Shriram Properties Limited (SHRIRAMPPS) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q3 and 9 Months FY '26 Earnings Conference Call, hosted by Shriram Properties Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Murali, Chairman and Managing Director from Shriram Properties Limited. Thank you, and over to you, sir.

Thank you. Good evening, everyone, and thank you for joining us today. We are pleased to share a significant breakthrough achieved during this quarter. The long pending commercial matter relating to our Kolkata land parcel has been amicably resolved through the conveyance of 42.37 acres of land to the government of West Bengal. With this settlement, the associated liabilities stands fully discharged. We'll walk you through the details of the development during the course of the call. Importantly, amidst the external challenges related to approvals and e-Khata, our core business operations have remained healthy and stable. Customer demand continues to be encouraging. Execution across ongoing projects is progressing as planned, and our sustenance portfolio continues to generate steady traction. Backed by a robust response to our FY '26 launches and a healthy sales trend in sustained projects, we delivered resilient performance for the 9 months ended FY '26 with a sales of 2.9 million square feet and a value of INR 1,691 crores. Looking ahead, with the multiple launches lined up and the key regulatory matters, now largely behind us, we are confident of a strong rebound in Q4, supported by project completions and revenue recognition. Our focus remains firmly on accelerating execution, strengthening cash flow generation and unlocking value across growing portfolio. With that, I'll now hand it over to Mr. Gopalakrishnan, CEO; and Mr. Ravindra kumar Pandey, CFO, to take you through the financial and operational details in greater depth. Thank you.

Thank you, and good evening, everyone. My name is Gopalakrishnan. I am part of Shriram Properties as the CEO of the company. Let me start with the presentation, which is already on the website. I hope all of you have got access to it. I'm going to use the presentation to deliver our messages during this call today. Let me start with the most important activity that has happened, most important development that has happened during this quarter. I'm referring to Slide 4. During the quarter, we have successfully completed and resolved all the outstanding issues that we had with the state with regards to parcel during the quarter. These issues have been resolved amicably. The disputed royalty payment obligation, which was provided in -- the details were provided to all of you in the past is there in our balance sheet as well. An aggregate liability to the extent of about INR 259 crores has been settled with no cash outflow. Prolonged and persistent efforts with Government of West Bengal has eventually yielded positive results. There will be no cash outflow from the company, and we have conveyed 42.37 acres of land from the land parcel aggregating to 314 acres that we currently own in Bengal. Government orders have been received. In fact, it was received in November and the administrative processes took some time, and we have completed the execution and registration of the conveyance deed in February 2026. As per order, we were also requested that the litigation initiated by Shriram Properties against the state needs to be withdrawn, and we have already initiated the process. With this, our obligations with regard to the noncompete fee or royalty, whatever way you all have understood in the past, now stands fully discharged and its impact will become zero going forward. More important than the development and the associated cash flow conservation, it also accelerates development and monetization -- accelerate not only the development of our projects, but also monetization of the surplus land. As you are aware, out of 314 acres of land parcel, we have ongoing projects aggregating to 5 million square feet, spanning across 48 acres. These launched projects, nearly 80% of them have been sold. Our strategic intent for this land parcel remains unchanged. As we have always said, we will develop close to 10 million square feet on our own and monetize the remaining land. We already launched 5 million square feet and 80% of it is sold already. Therefore, we will now focus on launching new projects, involving 5 million to 6 million square feet of development potential and with a GDV of almost INR 3,000 crores to be sold over the next 5 years. Simultaneous with this focus, we will also focus on monetizing the remaining land in the foreseeable future, thus unlocking significant value for the company. We believe the Kolkata site has the potential to unlock cash flows in excess of INR 1,500 crores in the next 5 years. Shifting focus to operational matters on Page 5. During the quarter, benefited from improving operating environment, but the strong recovery is still underway. We have got enhanced external visibility now. All the outstanding pending OCs have been resolved and they have been received. Fiscal is still stabilizing around the e-Khata and registration portal-related issues in Bangalore; however, we see no such external operational challenges or operational hurdles in other markets like Chennai, Pune and Kolkata. So overall, excellent