phase of journey exactly aligned with what we wanted to achieve. And obviously, we are supported by the external market. but we are preparing ourselves to build the capabilities for the longer term.

Absolutely. That's quite helpful and very clear. Second, how do you think about the launch pipeline for FY '25? Just basically a couple of projects that you have added in Bangalore recently, would or will they be launched sometime around this year in second half? And on the society redevelopment projects as well. While you mentioned about Malad, but the Santacruz one, would you -- would that also be launched in this year?

Yes. So we will have roughly, I would say right now, the good news is we have a very healthy pipeline. So Wagholi or Codename Crown will have Phase 1 is right now. We'll see how the market readiness is as we bring Phase 2. Similarly, Vista 1 has happened, Vista 2. Citadel 1 and 2 have opened. We talk about Citadel 3. And there are a couple of others in terms of fees launches of, let's say, projects that we have done, the launches that we have done. In addition, as you touched upon, Navy, West Era, and there are a couple of other ones that we have acquired that will be part of our F '25 launch planning. The 2 land pieces that we acquired in Bangalore, I think you may be referring to that. One is the larger one, it goes to 2 rounds of approval with 2 different authorities. One is a smaller one. So we will -- I think that the larger one, the 10-acre one or 9.2-acre one will take 9 to 12 months. We'll plan it in such a way so that it comes as soon as possible, but we'll have to respect the process that exists right now. We'll put all the efforts behind it. My sense is the smaller one could happen sooner because it requires only 1 set of approval. So we are putting our -- all our muscles, especially the Bangalore team is fully focused on bringing that to market at the earliest.

[Operator Instructions] Next question is from the line of Prem Khurana from Anand Rathi Share and Stock Brokers.

Congratulations on good presales this quarter. Sir, I have 2 questions. One was if you could talk about the competition on the BD side. I mean, the real estate cycle has been on an uptrend for the last 4 years now. There is [indiscernible] all of us I want to buy, I mean, the developer's community want to buy more to be able to scale up more. Does that mean the landowners or the JV partners are spoilt for choices and is taking a little longer to be able to consummate transactions? And would it be fair to assume that the landowners would be willing to take chances because there's [indiscernible] generally get to -- get carried away in these sort of times. Therefore, they don't mind -- they won't mind tying up with little inferior developer with an idea we're going to maximize returns?

Yes, yes. So if I pull up your same question, I think you're asking competitiveness of the industry and then how do we work with land owners, right, especially even joint development as well as outright, right? Is that the question, Prem?

Yes, sir.

So Prem, I think you're right. This is a very competitive industry and very opaque industry. So I wish it was transparent, clear and everything was very simple, but it's quite complex. And on top of that, you had the approvals and litigations and the clean title issue. So anything -- any land that has clean title is valued a lot more than, let's say, land with other issues. So it's competitive, but I would say that we are -- competition will make all of us better, right? And there have been a situation in the last 9, 12 months, where we have been very sharp in execution and we have kind of gotten those land parcels or done the launches in front of our other competitors, and we've been very, very successful. So I think there is a lot for us to learn. Our teams are quite excited, motivated with the results we are seeing on the ground. And we'll continue to hone our skills. So it's -- you can't wish away competition, but we've chosen our battle fields very carefully. We want to be big in Mumbai, Pune and Bangalore, and our teams are very well settled to take on the competition. So that's my broader answer to your first part of the question. The second part of the question is land owners. And I must say that it's a balancing act working with them. And many times, you'll find the asks and expectation quite difficult for us to economically make a win-win partnership. And in outright, you can easily say yes or no. But when you say JDA kind of situation, it's like marriage for 10 years, 8 years, 6 years, we have to be very careful and thoughtful who we are getting in the bed with. And many times, the expectations are very, very high in terms of commercial. But we also find that -- many of the -- many of the JDA land owners also want to get a decent sleep at night if they have a good partner on the other side. And you've seen in this industry, if you make 1 mistake, not having the right partner who's aligned with you economically as well as value system and other things, it can take a lot of your sleep and peace away. So we bring some of that to the competitive dynamics. There are many players who will say I'll take a shade lower return, but I want to partner with you because I can sleep easy. And those goes in our figure, but there are many other situations, it does not. And we are learning to participate in this market in a balanced way. It's good to do deals, but it's also good to say no to deals that don't make sense, and we follow that principle thoughtfully.

