Marathon Nextgen Realty Limited ($503101)

Ladies and gentlemen, good day, and welcome to Q4 and FY '26 Earnings Conference Call hosted by Marathon Nextgen Realty Limited. [Operator Instructions] Before we begin, this conference call may contain certain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Chetan Shah, Chairman and Managing Director from Marathon Nextgen Realty Limited. Thank you, and over to you, sir.

Thank you. Hello. I'm Chetan Shah, Chairman and Managing Director of Marathon Nextgen Realty Limited. Good afternoon, everyone, and welcome to the Quarter 4 and FY '26 Earnings Conference Call of Marathon Nextgen Realty Limited. Thank you for joining us today. I'm joined here today by Kaivalya Shah, Director; Samyag Shah, Director; Suyash Bhise, CFO; and Parmeet Shah, Project Head. We have uploaded our quarter 4 and FY '26 financial results and also investor presentation on the stock exchanges and on our website. I hope everyone has had the opportunity to review them before this call. This is a transformational year for Marathon. Ladies and gentlemen, FY '26 has been a truly transformational year for Marathon Nextgen Realty. I am proud to share the company has reported its highest ever profit in its history with profit after tax of INR 206 crores for the full year. This milestone reflects the disciplined execution, improving operational efficiencies and our unwavering focus on creating long-term shareholder value. Friends, during the year, we undertook several significant strategic initiatives across 4 key pillars: first one, strengthening our balance sheet; second, expanding our development platform; third, simplifying and rationalizing the corporate structure; and fourth, creating visibility for the next phase of long-term sustainable growth. Friends, in the strengthening of our balance sheet, we had a QIP qualified institutional placement of INR 900 crores raised during the financial year. This landmark strategic development during FY '26 was the successful completion of our QIP of INR 900 crores. The QIP has significantly strengthened our balance sheet. Of the total proceeds raised, approximately INR 340 crores has been deployed towards repayment of debt. Some amount has been deployed towards ongoing projects. And currently, out of the INR 300 crores earmarked for new projects, we have already deployed INR 54 crores in the projects that have been acquired during the financial year. During the year, we received letter stating no adverse observations from both Bombay Stock Exchange and National Stock Exchange, both the exchanges on which our shares are listed for our proposed scheme of amalgamation, a meaningful regulatory milestone that moves us closer to creating a larger, more integrated listed platform with improved operational synergies and capital allocation flexibility. The next state of approval is going to be from NCLT. During the year, we also announced the acquisition and controlling interest in 3 real estate entities in Kanjurmarg. These acquisitions involved an aggregate investment of approximately INR 70 crores collectively and pipeline of 6 residential projects in Kanjurmarg micro market with an expected GDV gross development value of about over INR 840 crores. These acquisitions are well aligned with our strategy of deploying capital into projects that offer quicker monetization cycles, near-term launch visibility and strong execution readiness. To highlight, a portion of these projects are already under construction or expected to be launched within the next 12 months, providing strong near-term revenue visibility. A significant portion of the project has been earmarked for development under the permanent transit camp, PTC model. Under this framework, we construct and monetize transit accommodation units that are purchased by other developers operating within the same or adjoining wards, enabling them to avail additional development rights and unlock higher FSI potential for their projects in the neighboring wards. This has created a differentiated business segment within our portfolio, expanding our revenue streams beyond traditional B2C to now establishing a scalable B2B vertical also. During the year FY '26, we also acquired a 90% stake in Sunset Spaces Private Limited, further strengthening our development pipeline and long-term presence in the MMR real estate market. Friends, now coming to operational highlights. FY '26 is an operationally significant year for Marathon. We continue to scale execution across our residential and commercial portfolio, while simultaneously building a strong foundation for our next phase of growth. Key operational metrics during FY '26, area sold -- Quarter 4, we sold 48,000 square feet. And for the full year, we sold 