Puravankara Limited (PURVA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '27 Earnings Conference Call for Puravankara Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Savita Singh. Thank you, and over to you, ma'am.

Good morning, everyone. I, Savita Singh, on behalf of Dolat Capital, welcome you all to the Q1 FY '27 Earnings Conference Call of Puravankara Limited. I would like to thank the management for giving us this opportunity to host the call. Today from the management team, we have with us Mr. Ashish Puravankara, Managing Director; Mr. Mallanna Sasalu, CEO South; Mr. Rajat Rastogi, CEO of West and Commercial Assets; and Mr. Neeraj Gautam, CFO. I now hand over the call to the management for their opening remarks. Over to you, sir.

Good morning, everyone. I'm Neeraj Gautam, CFO of Puravankara Limited, and I welcome you to Puravankara Limited's earnings conference call to discuss our performance for the first quarter of financial year 2027. Our financial results, investor presentation and press release have been filed with the stock exchanges and are available on the company's website as well. Before I begin, I would like to remind everyone that some of the statements made during today's call may be forward-looking in nature. Please refer to the applicable disclaimer in our investor presentation. I expect a little bit of disconnect on the technical bridge. I would repeat once again, if there is any idea we would like to take away from Q1, it is that Puravankara has entered FY '27 with a stronger operating rhythm. Presales and collection grew, realization improved, deliveries accelerated and financial performance moved in the right direction. At the same time, we invested selectively in future growth and advanced our capital recycling agenda. The quarter, therefore, represents more than a set of higher numbers. It reflects better alignment between sales execution, cash flow and financial outcomes. I speak a bit about the economy. India remains one of the few large economies where domestic demand and investment provides a meaningful buffer against global volatility. Consumption, public infrastructure, services and manufacturing continues to support activity even as geopolitical tensions, energy prices and weather-related risk warrant resilience. In August, The Reserve Bank of India retained its neutral stance, maintained the repo rate at 5.25%, and projected FY '27 GDP growth of 6.7% and CPI inflation of 5.0%. For real estate, this is not a stimulus. It is something equally valuable at this stage of the cycle, a more stable planning environment for homebuyers, developers and the lenders. Coming to our operational performance for the quarter against the industry backdrop, Puravankara delivered presales of INR 1,439 crores, an increase of 28% year-on-year. Sales volume grew 9% to 1.36 million square feet, while average realization rose 18% to INR 10,589 per square foot. This balance matters. It shows that growth was not dependent on a single lever. We sold more space and achieved higher value supported by quality of our locations, product positioning and mix. Collection grew even faster, rising 40% to INR 1,199 crores. We also handed over 745 homes, representing 0.94 million square feet. These are important markers of operating quality. Presales created the order book, collections turned that order book into liquidity and handovers converted construction progress into completed homes and recognized financial performance. Our focus is to preserve this operating chain, maintain sales velocity without compromising price discipline, keep construction moving, collect on schedule and delivery with consistency. When those elements reinforce one another, growth becomes more predictable, customer confidence deepens and the economies of business improve. Coming to our financial performance. The stronger operating rhythm is visible on our financial results. The total income increased 63% year-on-year to INR 877 crores primarily supported by higher handover, EBITDA margin expanded to 25% from 15% in Q1 FY '26. The profit after tax was positive INR 25 crores compared with a loss of INR 69 crores in the corresponding quarter last year. One quarter does not define an earnings trajectory, particularly in a business where revenue recognition depends on completion, handovers and project mix. The significance of Q1 lies in the direction of travel and the operating ingredients behind it, higher sales, stronger collection and more deliveries and better profitability. We will continue to assess performance across this complete set of indicators rather than through any single reported number. Coming to our balance sheet and capital allocation. As on 30th June 2026, our net debt stood at INR 2,836 crores and net debt equity was 1.57x. Gross debt declined by INR 74 crores during the quarter. Cash and bank balances were INR 1,106 crores and our average cost of debt was 11.12%. These figures keep balance sheet firmly at the center of our priorities. We are clear about the work ahead, leverage and the cost of borrowing remain active management priorities. The principal levers are operational, and we are addressing them directly. Our approach has 4 parts: grow collection, fund construction to project move towards [ leverage ], refinance where there is a clear economic benefit and recycle capital from mature or noncore assets. We'll also evaluate new opportunities through the lens of upfront cash commitment, project level cash flows and return on capital. The proposed Purva agentic transactions illustrates capital recycling. During the quarter, we entered into a definitive agreement with ICICI Prudential AMC at an enterprise value of approximately INR 625 crores subject to customary adjustment and closing conditions upon completion the transaction is expected to release a capital to enhance our financial flexibility, allowing us to direct resource towards the areas where we see strong strategic value. Coming to our growth pipeline and business development. During the quarter, we added 4 opportunities across Bengaluru spanning approximately 41.93 acres with development potential of 4.23 million square feet with estimated GDV of INR 5,200 crores. The additions include joint development agreements at Sarjapur and Doddagubbi, together with land acquisition at Sanna Ammanikere in the North Bengaluru Airport corridor and Mandur in East Bengaluru, each strengthens our presence in the micro market and meaningful infrastructure requirement for a real demand rise. The JV structure also gives us capital efficient route to participate in that growth. Now, how we are looking ahead, we reiterate our FY '27 presales guidance of INR 11,200 crores. Q1 establishes the base for delivery will depend on the sequencing of launches, the timely receipt of approvals and consistent execution across the remaining quarters. Our confidence is anchored in the identified launch pipeline, available inventory and the depth of demand in our core markets. We intend to pursue the guidance without compromising pricing discipline and our capital allocation standards. Our agenda for the rest of FY '27 is, therefore, straightforward, translate the pipeline into launches, translate presale into collection, translate construction into handovers and translate operating progress into stronger cash flows and balance sheet efficiency. Puravankara has the brand market presence and development capability to build at scale. The task now is to make that growth increasingly valuable. Our ambition is not merely to sell more, it is to convert growth into cash, earning and durable returns for all stakeholders. Thank you for joining us today. With that, we are now open call for questions. Thank you.