Sure. And this is really helpful, sir. And second question was, I mean, if this large land you lay out in Murud and there is demand for second home destinations, and it's been there with us for a while now. And I understand you signed an MOU. Is it possible to be able to carve out a part of this land and launch something wherein you'll be able to offer something to people looking for second home destination, let's say, either plotted or something a villa or bungalow sort of, so that I mean are you able to monetize a part of your the investment that you've made some time back?

Yes. So absolutely, the whole leadership team went there a couple of months back, we think it's a hidden asset for us. It has huge potential. So absolutely, we will -- we are thinking exactly the way you described. This is just 2 hours from Alibaug Jetty. We can get a very green a little bit on a hill. You can see the sea, a lot of greenery. So we are absolutely thinking the right way. And in fact, on a lighter note, if you're looking for a second home, let us know, we'll be bringing it to market in that area, in that region.

Next question is from the line of [ Punit ] from HSBC.

Congrats on good settled income. You started your commentary by saying that real estate is in a decent upward cycle. And then you also commented that you think that land is at the peak of the cycle. Can you reconcile those 2 views and also share your thoughts on how you think about different cities in terms of demand and supply environment?

[ Punit ], your second part of the question got muffled up. You said we are enjoying the cycle. What was -- what did you say the other part?

Yes. You also mentioned in your comment that we are well aware of the fact that we're acquiring land at the peak of the cycle.

Correct, correct, correct.

So if you can reconcile those 2 thoughts. And also give a little more nuanced view of how you think about different micro markets in which you operate and if there is interest to go back to NCR in a bigger way?

Yes, yes, yes. So let me start with the reverse. I think right now, I just want to focus on these 3 cities for now. Like so as I say internally, 1, 2, 2. 1 metro, 2 Tier 1 and 2 Tier 2. And 2 Tier 2s are our World cities, Chennai and Jaipur, which are Tier 2. Chennai outskirts is like Tier 2, and we have land banks in those locations. So we have to monetize that. But Mumbai, Pune and Bangalore is where we are just focusing on our effort. NCR, we do have a project, and we may go back. But at least for the next 12 months, we just want to really execute well in our core markets. So hopefully, that's the last part of the comment that you had in terms of expansion. The first part of the question is balancing act, I must say, [ Punit ], on this I think. Good news is that the moment land is acquired at a higher price, the pricing also captures that. So it's not that you'll be out of the pocket in terms of the -- you buy land and the pricing is flat. So the way we are thinking about is any time we are acquiring a piece of land, we are very, very diligent about the economic assessment related to that acquisition. And we do lots and lots of market intelligence gathering to ensure that we are able to make our business case work at the time of launch. But also at the time of OC because most of the bad news can come -- can happen later, and that cost and cost of construction related. And that's what we've always been doing. Whenever we find that we -- and I had to say, let me give you an example. I had to say no to a deal that we all want -- thought was a very good need. And it just was just below our financial parameters. And we all discussed that deal, and we felt that, hey, this is just below our financial parameter, but there is more downside if anything goes bad, then there is upside. And despite liking the deal, and there were some other factors, we ended up saying no to it. So that deal discipline is as important in terms of when you're in the up cycle, and there is a lot of hype around real estate industry. So that's what we are following up, very careful, thoughtful about how we choose the deals and how we participate in the deal. We get supported on the pricing side. The last part I just want to highlight is the growth will happen. I give this example in [indiscernible]. All the organized players in Mumbai, if you count them together, their market share is 20%. And given the cost of capital issue like GST and RERA and all those things, we see what I mentioned earlier, flight to quality. The -- there is more momentum for the organized players, and we will capture share vis-a-vis the less organized or unorganized players in this space. So that is another contributor to the growth. Hope that answers your question, [ Punit ].

Yes. And just if I may add, is it possible to share your aspiration of mix for FY '28? What cities do you think and what proportion do you think they will contribute in your...?

Ideally, it will be somewhere around INR 6,000 crores from Mumbai, let's say, INR 5,000 crores to INR 6,000 crores and a couple of INR 1,000 crores each from Pune and Bangalore. And if you want to introduce in new cities, we will look into that. That will be on top of this.

So Mumbai will still remain the most important business?

It has to be because from a pricing and stability of the market, Mumbai is very, very strong.

