Puravankara Limited (PURVA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Puravankara Limited Q1 FY '26 Earnings Conference Call hosted by Emkay Global Financial Services Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Harsh Pathak from Emkay Global Financial Services Limited. Thank you, and over to you, Mr. Pathak.

Yes. Thanks, Manav. Good evening, everyone. First of all, apologies for the delayed start of this con call. We shall now begin. So on the behalf of Emkay Global, I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Ashish Puravankara, Managing Director; Mr. Mallanna Sasalu, Chief Executive Officer, South; Mr. Rajat Rastogi, Chief Executive Officer, West and Commercial Assets; Mr. Deepak Rastogi, Group Chief Financial Officer; and Mr. Neeraj Gautam, Deputy Chief Financial Officer. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen.

Good evening, everyone. I'm Deepak Rastogi, and I thank you for joining Puravankara's earnings conference call to discuss the performance for the first quarter of this financial year. The results and investor presentation are available on the stock exchanges, and we hope you have had a chance to review them. I would also like to thank our host for today's earnings call, Emkay Global Financial Services. Now let me start with some brief highlights about the sector performance, followed by our financial and operational performance for the quarter. As you know, Indian -- India's economy continues to demonstrate strong resilience despite persistent global uncertainties, geopolitical tensions, supply chain disruptions and evolving tariff policies in key markets such as U.S. Amid these external challenges, India's macroeconomic fundamentals continue to remain robust. The RBI has maintained its GDP growth forecast at 6.5% for this year, financial year '26, reaffirming India's position as the fastest-growing economies in the world. In the first half of 2025, India's residential real estate sector benefited from supportive macroeconomic policies, especially from RBI rate cut of 100 basis points, which brought down the repo rate to 5.5%. This measure was aimed at stimulating credit growth and investment at the backdrop of global uncertainty. As a result, the inflation also pulled significantly with consumer price inflation easing to obviously the lowest in the last six years. The residential market remained steady during the period under review with sales volume for the quarter stood at approximately 82,000 units across the top eight major cities. Chennai and Hyderabad led in terms of growth, recording impressive year-on-year increases of 16% and 6%, respectively. Mumbai maintained consistent demand and remained the largest market by volumes during this quarter. India's residential real estate market witnessed 9% quarter-on-quarter growth in a unit -- in new unit launches as sales remained largely stable during the Q2 of calendar year 2025. The mid-end and high-end housing segments continued capturing the attention of home buyers constituting about 58% of the total sales across the top seven cities during the quarter. The office sector continued its strong momentum during Q2 of this calendar year with steady absorption observed across key markets. Office leasing during the quarter reached 20.3 million square feet, while new office supply of approximately 17 million square feet became operational. Space taken up -- was taken up by domestic corporates and GCC played a pivotal role in boosting the office absorption. Now moving on to the company's financial and operational highlights for this quarter. We achieved a presales value of INR 1,124 crores, reflecting a 6% year-on-year growth. The sales value of West region increased by 58% Y-o-Y, primarily due to the new launch of Purva Panorama in Thane Mumbai. Sales volume for the quarter stood at 1.25 million square feet. The customer collections for the quarter stood at INR 857 crores. The average realization also improved by 9% Y-o-Y to INR 8,988 per square feet, underscoring sustained demand and strong pricing traction across our portfolio. In terms of geographical sales contribution, Q1 of this quarter -- sorry, Q1 of this year, financial year, 50% was contributed by Bengaluru, followed by Mumbai and Pune at 24% -- sorry, were at 24%, Chennai at 15% and Kochi at 8%, respectively. Increase of sales from Mumbai and Pune from 15% to 24% during this quarter, indicating growing presence in Western region. Our