2,29,000 square feet. Booking value. For the quarter -- quarter 4, we had INR 156 crores of booking value. And for the FY '26, we had a booking value of INR 576 crores. And in terms of collections, the last quarter saw INR 203 crores versus INR 781 crores of FY '26 collection. Project level updates. Friends, our overall presales for FY '26 stood at INR 576 crores on an MNRL share basis. You are aware that we have a 40% revenue share for Monte South project in Byculla and INR 832 crores, including the post-merger portfolio. If we consider the merger to be happening at a future date, the accounting is going to be done from the effective date. So we are also showing you the post-merger numbers. and this is INR 832 crores, including the post-merger portfolio, reflecting broad-based momentum across projects. Marathon Futurex delivered an impressive 15% year-on-year growth in presales to INR 466 crores driven by strong absorption and robust leasing activity, reaffirming the sustained demand for high-quality commercial space in the Lower Parel micro market. The broader commercial real estate segment in MMR with grade A office absorption staying healthy as corporates continue to prioritize quality workspaces, trends that directly favor well-located Grade A assets like Marathon Futurex. Our next project, Monte South Byculla continues to rank among the leading luxury residential developments in the Byculla market, recording presales of INR 391 crores during the year and witnessing sustained buyer interest and strong traction. Notably, part occupation certificate for Tower B. You are aware that each tower is about 65 floors, and this Tower B has received the occupation certificate up to 45th floor, reflecting strong execution progress at site. The luxury and upper premium residential segment in MMR has been one of the standout performance of the broader real estate up cycle and high net worth buyer sentiment retaining -- remaining very resilient and inventory at premium addresses staying very tight, a backdrop that continues to support both pricing and velocity at Monte South. At Marathon Nexzone in Panvel, presales stood at INR 104 crores, continuing to benefit from the convergence of multiple infrastructure catalysts. Atal Setu had already been functional, but now operationalizing the Navi Mumbai International Airport during this financial year and broader Panvel-Karjat development corridor, all have led to higher presales at Marathon Nexzone. During the year, we successfully launched Phase 3 of Nexzone, with a sale area of about 4.9 lakh square feet, estimated GDV of INR 600 crores. On the execution front, in Nexzone Phase 2, Antilia, Triton and Atria towers, all 35-story buildings received their full occupational certificates during the year, a strong testament to our on-ground delivery capabilities. In our Neo series, projects at Bhandup, NeoValley, NeoPark and NeoSquare collectively recorded presales of about INR 65 crores, supported by improving connectivity and deepening social infrastructure in the micro market. NeoSquare received occupation certificate during the year, marking a key delivery milestone. The newly launched Neohome portfolio with an estimated GDV gross development value of INR 370 crores further strengthens our long-term pipeline in Bhandup. The broader demand outlook in Bhandup remains compelling. In a recent development, BMC has cleared 384 unauthorized structures in Mulund, Amar Nagar and Khindipada, making way for Eastern part of the Goregaon-Mulund Link Road. Mumbai's upcoming fourth East-West corridor spanning about 12 kilometers. Once operational, the road will directly link Bhandup to Goregaon by slashing travel times, enhancing its appeal amongst the buyers. Friends, our commercial project at Mulund Millennium contributed presales of about INR 21 crores during the year, reflecting steady demand for quality, small offices and retail spaces within MMR market. So consolidated financial summary, if we look at total income for FY '26 is INR 639 crores. EBITDA is INR 261 crores and consolidated PAT is at INR 206 crores. In the debt segment, we are cash surplus company. There is no major debt remaining unpaid. Strategic priorities going forward, friends. As we enter FY '27, our strategic focus remains clear and consistent, accelerating project execution across all our portfolio, expanding presales momentum across residential and commercial verticals, pursuing value-accretive redevelopment opportunities and strategic acquisitions, scaling the PTC-led B2B development opportunity as a growth vertical, maintaining a prudent capital allocation and strong free cash flow generation projects. Friends, with that, we are happy to open the floor for questions. Thank you very much.