Next question is from the line of Shreyans Mehta from Equirus Securities.

Congratulations on a great set of presales numbers. Sir, a couple of questions from my side. One, in terms of Kandivali land payment, how much is done until date? And how much is pending?

So I think Vimal can correct me. But 50% -- 55% is done and remaining 45% would be happening in the next -- in the current financial year. Correct me if wrong.

Yes. So a little more than half is done and balance will happen over the next 1.5 years.

1.5 years, yes.

Next 18 months, yes.

So 55% is done and the balance would be in the next 1.5 years?

Yes.

Sure. And also in case if you could help in terms of the land outlook for next, say, over next 2 years from the current projects? Absolute amount, if possible?

Yes. So fundamentally, I just add that what Amit just mentioned in terms of our aspiration to acquire GDV, which is spread across Pune, Bombay and Bangalore. You can do the numbers based on those is what I recommend because we don't share the exact cash flows on a financial year basis. But you know the land cost in all these 3 micro markets. If you are looking for any specific information, please let us know and when we can take this offline.

Sure, sure. I'll get back. Sure. Sir, second question is, I mean, though we are doing as far as our large projects or the recently signed deals are concerned. But in terms of our projects like Kalyan, Boisar, Palghar, there it seems we've seen -- we've lost momentum. So any thoughts on that?

Yes. So I'll break this into 2 parts. Our aspiration is to be a mid premium, premium player. And some of these locations are a little bit far from a demand supply point of view. And as a result, you see the pricing or velocity gets constrained and the cost, because a little bit tougher locations to make things who are -- it's difficult to have all those work in your favor. So our goal is to finish those projects in line with our commitments, meet our RERA customer commitments in every which way. And then evaluate whether we want to go to whether you want to do anything and our aspiration I said is to be mid premium to premium player ideally as much premium as possible, so you'll see less of those. But we will play by the year for the right projects.

I have 1 more question, if I can.

Go ahead quickly. Let's cover quickly.

Sure. Sir, just the clarification on Thane. When you say INR 8,000 crores, that's the only -- only for resi part or it's a mix of commercial in terms of potential?

It's 50%-50% based on the rules of IITT policy. 50% resi, 50% commercial.

Next question is from the line of Komal Choudhary from Ratnabali.

I just had 2 questions. One is other than the Thane project which is a mega category project for you, do you have any other project in line as big as this?

So right now, no. Right now, no, we don't have. But I would say some of our other projects like Kandivali is close to INR 3,000 crores, our Citadel is close to INR 2,700 crores. So we have -- and if we are able to monetize, let's say, Murud and even a couple of others, they should be north of INR 2,000 crore projects. But right now, you're right, 1 mega project, and mega project is for anything more than INR 5,000 crores. And category A project is INR 2,000 crores to 5,000 crores. So we have multiple category A projects, but mega project is as of now only 1.

Got it. Got it. And sir, what about the Thane launch, you had mentioned that you'd launch it in the first half of FY '25. Are you in line with that?

I think we had talked about F '25 or F '26 Q1 because the land has multiple approvals, Komal. One of the approval is for something called 63-1A exit, which has been secured in the last quarter. The next approval is to get IITT policy sanction, which we have already applied for. Post those clearances, then we will apply for like all the RERA-related approvals. So these are 3 steps. And we had to wait for some of this because the IITT policy only got cleared in August of last financial year. So we worked on the clarity on what we want to do, how do we monetize it, get the exits from the industrial line, then get into IITT and then go into the RERA part. So that's what we are doing. My sense is it will take another year or so for us to launch.

Next question is from the line of Jatin Sangwan from Burman Capital.

Congrats for the amazing type of presales number. I was looking at the presentation and looked at your presales guidance for FY '25, which is like INR 3,000 crores. But if I look at your launches, you have a strong pipeline of launches for the projects that have been already launched. For example, Kandivali. Then you have Wagholi. Then you have Citadel. So how likely are you -- is this guidance conservative? Because according to the launches you have, you could easily beat those INR 3,000 crores of number. So what are your presales targets for FY '25?

