Puravankara Limited (PURVA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q3 FY '24 Puravankara Limited Conference Call hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ashutosh Mittal from Axis Capital Limited. Thank you, and over to you, sir.

Good evening, everyone, and welcome again to the post results conference call of Puravankara Limited. We have with us the senior management of the company with us led by Abhishek Kapoor, Executive Director and Group CEO; Vishnu Moorthi, Senior Vice President, Risk and Controls; and Neeraj Gautam, President, Finance. I now hand over the call to the management for the initial comments.

Thank you, Ashutosh. Good evening, ladies and gentlemen. Thank you for taking the time to join Puravankara Limited's earning call for the third quarter of FY '23 (sic) [ FY '24 ]. I'm Neeraj Gautam, President, Finance at Puravankara Limited. Thank you for joining us today. We are pleased to present our financial results for the quarter ending December 31, 2023. The results, along with a comprehensive presentation, have already been made available for your review on the stock exchanges. To begin with, let me share my thoughts on the broader circumstances, both globally as well as on the macroeconomic front. In its global uncertainties, India's economy remained robust, evidenced by the RBI's upgraded FY '24 GDP growth forecast to 7.0% from 6.5%, a stable interest rate and controlled inflation bolster economic prospects. The surge in demand for residential real estate mirrors increased economic activity and rising income in 2023 with a strong interest from both foreign institutional investors and domestic institutional investors boasted India's global index rate. Political stability and ongoing economic reforms position India as the fastest-growing major economy. Turning to the performance of our company, Puravankara Limited. The first 9 months of FY '24 have witnessed exceptional presales, marking a strong growth of 89% compared to the same period last year. We achieved sales value of INR 3,967 crores for 9-month period FY '24, the highest ever for 9-month period since inception. In the Q3, coming to the quarter sales number, the sales performance across our brands showcased robust figures. Puravankara led with INR 663 crores, Provident followed closely at INR 419 crores and Purva Land contributed INR 158 crores with a total sales value of INR 1,241 crores, which is 60% up compared to the same period previous financial year. Now coming to the geographically -- geographical contribution. Bangalore emerged as a primary driver, capturing the dominant share of 52%, trailed by Chennai at 27% and Cochin by 9%. The average realization was INR 7,610 per square feet for the quarter. However, if you look at the 9-month period, our average realization was INR 7,916 per square feet. Coming to the new launches. Bengaluru, we introduced Provident Deansgate boasting a saleable area of 0.6 million square feet with an initial launch area of 0.3 million square feet. Meanwhile, in Chennai, we presented Purva Soukhyam, a plotted project with a saleable area of 3.16 million square feet, initiating with a launch area of 0.8 million square feet. Coming to the business development front. We are expanding our horizon in aligning our strategic vision. We eagerly tested into the Mumbai redevelopment market. Our inaugural project encompasses approximately 6 lakh square feet with a gross domestic value of about INR 1,500 crores. The Mumbai landscape holds tremendous potential, and we are actively pursuing several opportunities currently engaged in advanced discussions with 4 societies. Our launch pipeline is equally robust. We have an impressive launch pipeline of approximately 13 million square feet, ensuring a steady flow of new projects in the coming period. Non-Bangalore projects now account for 42% of the share of ongoing and 77% of launch pipeline. On a division basis, Provident accounts for 44% of launch pipeline in the line with market trends and the group's strategy. Coming to the debt management. In addressing our debt, we're pleased to highlight a positive trajectory. Demonstrating a fiscal prudence, our net debt has reduced from INR 2,135 crores in Q3 FY '23 to INR 1,741 crores in Q3 FY '24, making a substantial decrease in net debt-to-equity ratio from 1.09 to 0.85. Notably, our debt has decreased by INR 251 crores and gross debt by INR 53 crores from the previous quarter. Equally significant is the decline in the debt per square feet of building space, dropping from INR 1,291 crores in Q3 FY '23 to INR 791 in Q3 FY '24 reflecting our commitment to efficient capital utilization and fiscal responsibility. With this, our debt perspective per square feet of under construction area has decreased by around 62% over the last 5 years. Coming to the customer collections. Customer collections have been a driving force in our financial performance totaling to INR 2,515 crores for the first 9 months of FY '24 and INR 941 crores for Q3 FY '24. These robust collections figures underscore our commitment to execution excellence. The impact of our effective collection strategy is evident in the operating surplus reaching INR 418 crores for Q3 FY '24 and INR 965 crores for the cumulative 9 months of FY '24. Remarkably, our operating surplus has experienced a substantial year-on-year growth of 101%, a testament to our aggressive execution, heightened collection efforts and operational efficiencies. I would like to draw your attention to the fact that as on December 31, 2023, the balance receivables from our sold units has amounted to approximately INR 3,857 crores. This impressive figure covers around 78% of our remaining cost required to complete the inventory currently open for sale. This indicates that a significant portion of cost to complete the remaining inventory has already been secured through receivables, providing us with a strong foundation to meet our financial commitments. Moreover, our cash flow visibility is equally promising with a projected amount of INR 6,747 crores, expected over the period of 3 to 4 years. In addition to this, there are cash flows from 2 new commercial projects. If we value this today, it is about INR 1,308 crores. This signifies our sound financial planning and ample cash reserves to support our operations, project growth initiatives in the foreseeable future. Finally, turning to our financial performance. In Q3 FY '24, our total revenue grew by 45% year-on-year to INR 596 crores. The EBITDA for the Q3 FY '24 was INR 218 crores with a 37% EBITDA margin. The PAT for the Q3 FY '24 was INR 78 crores. For 9 months FY '24, our total revenue increased by 37% to INR 1,313 crores in 9 months FY '24, which was INR 961 crores in 9 months of FY '23. The EBITDA for 9 months FY '24 was INR 392 crores with a 30% EBITDA margin. The PAT for the period of -- 9-month period was INR 49 crores. In conclusion, I want to highlight that Puravankara is well set to benefit the real estate sector's growth nationwide. Our strong sales consistently beating targets, our thanks to careful project choices, effective marketing, connecting with customers and the commitment of delivering great products as we move forward. Thank you for listening. And now I'm closing my opening remarks for your questions and suggestions. Me and my colleagues are here to answer all your questions and take the feedback, which you would like to give us.