[Operator Instructions] The first question is from the line of Prisa Rathi from MM Securities. Ms. Prisa Rathi, you can please go ahead. As there is no response from the participant, next question is from the line of Anuj Agarwal from FDA Advisories.

So my question is, the company acquired controlling interest in multiple entities, adding like GDV potential of around INR 840 crores in Kanjurmarg. So could you elaborate on launch time lines or expected capital development and targeted margins for these projects?

So this total gross development value, Anuj, is INR 840 crores plus. Depending on the model, whether it is PTC or presale, the values can even go beyond INR 840 crores. We have conservatively estimated at INR 840 crores. Out of which one project is already undergoing. It is at fifth level -- 5 slabs have already been cast of a 23-story building. So say, 10% of this is already ongoing project. Balance about more than INR 225 crores worth of launch is likely to happen in the next 12 months. So that is the progress about this new acquisition. And margins, as you see, all our EBITDA margins are in the range of 30% to 40%. So that is the margin that we are expecting here.

[Operator Instructions] Next question is from the line of Dev Ajmera, an individual investor.

A very big congratulations on the numbers. Sir, what's the update of the amalgamation? Has the company submitted the documents at the NCLT?

Yes. As I mentioned in my speech, we have had no adverse observation letters, which was a prerequisite for submission to NCLT from both the exchanges where we are listed, that is National Stock Exchange and Bombay Stock Exchange. Both the exchanges have given us a letter confirming no adverse report. So that -- along with that, all the documents have been submitted to NCLT. Now we are awaiting the hearing. Initially, the hearing, we are seeking -- doing away with all the meetings of stakeholders because most of them have given NOC. So those steps will be now taking place when the hearing takes place.

[Operator Instructions] Next question is from the line of Trisha Rathi from MM Securities.

I have a couple of questions. So my first question is, the company has significantly strengthened its balance sheet through the INR 900 crores QIP and is now net cash positive also. How do you plan to balance capital allocation between land acquisition and accelerating launches across the pipeline?

So broadly speaking, the INR 900 crores were divided into 3 parts. About INR 360 crores worth of debt was repaid. So that made us our balance sheet very stronger. Other 2 parts, that is 1/3, 1/3, if you say roughly, were earmarked for existing projects augmentation and speedy execution. So those money has also been deployed in all the existing projects. And the last 1/3, which is about INR 300 crores worth of allocation for new project acquisitions. Now that new project acquisitions, we have already evaluated more than 30-plus projects, and they are at various stages of due diligence, out of which we have shortlisted about 3 projects that we may want to do it. Two projects have already been acquired. One is the Sunset Spaces as a company, which has an ongoing project and Kanjurmarg project, which I just answered in the previous question, about INR 840 crores worth of GDV. We have taken a controlling interest in 6 projects, out of which one is already launched and 2 are likely to be launched in the next 12 months.

Okay. Yes. So my second question is with Marathon Futurex continuing to witness strong demand and leasing momentum. Do you plan to increase the commercial share with the overall portfolio going forward?

Yes. We try to balance our portfolio. So as soon as one commercial portfolio gets completed and sold, we try to add a new one. So in this ongoing process, we had small offices, Millennium project added in Mulund about 3 years back. And we also have an upcoming project in Monte South commercial building that is Tower 5 in Monte South. That will come up in the future.

[Operator Instructions] Next question is from the line of Prashant Singh from MB Securities.

Congratulations on a good set of numbers. So I would like to ask a few questions. One was, how should one think about the launch intensity of Marathon over FY '27 and FY '28, given that we significantly expanded our land bank and redevelopment pipeline.

Yes. So as you are aware that ongoing projects, we have already uploaded all the ongoing projects and upcoming projects pipeline in our presentation to the stock exchange and also on our website. So ongoing projects where -- what we call ongoing projects is where we have already acquired land and part of the projects are already executed. So that pipeline itself is very strong, and that is going to continue. To add to that, there is going to be new acquisitions that are happening. So these 6 projects in Kanjurmarg and one asset, Sunset Spaces acquisition, that is going to add to that. On top of that, when the merger takes place, the other entities which are outside the listed entity, that land parcels will also come as an asset to the -- our company. And not many projects can get launched out of the land bank that is coming in. One particular one is going to be in Panvel, which is an upcoming area where we have a possibility of sites or plotted development, which is the segment in which currently Marathon is not present. So that can come up. So we are trying to augment our revenue streams from various resources that can be gathered, one I mentioned about this Kanjurmarg, where we are trying to do B2B, that is a PTC component that's a new segment for us. And another one is this Panvel, where we may be wanting to launch in FY '27, FY '28 with the plotted development.

Understood, sir. Sir, I had a follow-up question regarding this. What is the transit camp project that you talked about in Kanjurmarg project? So out of the INR 840 crores GDV, what is the contribution of this project.