Jatin, I think you already increased our guidance by INR 500 crores. So our INR 3,000 crores was -- that was at calendar year right, in a way, right? It includes IC & IC business as well. So we expect to generate INR 500 crores or so from the IC business. So INR 2,500 crores is the guidance that we had given for FY '25 and then INR 500 crores. So you can say we are already INR 2,700 crores or INR 2,800 crores, INR 2,800 crores, right, on IC & IC plus resi combined. So that's healthy. And you're right, the -- if you have achieved INR 2,800 crores, is INR 3,000 crores is aspirational. Our goal is to deliver and then talk about it rather than give a promise and then they're not delivered. So that's what we are hoping for. Not changing any midterm targets. I think you should look at long-term targets, like INR 8,000 crores to INR 10,000 crores in F '28 is what we are shooting for. And all our efforts are aligned to achieving that. And you've seen the year 1 of the journey. And I think year 2 would be hopefully as exciting.

Next question is from the line of Vaibhav Saboo from Nippon AIF.

So my question has already been answered in this previous. But just one thing which I wanted to highlight like, sir, you have mentioned that you know that INR 3,000 crores number is something which is that you want to be. But just highlighting that from FY '24, INR 2,800-odd crores numbers that we have undertaken. If I look at the lower range, that is INR 8,000 crores guidance for FY '28, that comes out to a compounded growth of around 30% year-on-year. So just working on -- just working backward from that, don't you -- like wouldn't the company be targeting somewhere, let's say, close to INR 3,300 crores, INR 3,400 crores resi plus IC & IC combined for FY '25?

So Vaibhav, I think we -- you're right. That's a strong expectation, and we will strive for it. But I'll hold myself from giving any guidance given how we have operated in the past. And hopefully, we'll keep updating you how we are progressing in these calls as well as a one-on-one basis. But I don't want to give a promise and not meet it. So I just want to make sure that we do great work. We think of long-term aspiration, manage our balance sheet and continue to deliver good results.

Next question is from the line of Aditya Sen from RoboCapital.

I understand you refrained from sharing guidance. But I just want to understand how much margin do we target in our residential projects as we previously said that we target mid premium to premium. So how much margins do we target there, around 30%?

Yes. So in our case, we -- so on margins better would be to see the [indiscernible] correct me. I would say I think margins in this industry is a little bit confusing, if I may say so. I think the right way to assess this industry is from an IRR perspective. So how much you put in upfront for land, how much you put in let's say, between land to launch. And then from launch, you start to collect cash, which allows you to fund the construction as well as, let's say, part of your land investment. So that's -- and then you get an OC and you get the project closure, et cetera. So you know the life cycle probably very well. So that's how we measure IRR. Our goal is to be always north of 20% IRR. And that's, let's say, project IRR pretax, if you do equity IRR with the right debt-to-equity capital structure post tax, it will come out to be a couple of percentage points higher. But we always look at this as a portfolio. So right now, we have 28 projects going on. 18 projects are well underway. 5 have been launched in last financial year. 5 are going to be launched this financial year. So we look at, okay, what's our -- and this has affordable. This has premium. This has all sorts of other vintage and it has all sorts of our geographic spread. So we are saying that how do we, as a portfolio, deliver a 20% IRR, which is in line with the expectation that anybody should have from a return on invested point -- invested capital point of view. So that's how we look at the business. So not necessarily margin because the accounting story gets very convoluted to understand the -- what the projects are doing. But this is how we think about it.

Next question is from the line of Meet Shah from Finovate.

So first of all, congratulations on a great set of presales number. I have recently started covering this space. And as a young analyst, finding it difficult to comprehend a few things. So my first question is related to accounting. Like how do we record revenue in resi and IC & IC business?

I'll request Vimal to jump in. So yes, resi, tell me if I'm correct, resi. Resi is as per the RERA rules, so only OC you can count, it's 100% completion. And IC is practically India. It's like leasing is as good as revenue. So in a way, if we lease this year, you'll get the leasing converted to revenue in the same financial year.

Okay. So like our FY '24 revenue is around INR 212 crores. Why our lease premium from IC & IC business was INR 370 crores? So like can you explain the discrepancy?

Yes, go ahead.

So the reported numbers, so actually, our -- as per Indian accounting standards, which basically says that there will be line level consolidation for entities where you exercise full control. And that's a litmus test from accounting point of view. What happens in IC leasing entity, we have a stake, say, in Tamiladu, we have the Tamiladu government or for Jaipur we have Rajasthan government stake, where they do have shareholding as, let's say, in the operating key matters. And therefore, in those entities, only the share of profit or say the last number from their P&L gets picked up into the India's consolidated number. Therefore, that's the reason top line, you don't see IC leasing numbers, while in the bottom line or say the profit number, you see our share of profit getting added.