launch pipeline for the year remains robust with approximately 12.32 million square feet of planned development, which includes 9.22 million square feet new project launches and 3.1 million square feet of new phase launches. Notably, non-Bengaluru now -- projects now account for more than 50% of ongoing and planned projects, reflecting our strategic geographic diversification. Mumbai and Pune together represents 21% of the planned pipeline, underscoring our strong focus and expanding presence in West India. On the commercial front, we are on track to complete 2 million square feet during Q1 of '26. In '26, we have signed LOI with IKEA for 80,000 square feet of carpet area at INR 150 per square feet for Purva Zentech. The building will be ready by January 2026 with handover expected one to two months later post their custom modifications. With regulatory changes such as extra -- such as e-Khata have impacted handovers and revenue recognition time lines, we remain on track for a planned delivery of more than 4,500 plus units during this financial year. Out of the planned handovers, 3,000-plus units, 3,015 units, approximately 3.65 million square feet have been completed and the OC has been received already. These are currently awaiting e-Khata issuance for handover permission. During the quarter, we handed over 667 units covering 0.68 million square feet, generating revenue of INR 539 crores. On business development front, we have been selected as the preferred developer for the redevelopment of eight housing societies in Chembur, Mumbai with an estimated GDV of INR 2,100 crores with development area of 1.2 million square feet. This forms part of our broader redevelopment portfolio in the city with four key redevelopment projects collectively with a development area of 3.63 million square feet, which is expected to generate a GDV of approximately INR 7,700 crores, further reinforcing our strategic presence and growth momentum in the Mumbai market. Further strengthening our presence in key micro markets, we have entered into a JDA for 5.5 acres land parcel in East Bengaluru with an estimated GDV potential of over INR 1,000 crores. Earlier this quarter, Puravankara partnered with KVN Property Holding, LLP for a 24.59 acres land parcel with 3.48 billion sellable area with an estimated GDV of 3,300 square feet plus. The project is located in North Bengaluru near the airport and is expected to launch within six months. These strategic initiatives underscore our focused approach towards expanding in high-opportunity locations and driving long-term value creation. Coming to the financials of this quarter, our revenue was INR 539 crores. EBITDA margin for the quarter was 15%, while we basically reported a loss of INR 69 crores. The sales and marketing expenses and overheads incurred for the presales have been entirely charged to P&L as per Ind AS standard 115. On our debt position, our net debt stands at around INR 2,825 crores, which is at a net debt-equity ratio of 1.68 with a cash balance of INR 718 crores, indicating a strong liquidity profile, ensuring stability and operational continuity. Gross debt during this quarter actually reduced by INR 138 crores with major, obviously, debt coming down on the resi side, but because of the changes or the increase in the commercial, the net increase -- sorry, reduction was INR 138 crores. Cost of debt has reduced to 11.35%, driven by continued focus on improving funding efficiencies. We remain committed to optimize financial resources by continuously working on reducing, obviously, the debt per square feet for under construction projects. In the next couple of quarters, we will see increased velocity in acquisitions and growth trajectory new -- sorry, increased acquisition and new launches in the line of growth plans of the company. We want to highlight our strong growth trajectory over the last three years, and the sales growth continues to be at CAGR of 28%, while the collections have increased at a CAGR of 37%, reflecting our commitment to execution excellence. To conclude, we continue to be optimistic about the sector considering the demand-supply gap and rapidly growing economy. We are strategically launching the projects in our focus markets with a strong pipeline of already launched projects and further planned launches as well as ongoing business development activities. Thank you for patiently listening. We will now open the floor for questions.