Prashant, we have taken a 30% -- 1/3 economic interest, and we have a controlling interest of 50%. Now this INR 840 crores are going to come from 6 different development projects, out of which one is already ongoing at a fourth slab out of the 23-story building. There are 2 more sub-projects which will be launched during the next 2 to 3 quarters. Totally, out of INR 840 crores, more than INR 225 crores will be launched in 12 months.

Next question is from the line of Nitin Babulal Gandhi from Inoquest Advisors Private Limited.

Yes, 2, 3 basic questions. What could be the overall next 5 years plan for -- because post acquisition, the big things are coming up. So just a macro view, if you can share 5 years ahead, what will be the launch and how you propose to start working on those developments because numbers will not come in the books until the completions become significant. And second thing is I understand that the slide shows the residential project for Byculla at 50%. So balance 50% is yet to be considered. Is it right way?

Yes, that is correct. See, the presentation -- thank you, Nitin. So I'll just clarify on what the presentation is showing. In presentation, there is ongoing projects and there are upcoming projects. So when we are talking about ongoing projects, even ongoing projects are at various stages of completion. So when we say 40% or 50% or 60%, depending on every project is at different stages of completion. And our accounting process is on percentage completion. Revenue is recognized on percentage completion. So that percentage completion is also given in our presentation slide as one of the columns. So what you can say is whatever is the area sold in 2 percentage completion is the revenue which we have already recognized and balance revenue is yet to be recognized even from the sold values. And of course, 100% of unsold value is yet to be recognized. So this is just from the accounting perspective. So some projects are at 50%, some are even at lesser. Monte South, you mentioned particularly, has 4 residential towers. Each tower is about 65 story. Tower A is already delivered. So whatever inventory we have in Tower A is reflected as unsold inventory. Tower B is ongoing tower. Out of Tower B, first phase that is up to 45 floor is already completed, and we have received occupation certificate during this financial year. So that is also at 100% completion. And anything beyond 45, that is between 45 and 65, in fact, from the structural perspective, we have topped out the top slab of 65 and even machine room slabs have already been cast. So that is also at higher advanced level of completion, likely to be completed by December this year. So those numbers also will come into the revenue. And then there is a Tower C and Tower D. Tower C, we have launched and the construction is up to 17 floors completed. And that is also a 65-story tower and Tower D is yet to be launched. So these are 4 towers, residential tower. And the fifth tower is commercial tower, which can also come up in the next 12 to 18 months for launch.

Yes. Just to add to this, just to give you a summary, all in all, just a listed entity currently has an unsold value of around INR 6,500 crores if you consider only MNRL share, adding to which we added one more project of INR 840 crores. And this is only the listed entity. Now post merger, there is around 418 acres of land that will be merging with a higher -- with a huge potential of additional projects. And additionally, we have earmarked -- of the INR 300 crores, we have spent only around INR 50-odd crores till now. We are yet to spend around INR 250 crores for project acquisition. So in terms of the next 5 years, we have enough inventory to sell as well, and we have enough money power to actually get more -- acquire more projects and execute the existing projects as well.

And just continuing same question, GDV of unsold and GDV of ongoing put together is somewhere around INR 8,000 crores. And how much spend we have yet to do.

So every project is on a different...

We'll have a ballpark figure. I'm not saying I have precise numbers, but put together, INR 6,425 crores, that's INR 1,400 crores, which you said.

If we consider the thumb rule calculation of EBITDA, whatever is unsold will probably require about 60% of the cost to be incurred.

And for ongoing also same number or it will be a little higher.

Anything which is incomplete. See, in ongoing also, if it is -- there is some part which is already completed, which shows up in our work in progress, WIP, and balance is yet to be spent. So what I'm talking about is whatever is unlaunched, there you can directly apply a 60% formula, that 60% of the cost of unlaunched project is yet to be spent. Balance at every project is at different stage of completion. So we'll have to work that number out.

Yes. So the balance, actually, we've already uploaded on the presentation. The value of unsold, which is launched -- of the launch inventory, we have around INR 2,000 crores. Of that, cost to complete is around INR 1,600 crores.

[Operator Instructions] Next question is from the line of Dev Ajmera, an individual investor.

Sir, one of my follow-up question. Sir, is there any plans for a bonus issue after the amalgamation is completed?

That's very difficult to say right now. I mean Marathon has always had a policy of declaring bonus after a few years. So that may or may not happen. We can't make any commitment.