Okay. Okay. Got it. And just to confirm in resi business example, like Kandivali is run, will be completed in financial year '29. So we will record the whole revenue of INR 1,200 crores in FY '29, right?

Yes, it will get recorded in the year in which it gets completed.

Okay. And what about the related costs like land acquisition and construction costs in the same year, right?

Yes, that's right.

Okay. And lastly, what would be the value of our unsold inventory?

Our unsold inventory, including various land parcels, which we have acquired, should be upwards of about INR 8,000 crores.

Okay. No, I am talking about the ready inventory, which are ready to move, which you've shown in the PPT.

Ready to move in inventory you're asking?

Yes.

Yes, ready to move in is very, very miniscule. Most of our properties and inventories are sold out. And it is a very small number of about INR 60 crores, INR 70 crores, which will be there.

Next question is from the line of Himanshu Upadhyay from BugleRock PMS.

And my question is on acquisition, okay? And I appreciate the part that we acknowledge we are near the peak of cycle, okay. We've generally seen that the prices don't fall for residential projects, historically, by a very large number. But the sales velocity, collection and inflation or cost site to hampers the returns or IRRs? How do you manage those risks? And also to one of the replies you stated that risks can happen at OC level? And for 2 of our projects, which had happened historically. So how has the process improved versus what we were doing in the past? So some of your more thoughts on the process improvement and more clarity on the philosophy your working will be helpful.

Himanshu, I think it's a tough question to answer on a short call with a couple of minutes. I will ask you to come over and we'll spend time with the leadership team to explain how we solve this equation. And you're right, in this business, when you're top of the cycle, what we are trying to do is we are trying to optimize this velocity and price premium project by project, location by location. In some locations, we say that, hey, we don't want to sell out the whole project. We want to keep some inventory because we do know the price improvement will happen based on micro market and comparison with other micro markets nearby competition, et cetera. So you're always making those choices. But the most important thing right now is that the capabilities that are required to make that assessment is both intellectual and experiential, right? You cannot be just say I'm very smart, I can predict the market or I've got so much experience, I will not do analysis. Both are [indiscernible]. And both of these things have to be happening together, and that's what we keep doing it. And in addition to that, we have actually the biggest thrust here for me going forward is going to be project execution, especially cost of construction, the procurement, the design specs -- the design, the design spec, the procurement excellence because that's where you will end up losing a couple of basis points, a couple of percentage points of margin and being able to manage through inflation because the labor cost will go up 5% every year. There could be spikes in the commodities, steel, cement, et cetera, aluminum in a couple of years. And your business case should be able to account for that. And that capability, we are building. We already had a strong one when I came in, but the center -- the costing center of excellence, the procurement team, we're just amplifying the efforts that's required. The -- let me just pause at that. It's something that you'll have to experience by talking to our leadership team. I will welcome you to come over and give us some time, and I'll share more detail.

And one last thing. Generally, in bull markets, what we see is land which is cheap is generally inferior, okay? Or will take more time to launch. It can be because of various issues. And the land, which is good, is extremely expensive, okay? And how do you choose where to focus on? Because a good land, if it takes more time and cost escalation or, let's say, lower sales velocity and all those things can eat away the returns, okay? When you -- or how are you focusing on? And how do you decide that this is the time to be courageous, to be patient in the market?

Yes. So that's -- you'll have to see us in action for a few years for you to determine that. My sense is once -- see in this business, the thing that we want to avoid is being feeble [Foreign Language]. And that's something that we have been coached and we have seen from other industries that you want to be very careful with that. We should be able to walk away from any deal if we don't think the contours, the guardrails are not right. And that's what we want to follow. Because in other risks, if it's a different noncorporate or less organized player, they'll say I look at cash in cash out, and I can take the -- I'm okay to do the project. But for us, IRR is the mantra. We just can't avoid that. So we're very careful when we're doing a deal assessment, go through a rigorous process and allows us to judiciously take decisions. That's what I would say.

And best of luck, Vimal, for your future. Hope to interact with you in the future at some other levels.