[Operator Instructions] We have first question from the line of Harsh Pathak from Emkay Global.

So first of all, on the upcoming launches, especially in the West region. So since there is -- the NGT order has come, and I guess there has been some clearance in taking clearance from the state government. So how do we see launches in the West region? And I see in the presentation, most of them are lined up in Q3 and Q4. How -- where are we on the approval stage? And when can we expect progressively the launches to come in?

Rajat, do you want to take it?

Yes, I'll answer it. Good evening to everyone. So as you rightly said that a couple of our launches were stuck because of the NGT reason. But now with the favorable order, we have started putting our applications for the MoEF approval. Understanding there is a long queue for all the cases that have been pending for last one year, we hope that our Andheri project and our Thane project, they both will be available for launch in quarter 4 or maybe end of quarter 3. So from an approval perspective, I think our files -- our approvals, our files are moving in the right direction. They're moving swiftly. And I think in a matter of two to three months, we should start getting approvals. But I think the launches, as you said, will probably happen either in the end of quarter 3 or in the early quarter 4.

I guess this will be phase-wise launches. So what is the quantum we'll be opening maybe phase-wise, if you can highlight some part of that?

Yes. I think amongst the three launches that we intend to do in the West region, the total inventory that we open for sale will be in the range of around INR 3,000 crores.

Sure. And so any -- I mean, in terms of hierarchy, so which projects can we see first coming, maybe would it be Bandra, the Breach Candy and maybe down the line, we'll go for Apna Ghar because we see there are a lot of launches lined up in those clusters. So how do we see the launches there in terms of...

In terms of time line, of course, not 100%, but in terms of timing that we predict, I think it's going to be Thane, followed by Andheri and then Pali Hills and Miami. That is how we are planning.

Sure, sir. And the Chembur projects, which we bagged very recently. So when do we plan to launch these projects?

So typically, I mean, the approval process takes time. We just started working on the design and the prospects of it. So from a launch perspective, we're expecting it only in the next financial year, maybe in quarter 2 of next financial year.

[Operator Instructions] We have a next question from the line of Deepak Purswani from Swan Investments.

Yes. Sir, firstly, just wanted to get the sense in terms of the launch pipeline in the Bangalore, I mean, if you can give a broader sense about the approval process there? I mean, how should we see the approval? I do understand in the presentation, there is a time line is given for each of the projects. But in terms of the -- at what stage of approval we are -- if you can give a broader sense for the project like Grand Hills, Bellandur, Hebbagodi, Kanakapura, and Westend?

Yes. This is Mallanna here. So I think in the document that what we have provided, we've already said that Bellandur is going to come in Q3 and the other one in Cochin, there is a project called Winworth Phase 2. We said it's going to come in for Q4, Grand Hills in Q4, and Hebbagodi Q3, Westend in Q3, Hennur Road probably Q4 or Q3. Mallasandra, that is our -- one of our project in Kanakapura Road, that should be coming up in Q3. And another Kanakapura road project, which is called Vajarahalli, should be coming in Q4. Also a small development. This is supposed to come in Q3. The issue here has been that the Bangalore Development Authority and BBMP were revising the bylaws for the setbacks. So which -- what it did do for us is we went on revising it, and there were several couple of revisions that was brought in by the authorities themselves. While we did our thing and when we went for the approvals and the approval got delayed further revision and further revision. And I don't see any challenges in bringing these things within this year within the time lines we have said, maybe one or two projects may go one or two quarters this way or that way, but we are committed to probably launch all these projects within this year. So as far as there are these approvals and all NOCs received on all properties that now we've got the NOCs. It's just a matter of authority approvals is what is pending now.

Okay. And sir, I mean, in terms of the demand environment in both of the regions, I mean, firstly, on the Bangalore side and secondly, on the Western region side, I mean, what is the kind of the absorption based on the current traction in the launches we are seeing? I mean what should be the broader absorption trend we are observing? I mean, we are expecting in terms of the launch pipeline and in terms of getting the new sales from these for the upcoming projects?

Rajat, do you want to talk about it from Mumbai and Pune, and I'll talk about Bangalore and South India.

Sure, sure. I think I'll just give. So I think the market remains very favorable, especially on any product, which is above INR 2 crores, and that's the segment primarily that we are catering in the West, especially in Mumbai. All the products that we have in the launch pipeline, be it Andheri, Bandra or Breach Candy and the Thane Phase 2, they're absolutely in phenomenal locations. The locations that customers are really, really looking for. We already started getting a lot of inquiries. So we remain to be very positive and the market is also very supportive in the segments that we are currently catering to. Mallanna, do you want to?

Yes, yes. So -- and if you really look at what's happening across, I think, in Deepak's introduction and opening remarks, he said about how the markets are doing. Nevertheless, See, if you look at all over India, 66,300 units were sold in Q2 of 2025, units launched were 72,200, which means that it's a very balanced market at this point of time. That is the number of units that are coming in versus number of units that are getting sold are almost in tandem. So if you look at 58% of these things are coming from Mumbai, Pune, Bangalore and South India, so which is exactly where we are operating. And particularly in Bangalore and in Chennai and in Cochin, what we are seeing is the demand is quite stable, and I would say that between stable and robust. because any of the projects that have been launched, the offtake is very good. The number of players have come down and whoever is the larger players, listed people players like us, we are really having -- taking a premium out of that. So it's a great market. And maybe my thing is that we had a good run over the last two years on the pricing side as well. Maybe pricing might have achieved its target and maybe it's going to be there. The prices cannot go at the same rate as what -- which went up in the last two, three years. But nevertheless, it will beat the inflationary numbers is my opinion. So it's a great market to be in.