[Operator Instructions] The first question is from the line of Deepak Purswani from Svan Investment.

Congratulations for good financial performance. Just wanted to check on a couple of things. Firstly, in the cash flow statement, there is a line item land payment to the extent of INR 574 crores. While I do understand there has been some business development in Q1, but just wanted to get the sense from the year perspective, how should we -- this line item going ahead?

See, as far as this land payment is concerned, as I mentioned in my earnings call, we have completed 4 acquisitions during the quarter in the Bangalore, which is about 43 acres and 4.23 million square feet of development of GDV of about INR 5,200 crores. As you noticed that we have not increased any gross debt for that. The cash and cash equivalent, which is lying at 31st March 2026, we have utilized the money, and this amount has been paid to completing these 4 acquisitions during the quarter. And going forward basis, as I mentioned and I think the rest of our colleagues will mention that we'll be strategically acquiring land banks?

Yes.

Okay. But from the outlook perspective, how should we see this amount for the already committed land and any future acquisition?

No. All I'm saying is that whatever the land commitment has done, where whatever we need money for the development of those land, whatever land we have acquired, there's no amount remain unpaid towards acquisition of land. All the acquisition has been fully paid as far as land cost is concerned. However, the money which we required for development of those land and that will be done as a cost of construction and development, not as a land payment per se. However, if we choose to do any new acquisition, which is beneficial for the company and then there will be some land payment.

Okay. And secondly, just wanted to check it out on the ICICI approved transaction. Since now this transaction has been culminated now, how should we see cash flow coming in? And should we expect the land debt coming down to the extent of INR 500 crores with this transaction -- going ahead?

That transaction, as we have given update to the stock exchanges, we have signed the definitive agreement with the ICICI potential. And we are in the process of completing the customary condition precedent of the transaction, and we are expecting that this should be happened during this month. As soon as that we complete, the consideration will be received. And the debt, about INR 250 crore debt sitting on that particular asset, that will be repaid out of the proceeds of that. And the balance cash flow, we will evaluate judiciously where to deploy, whether we should reduce the debt, whether we invest in the -- whenever not to increase any debt and any business development issue or you can use money as in working capital, which is the most optimum for the business needs. Accordingly, we'll take the decision on that.

Okay. At least INR 250-odd crores, which was lying in [indiscernible] that will go away from our books.

That is because it's part of that asset.

Okay. And coming to the launch pipeline, I think a few of the projects that is Westend, Hennur Road and Cityspire, Winworth, Kochi, these have been now close to the Q2 FY '27. Just wanted to get the sense, I mean, was there any approval-related issue? Or if you can just give -- share your perspective on these projects?

Yes, Westend -- Mallanna here. Westend is already -- we have already got the RERA approval, and we have launched the project, and we have received good number of EOIs on the project. And Hennur Road, because of what is going on in Karnataka at this point of time, in terms of the change in power and change in the ministries and change in officers has led to a little bit of delay in getting the approvals. Now I think we have the clarity with all the ministries that are already been sworn in, ministers being sworn in. And I think this week onwards that we should be having a little bit more clarity. In Cityspire and Winworth, and it's just the last step, only the RERA approval is pending. And so we are quite confident that it's going to be launched in this quarter as well. So there is no anxiety in terms of the launches. It's just a little bit of delay. And as far as the business is concerned, we have made sure that there are no impediments for getting the approvals or for the launch.

Okay. And there are some other large projects which are expected to be launched in the coming quarter, like Grand Hills, Bellandur, Mallasandra and Kanakapura in Bangalore and then Winworth 3 in Kochi. If you can share your perspective, I mean, where we are in terms of the launch pipeline there? Is everything is on track and approval process is on track? If you can share you a perspective on that one?

They are all on track. It's -- in fact, they are ahead of the curve at this point of time. The only challenge was, as I said, that there were some delays from the government side in having the meetings and concluding the approvals. Otherwise, all the projects that you mentioned, that is the Grand Hills and Balegere and Hennur Road and Winworth 3. Winworth 3, I already spoke about that is already in the last step. That is just the RERA approval is pending and maybe this week, we should be able to get that. So all projects are in line, and there is nothing to worry about.