Sir, it's been a long time, a wait of 11 years.

If you consider the bonus history of the company, currently 3% is original capital, 97% of the capital is bonus capital. So we have given bonus accelerated during those years. So now it is sort of on a slower burner. But yes, we will consider as and when the time is right.

Next question is from the line of Rishabh Jain from Shah Moti Capital.

Given the large commercial pipeline in Lower Parel and Byculla, how do you see demand trends for premium office assets in South and Central Mumbai, sir?

So the demand is really good. We have Samyag Shah here with us, and he handles the Futurex, and he is on the know of the thing. Samyag, please go ahead.

Yes. Thanks a lot. So we are seeing very, very good demand in South and Central Mumbai. What we have traditionally done and what has helped us is we've been flexible in terms of which customers we are sort of catering to. A lot of them over there sort of do an only lease model, whereas we have done both, we've done institutional sales and we have done leasing. And that sort of has helped us create a niche. Not many players are doing that. And what is good is also that the scale or the demand is there across different areas. So we have done leasing of mid- and big-sized sort of areas as well, and we have been able to cater to scalable options starting from 1,500, 2,000 and so as well. So -- and overall, what we are also seeing is that demand remains high and supply is not as much as it used to be. So right now also with Futurex, if you see over a 5- to 6-year period, we've almost seen a 50% to 60% escalation in rate without ever having to compromise the area of sales that we've been able to do every year. So we are quite confident and positive. And basis that we are looking to create also a new portfolio of commercial projects, while we do have inventory in Futurex itself, which could probably take between 12 to 15 months to sort of exhaust. We want to look a little ahead and create a portfolio accordingly.

So just to add to that, the prices have firmed up year-on-year, if you see the values at which we have been selling, the prices have firmed up by 15% over the previous year, if you see. And the foreign companies are wanting to have A class offices, which is what our Futurex and Monte South portfolio would be. It would be A-grade offices. And we have big clients like Nykaa, ZEE and L'Oreal, international clients, also SBI, HDFC, all the institutional clients. So we have more than 300 clients already with whom we have relationship. So we will build on this relationship when we launch our new project.

My another question is that you have highlighted strong infrastructure-led tailwinds in Panvel, Dombivali, Bhandup. So which of these markets do you believe can deliver the strongest sales growth and appreciation over the medium term?

Appreciations, we don't comment much on, but all the 3 markets, the Bhandup market is the fastest-growing market and particularly with this MGLR, Mulund-Goregaon or Goregaon-Mulund Link Road, the last of which I mentioned in my speech, there was encroachment that was cleared just last week. And this Eastern part of Goregaon-Mulund Link Road is ready. The tunneling part has already started and the western part is also ready. So in a year, we should be able to see this project at very advanced stage. This is going to give a fillip to the Bhandup and Kanjurmarg market. So that is what we see. In Panvel, of course, it is a continuing growth story. There is Mumbai and Mumbai 2.0. And now, of course, we are going Mumbai 3.0, which is much beyond Panvel. So Panvel itself is a very good story with Atal Setu, which was already in place. And now in the last financial year, we saw this airport also coming up and the new linkages to the airport of all the roads from Western suburbs, from Vasai and other areas. So this infrastructure is going to give a big push to Panvel. So we see price appreciation definitely happening in Panvel and many more launches also coming in Panvel.

Just to briefly add to that, so Panvel, obviously, we've seen all the physical infra, which has been built and now we also have the Panvel-Karjat railway line, which is going to be completed very soon. The government and CITCO as an authority have also been quite proactive in developing the social infra. So they have done announcement of Educity, which is a very one-of-its-kind project, where they have international sort of colleges coming up and setting up campuses and various other social infra-related projects. There is the Kharghar commercial complex, which is coming up, which is also going to be a big office development in and around that area. So the development is quite holistic. And obviously, with Dombivali as well with the bullet train station, hopefully completing soon and operations over there also starting, I think we see growth potential there as well.

That was the last question of the day. I now hand the conference over to management for closing comments. Over to you, sir.

Thank you very much, everybody, for participating. Your questions show us what is the investor interest in the area, and that also guides us for our future acquisitions. Thank you for participating, and please keep participating like this. Thank you very much.

Thank you. On behalf of Marathon Nextgen Realty Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.