Okay. And sir, I think Thane project, actually, we launched Phase 1 at the end of the March and early April. So if you can give a broader sense, what was the total launch pipeline inventory -- launch inventory during that time and how much has been sold? And how has been the response for that project?

So for the Thane launch, we launched close to around inventory around INR 300-odd crores. We've already sold around 20%, 25% of all the inventories at the launch. The launch was very, very successful. The price that we received was about INR 20,000 as a realization at the launch, which probably is one of the highest in that micro market. So most of the people who bought with us were more keen on the quality that Puravankara provides. And we continue -- we're very, very hopeful that in the Phase 2 and the new inventory that we get post these recent approvals, I think this launch can be a much, much more bigger launch and the numbers perspective.

Okay. And sir, if I understand correctly, earlier in the presentation, we were giving that the total GDV for this project would be around INR 3,500 crores. So eventually, what would be the time line where we would be looking out to monetize this complete project? And also, is there any -- is it going to be purely a residential development? Or is there going to be the mixed-use development in this project?

Yes. So just break up the question into two. So one is overall -- you're right, it's overall INR 3,700-odd crores GDV project. We're looking at launching the entire project over a period of 1.5 years. As I said earlier, it got a bit delayed because of the NGT issues. And now with that issue being over, we are quickly working on the approvals. So within a matter of 1.5 years, we should be able to launch all the towers in the project. Number one. Number two, yes, it's a mixed use. We have a sizable retail because it's right on the Ghodbunder Road, one of the most premium locations in Thane, and we are developing close to 3 lakh square feet of retail in this project.

Okay. And I mean, what would be the time line for the next project? And what would be the GDV we would be looking at? And in terms of -- and second question to it, what would be the retail area which we would be launching? And when would be the -- we would be looking out to launch that project, sir?

So as I said, I think this is a composite project with five towers. We launched the first phase, which was around half of a tower as per the last approval. So now we're going to be launching another two towers. And hence, over a period of 1.5 years, we'll be launching all the five towers. In terms of the retail area, we are not launching. We intend to hold the retail area. We are not looking at selling the retail as of now. We'll try and build a product which can lead to annuity income in the future. So right now, I think we are not opening any retail area.

Okay. And on the commercial side of the development, I mean, Gene, we were looking to monetize that project. I mean if you can give this broader update at what stage we are and where has been the progress about the monetization of that deal?

So as Deepak mentioned in his presentation just now that we'll be able to lease the entire retail area to IKEA. That's one of the most significant deals that happened in the last quarter at a rent of close to INR 150. Apart from that, as you rightly said, we are in the -- we are monetizing the -- we've already sold close to 15% of the asset so far. And right now, as we speak, I think there's a business which is going on. So we hope by the end of this financial year, we'll be able to monetize a substantial part of the asset.

Okay. Okay. And just final question from my part. If I were to look on the cash flow slide on the Slide #23, a couple of things. One, on the collection side, I mean, year-on-year, it has been flattish. I do understand because this time, there was only the sustaining sales and there has been no launches. But if you can also get a broader perspective, once the launch pipeline open, how should we see this collection number going ahead? And second part of the question is in terms of the -- there is also the line item exit or investment equity in nature to the extent of INR 322 crores can you give the broader reason what this amount pertains to what?

Yes. So your question has two parts. A, is you said that collections or operating surplus is a little less compared to the previous quarter. What are the reason and how it going forward looks like. So current quarter, as we have mentioned that there are less launches and that impacted our collection EBIT. However, the question of your second question lies in Slide #24. If you look at Slide #24, we have the balance collection to receive from the sold units itself, INR 4,643 crores. So that means we have sold the inventory and collections will be -- as we construct faster, the collection will come. So going forward, we see there is an increase in collection as we build faster, the collection will come in. The third point which you asked about the cash flow, which is INR 322 crores which is investment in equity in nature. So we are referring about the drawdown, which we have done from SBFC Capital, which is INR 282 crores, which is payable and enable structure and zero coupon bond. And we utilize this money in acquiring one of our -- which we announced Hardware Park property. And another INR 50 crores we have drawn from INR 361 crores. That facility is also payable in nature. And that is a basis of surplus hearing and IRR based against a zero coupon bond. And that money we have lied for our Bacon redevelopment project in Mumbai. That is why it has been classified as a separate line item.