[Operator Instructions] The first question is from the line of [ Chintan from Punishka Family Office ].

How many units we have delivered this quarter?

498 units have been delivered.

Okay. And what is the plan for FY '25? How many square feet we have delivered to planning?

So while we don't give any guidance numbers, we will come back with the exact number that we are looking at delivery in the next financial year.

Okay. And sir, in last con call, you mentioned that we have pending delivery of 2,500 units in H2 FY '24. So now we are pending of close to deliver of 2,000 units, correct, sir?

Correct. You're right. In that already delivered about 1,405 units for 9-month period. Another...

So yes. Now we have OC already we have received for 2 of our projects -- 3 of our projects in the last quarter -- towards the end of the last quarter. We are expecting 3 more projects to give OC within next 2 fortnights, final stages where we are expecting the OCs to come in, and those deliveries will happen. So I think the last quarter, we've been mentioning for a long period of time will be possibly one of our biggest quarters for delivery because all the OCs and the delivery of the projects are coming at this time. And of course, the handover, it takes a little time, but once the OC is there, then it's only a matter of time for delivery.

Okay. Understood, sir. And sir, what is the current unrecognized revenue?

So sold revenue, as of now, as of today, just open that slide of the -- sold value is...

If you go through our balance sheet -- if you go to our -- so the cash flow plus revenue to be recognized. Cash flow, if you go to Slide #29, that gives the detail of the balance receivables from the sold units. However, the question -- I understand your question is more related to how much balance revenue to be recognized. If you go to our -- look we have not published in this 9-month period balance sheet because that is not required to be published. About INR 6,000 crores is sales value, which is advanced from customers for which I have yet to recognize revenues, which is part of our advance from customers in the balance sheet. I'm sorry, of course, unsold, which we can sell -- which are the value of our unsold inventory, which is there in the Slide 29, is about INR 5,617 crores. And of course, as I mentioned to you, about INR 6,000 crores is the advance received from customers where I have yet to recognize revenue. However, I will send you the exact number offline.

Okay. Okay. And sir, if I look at your cost from borrowing, it's close to 11.92%. Any efforts you're doing to bring it down more, and other real estate players taking borrowing or any efforts or any plan for it?

Yes. It's very much the plan. So if you look at my cost of borrowing has come down compared to the immediate previous quarter. It's 11.49%, which was the previous quarter is 11.61%. So as and when I'm launching project and moving -- converting into the bank loan and reduced interest rates and which is already reflecting previous quarter to this quarter we've come down, and we are putting continuous effort to reduce interest rate by taking new loans at a competitive rate and refinancing the existing rate also for lower interest rate loans.