Okay. And on the Mumbai portfolio front, similarly, if you can share your perspective in terms of the time line of the project, that is Miami, Deccan, Apna Ghar and Chembur project. Are we on track in terms of launching or where we are in the approval process at the current juncture?

Rajat?

So Miami, we got the RERA. We've already received RERA in the month of June. So I think Miami is already on for sale. Pali Hill, we have received 100% vacation now. So we'll apply for RERA by end of September. And subsequently, we're looking at a launch in between October and November. So that's also on track. Apna Ghar 3, sent for approvals and so is Deonar Baug, we're looking at a launch in quarter 4. So all the 4 projects that we have planned are absolutely on track, and we should have these launches between quarter 3 and quarter 4.

Okay. And finally, just wanted to double check on the guidance front on the presales guidance of INR 11,200 crores and debt reduction of INR 700 crores, how we are seeing this internally? And how are we seeing the demand environment in each of the major micro market that is Bangalore and Mumbai at current juncture, if you can share the perspective, please?

Yes. We gave the guidance INR 11,200 crores, and we've just spent 1 quarter so far and maybe another month after that. So we continue to hold the same numbers because as I said that the launches that did not happen in first quarter have moved to the second quarter, maybe 1 or 2 projects. Otherwise, everything is on track, and we should be able to reach the numbers that the guidance...

And what about the debt reduction of INR 700 crores, which we were targeting at the beginning of the year?

Our guidance remains hold. If you look at the Q1, though we have added 4 new projects. And despite that, we have reduced the gross debt by INR 74 crores, and we hold our guidance. We have just finished the Q1, and we hold our guidance as a debt reduction as well.

On this issue, it's a little bit dynamic, right? Basically, what happens is that there will always be opportunities for us to put money on. So it's just versus opportunities that we are pursuing. The cash flows are quite strong, but the opportunities to pursue versus reduction of the debt. So from time to time, I think that we will evaluate that. But at this point of time, as Neeraj said, we continue to hold the line that we will reduce the debt by INR 700 crores.

Okay. And finally, if you can share the perspective on the demand environment in major micro market, that is Bangalore and Mumbai region?

I'll just talk about South. So far, we have not seen any kind of slowdown or anything like that. It's business is steady, as I always keep saying that this may not be '24, '25 kind of growth that what we are seeing. But for the listed players, for the products which are well priced and the products which are well designed and which reaches customers, and they are all doing very well. So we have not seen any slowdown, whether it's sustenance or the projects that we have launched so far.

I agree with Mallanna. I think so is the situation in Mumbai and Pune. I think the top branded players continue to gain larger market share. I think that's evident from the numbers of the quarter. I think all the price points are doing well at this point of time. In fact, our project Purva Miami in Breach Candy has received a lot of encouraging response from the ultra-luxury segment as well. So from an overall holistic point of view, I think the demand remains sustained. We see that, in fact, the demand is going to grow up further in the festival period, the way it is going right now. And yes, I think the branded players will continue to gain a larger market share with regards to the products and pricing.

The next question is from the line of Akshay, an individual investor.

Sir, my question was regarding the margins. Like what margins are we targeting for the next 2 years? And also, if you could provide the split between the redevelopment projects, the new developments that we are doing and the joint ventures that we are in?

So as we reported EBITDA margin this quarter, 25%, and we continue to hold the margin guidance between 25% to 30% at a overall portfolio level. And depending upon the product mix between the plotted project or the JDA project and the own outright land project, redevelopment project, margins are slightly different depending upon the nature of the product. However, on overall basis, on a weighted average basis, we continue to hold the EBITDA margin of 30% in the range of 25% to 30% range.

Okay. And also, I wanted to know on the presales guidance, if you could provide that?

We have -- as I think we have mentioned in the last quarter as well in this quarter that has been created, we continue to hold guidance of INR 11,200 crores of the sales for the financial year FY '27.

The next question is from the line of Varun Kothari from White Knight Advisors.

I was just curious to know how are we planning to reduce the debt in next 3 years?

Yes. This is a question that comes quite regularly. So it's a question of, as I was saying in the previous question, that it's a question of opportunities, pursuing the opportunities versus reducing the debt. And so if you really look at what has happened in the last 1.5 to 2 years, and we have reached a portfolio size of around INR 58,500 crores. That is because of the investment that what we are making. The free cash flows either we can invest into the available opportunities, the best opportunities available, or we can reduce the debt. And so we are quite comfortable with the debt position we have. And in fact, that we have given a detailed report on how the debt has been put together. It has been deployed against the portfolio size and against the business. So -- so we do not have any such guidance towards saying that we are going to become 0 debt in the next 2 years or 3 years, and we think that the debt is an important part of the business. As we grow, this money will be required.

Fair enough. That answers my question. Now next question is, will we be able to achieve our presales guidelines of more than INR 11,000 crores this year?

Yes. I think we have given that guidance. And so we are -- so far, we are holding that line because we have just spent 1 quarter and the quarter is that whatever as per our AOP plans that internally we've had, and we have met that. And so we continue to hold that line.

[Operator Instructions] The next question is from the line of Rahul Shah from Eternal Capital.