Yes. So I think we should thank Vimal also. This is his last analyst call. He is moving from next week to Mahindra Holidays. So maybe you can listen to him there. So thank you, Vimal, for everything that you have done and the relationships you build with all our extended partners.

Thank you, everyone. Thank you, Amit. Thanks Himanshu.

I think we had a couple of quick questions. Should we take just 5 minutes and close things out? Yes, Pritesh, go ahead.

Next question is from the line of Pritesh Sheth from Motilal Oswal.

Sorry, just had 1 question again on margins, right? Since you have started this whole scaling up in the last 3, 4 years, we have now almost launched every project, which we signed in the last couple of years. And just on the project level, EBITDA margins or whatever margin you want to guide to us, how are things looking? Earlier, we have guided for 15% to 18% EBITDA margin on a blended basis. But do you see any upside now on that number because of the kind of realization, et cetera, that we are getting on those projects? That would be just 1 question that I have.

Yes. So Pritesh, as Amit very extensively mentioned and talked about the IRR focus, fundamentally, what it means is that we are not getting into any land parts and acquisition or any launch, which is not IRR accretive. By extension, what it also means is that any launches over the last few quarters are north of our guides. Similarly, the earlier project, a few of those may have got impacted because of lower velocity or real estate industry, not redefining initially. However, we have got very strong controls to ensure that we deliver as per our committed [indiscernible]. So that's where we are. Overall, it's very much on track.

Next question is from the line of Shreyans Mehta from Equirus Securities.

Sir, just 1 clarification in terms of Origins Ahmedabad. It's been a long time we are actually looking for an anchor partner. So any thoughts out there?

So yes, Origins, right? So...

Yes.

So Origins, we already have -- we're talking Origins Phase 2, right?

No, no, I'm talking about Origins Ahmedabad.

Ahmedabad, okay, okay, okay. Got it. Yes. So we already have IFC there, right, as our partner. So you're looking for an anchor client is what you mentioned, right?

Right.

Yes. So we get a lot of request, Shreyans, for Ahmedabad, which are small 1, 2, 3-acre kind of demand from them. But we want to get to an anchor client, which is at least 40, 50 acres clubbed. We end up saying no to the smaller ones because it won't make sense for us to develop the whole infrastructure just for a small revenue base. So -- and as we have seen, I've been there personally, what I've seen is the land is still maybe 5, 6 kilometers away from all the industrial movement and the warehousing movement and the build-out that's happening. My sense in the next 2 years, we'll start to see a lot more demand. We have right now maybe 2 good quality large customer discussions happening, but there is also competition with some of the other GIDC, et cetera, that creates some of the challenges. So neither IFC nor us are in a hurry to find and exit from this. We are looking for the right tenants, right clients. And given the momentum in the country as well as in Gujarat, we'll hopefully find good solutions.

Got it. Got it. Got it. And sir, secondly, as far as Pune -- Origins Pune is concerned, what's the status there?

The 3 parts. The part 1 is land acquisition for access route is fairly underway. So we had a lot of land parcel, but need to make sure the access is smooth and efficient. So that part is underway. We are acquiring the land. Then there is the chief problem of where -- how we can make sure that it comes -- it's efficient from a layout perspective rather than 1 or 2 acres or land pieces in the middle, which don't belong to us. So that continuity is being addressed. And third part is this will also go through a very long, arduous approval process. So my sense is at least 1 year to 18 months before this can be brought to the market.

So a large part of our IC & IC contribution would be coming from the existing Chennai and Jaipur?

Yes. It will be Jaipur major as well as Origins Chennai Phase 1 and then subsequently, Phase 2.

Ladies and gentlemen, due to time constraints, that was the last question for the day. I now hand the conference over to Mr. Amit Kumar Sinha for closing comments.

Thank you, Ria. I think I just want to thank all of you for listening in and giving your input and clarifying the questions top of your mind. As I mentioned earlier, we are in a multiyear journey of creating a very strong franchise of Mahindra Lifespaces, which will be a scale and stature -- which will have a scale and stature that will be NNB for many. And so we are making strong progress. Some of the results that you see today are in that direction, but a lot of work needs to be done for us to achieve that. So thank you for your feedback. Thank you for your support. We are -- anytime welcome you for any additional feedback, comments, if you want to learn more about our business, let us know, we'll set it up. Your feedback is incredibly valuable and will allow us to push us more to achieve better outcomes. So thank you all for your support.

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