And maybe one addition to the first point in terms of the cash flow reduction. Obviously, it is -- I think the contribution that would have come from new launches. Also, if you notice the handover, while the projects are complete, the balance 10% that we get on possession, right, those have gotten delayed on account of that e-Khata. So the projects are ready. as and when that e-Khata comes and we start doing the registration because most of these apartments are funded by banks. So they pay the balance 10% only on registration, so which have gotten delayed because of some change in government rules in this whole e-Khata business. So if we had handed over, for example, what we had targeted for this quarter, while on the business side, the project is complete. But from a handover point of view, because of the e-Khata, that possession has gotten delayed. So that's the second reason why you see that a smaller number.

And that also answers the question why comparatively, the revenue is lower, and that's one of the reasons why the revenue is lower as well. While the expenses remaining constant on the future projects, the marketing and general expenditures going up and the revenue not recognized despite the project is completed because of this e-Khata business, and that's the reason why you see that the revenue numbers being low.

So would it be fair to say now this issue would be behind us and incrementally, one on the sustaining part of this collection should improve. Second, with the launch of new projects, there would be a substantial increase in the collection going ahead? And secondly, this balance collection from sold units of INR 4,643 crores, what would be the time frame here we would be looking out for this collection of sold units?

So that is coming from our current ongoing projects, which is two to three years, we'll be to achieve the collection.

From a first question perspective, Deepak, we are expecting next -- mostly from Q3, Q4, you will have very, very strong collections. Q2 also will have something more. But Q3, Q4 will be the higher collections is what we expect because what Mallanna just suggested on the e-Khata thing with the glitches there, if everything goes right, obviously, everything will fall in place in the current quarter as it will actually get into the next quarter. But let me assure. That enhanced team here that we are very confident that whatever we think we should be able to do it, we will be able to achieve it during this year.

[Operator Instructions] We have our next question from the line of Chintan Mehta from Puniska Family Office.

I just want clarification. In press release, we mentioned about the surplus cash flow. The surplus cash flow also includes the redevelopment project, all of the redevelopment project.

This surplus includes all our ongoing projects, plus also our project phases of the existing project, which we have yet to open for sale and also the launch guidance which we have given, which is there in our launch guidance in this ICP, Slide #16. It does not include any business development, new business development or which we are signing. It's precisely from our inventory open for sale plus inventory not open for sale, plus the launch guidance which we have given, which is on Slide #16, nothing more than that.

So redevelopment is actually included in this is what I can confirm basically, which is your agar, which is Rajat was mentioning, we just got the NGT clearance, Miami and for Deccan. So those are the three redevelopments, which is part of the current cash surplus, which would obviously, once we launch it, over a period of time, we would be able to at least get those surplus in place.

But certain ones like, for example, what we just recently announced, Chembur, the 4 acres, that's not part of this. Those cash flows have not been included. So those are all additional?

Correct.

Chembur, and also we announced that the KIADB land that is 3,300 GDV, that is not included. We announced another one Panathur, Balagere in Bangalore. That was another INR 1,000 crores that is not included, and they're all there in the public domain. while we are actively pursuing quite a number of opportunities which are coming to closure, but these are the things which are not included.

There are about four or five projects where the transaction is closed, but have not been included in this cash flow.

Okay. And sir, what is the margin difference between these two owned land development projects and redevelopment projects?

So among the 10 in the South India that we have, nine of them are owned land and one is a joint development agreement. And I think rest of the three that are listed here are all redevelopment.

I just wanted the margin differentiate between.

So just to -- so even in redevelopment projects, Chintan, the margins are different for every project. But just to give you a perspective, I think the PBT levels that we would like to operate would be between 20%, 25% across our project portfolio. I'm talking about the redevelopment projects, yes.

Okay. And for own land, it would be higher than 35% or 30%.