Okay. And sir, for the commercial project, we are looking to lease it out or to sold it out? I mean, how we are monetizing it?

Currently, our goal is to lease out one asset and sell one. There is one asset, which is about 2.1 million square foot, which is under construction on the airport road in Bangalore and the other one, which is at Kanakpura, which is about 800,000 square foot. At this point in time, we haven't sold anything. Very active interest is there in leasing. There are multiple LOIs, which are currently in progress. So yes, we'll wait it out and see how it goes. If we can hold on to the inventory, we'd prefer that the whole lease model because we want to build the portfolio over the long term. However, one is a JDA, one is an owned asset, 2.1 million, which is an owned asset, definitely, we are going to own and keep. The JDA asset, we will evaluate as and when we get closer to completion. Currently, we are out for leasing for both assets.

Okay. Okay. So one request if you can in the presentation the possession date of each ongoing or under development project, that could be a great help, sir.

Yes, sure, sure, sure. We'll make sure that we can publish the expected date of completion of each projects.

[Operator Instructions] The next question is from the line of Mr. Ashutosh Mittal from Axis Capital.

Yes. So my question is related to your entry into Mumbai redevelopment. So you guided for you are in advanced discussion for 4 projects. So what kind of projects and what micro market specifically you are looking at? And what would be the -- how would the margins be different for these projects versus your other existing projects?

So we are looking at all the markets, both in the western and central suburbs, and of course, in South Bombay. Currently actively pursuing -- actually, we have participated in more than 12 projects in terms of the tendering process, active, short-listed conversation engagement going on, on 4, mix of all 3 markets with the South, West and Central. And from the margin point of view, we are continuing to target our EBITDA margin of about 30%.

The next question is from the line of Vignesh Iyer from Sequent Investments.

I just wanted to know which projects are expected to get OC in the coming quarters? And could you tell me how many units is coming from each project?

So we are expecting Zenium, Somerset, Promenade and Tivoli. Tivoli partially we have received the release of site, the balance we will get now in the coming week or 10 days. Between all of these, the total inventory would be about 1,400 units. We also got OC for Equinox in the last quarter. So in all, if you take -- including the last quarter, we will have about 2,000-plus inventory available with OC.

Okay. Including the quarter 3 OC, right?

Yes. They'll be available for handing over about 2,000-plus units will be available for handing over with OC.

Okay. And when it comes to -- so we have got a good pipeline in quarter 1 of FY '25 and followed by -- quarter 4 and quarter 1. So what is the presales target that the company -- what is the internal estimate of the presales target for FY '25 for the company? Unit-wise and maybe even value-wise, if you could help us understand.

So we don't give guidance, as I mentioned earlier, on what we are expecting in terms of the sales numbers. But we do publish our expected launch pipeline. And from our past tax record, you can kind of assess for yourself, but we normally don't give guidance on the -- but what we do give guidance on is the number of launches that we are booking and doing. If you look at our Slide 20 -- Slide #16, that will kind of give you a trend of the sales trajectory that we have achieved. For example, for the 9-month period last year versus this year, we have -- we were in '23 at 2.78 million square foot for 3 quarters. This year, we are at 5 million square foot for the 3 quarters. I think the sales value has gone up by about 89%, and volume has gone up by a little over 90%, if I'm not wrong.

Okay. So going by the trend, we can expect similar or better performance going ahead would be the right -- like you have done a CAGR of 28% in last 4 years. So we can expect a similar line improvement going ahead, right?

Look, again, as I said, we don't give guidance, but our effort is definitely to continue our growth trajectory.

The next question is from the line of Shivang Joshi from Centrum PMS.

I hope I'm audible. You indicated on one of your slides about your launch pipeline for the fourth quarter. Just wanted to understand there are 6 projects in that slide, I'm referring to Slide 22. What is the status of approvals for all these projects? I mean, what is the likelihood of any project launch getting delayed to, if I say, a quarter or 2?

So no, there are none of them which will get delayed by a quarter or 2. We are actually at the final stages of all of these projects. Some of these are already approved projects where we are opening a new phase. We already have the approval. And some of these projects, we will get the approval. So we are confident that we should be able to take these to the market in between this quarter and the next quarter. There is nothing that out of this inventory that will go to the quarter beyond this quarter and the next quarter.

Okay. And indicatively can you give a number as to -- I understand you gave your launch pipeline for next year, but a ballpark number as to what will be your area to be opened for sale, new projects as well as new phases in existing projects for FY '25. Any number?