environment remains conducive. Markets have remained strong. A lot of conversation, a lot of likely industry slowdown. We believe the slowdown fears seem unfounded. New launches are receiving good traction. Sustaining sales is strong, which clearly shows us or demonstrates to us that the customer purchasing is continuing with a good momentum, and therefore, we see the markets remaining positive for some time. Regional industry suffered predominantly on the administrative issues that all the residential real estate players have suffered in Bangalore, but all other markets remain very stable. Even in Bangalore, the situation around handover and registration, which is eventually resulting in revenue recognition, things have improved substantially from where we were in September, October to Jan, Feb has been substantial improvement. That gives us a better stability and better visibility on remainder of Q4. And therefore, we see our overall operating momentum to strengthen in quarter 4 and the past quarter or 2 would, we believe, be a transitory in nature. Our core operations have remained strong and the operating platform is efficient and well-oiled machine now. And therefore, we are confident of delivering our Q4 as well as the full year -- as well as the next couple of years towards our medium-term mission that we have set for ourselves. With this backdrop, let me move to a few operational -- a few more highlights of various [indiscernible] of our KPIs. From a sales perspective, early signs of stabilization that was seen in October got impacted a little bit. The recovery momentum was slow, and therefore, launches happened outside Bangalore, but Bangalore launches are still taking time. System has stabilized now only recently, and we believe the industry will see more launches coming up in the next couple of weeks. At Shriram Properties, the situation is almost similar. We are targeting for multiple launches during the remainder of this quarter, and I'll explain them in subsequent slides. Meanwhile, we focus heavily on the sustaining sales and markets have remained supportive, both on volumes and pricing. Our recent launches have done very well, and that gives us the confidence that the positive market environment and increasing launch supplies should help us clock a very robust Q4 like in the previous years. As all of you are aware, Q4 is usually the peak quarter for most real estate residential players and for us as well. We have lined up a minimum of 2 launches, a maximum of 4 launches that is likely to happen in Kolkata, Chennai and also in Bangalore. I'll explain them in subsequent slides. We, therefore, see a very strong Q4 coming back. With all the OC issues resolved, 4 OCs received, out of which 2 of them received in Q3. The third one was received towards the end of Q2. So all of them had some good impact on our revenue recognition. But given the e-Khata -- unstable e-Khata and registration system portal in Bangalore, in Karnataka, we believe things have now shown a good traction. And therefore, we will continue to work towards next 6, 7 weeks to achieve our handover volumes in excess of last year. I'll explain each of the metrics in detail as we go through. Just to -- Slide 6 primarily captures the impact of the handovers and e-Khata issues that I talked about. It's continuing for the second quarter, if I'm not mistaken. We've had some additional turbulence in Q2, improved a little bit in Q3 towards the end of Q3. Q4 has become more stable. We have about 380-plus units to be handed over from 4 projects that received OC during Q3, adding up to about INR 350 crores of revenue recognition potential. We have 2 milestones coming up, of which part of the OCs have received in Kolkata, 2 tower OCs are pending. Balance OCs have been received, which gives us a handover worthy units of about 1,490 units or 1,500 units approximately. Against this 1,900-plus units, we should be able to recognize about INR 800 crores of revenue in Q4, to a large extent, should have been handed over before end of this financial year. These are -- as I highlighted, these are just a temporary Q4, Q3 carryover issues. Overall, if you look at over the 9 months, if you look at Slide 7, the operating cash flows that reflect the strength of our core operations have remained positive. Overall operating inflows, which is the collection mechanism that we have has shown -- these are net collection to us, net of JDA, net of DM, net of landowner shares. INR 787 crores of operating inflows, reflecting 27% year-on-year growth. Our cash flow from operations have remained robust at INR 193 crores, reflecting a 23% growth year-on-year on a 9-month basis. Our overall project investments have also remained very strong. We have more than doubled our commitment towards new projects at INR 246 crores during this year so far. One of the highest levels of capital commitment that we made for building our pipeline in recent times, as you can see from the trend line chart below. On a combined basis, if I look at from FY '23 to 9 months of FY '26, we have generated an operating inflows of about INR [ 3,175] crores. Cash flow from operations have been in excess of INR 840 crores, and we have made capital commitments in excess of INR 600 crores during the last 45 months. Shifting focus to the next slide, which is Slide #8. reflecting the high investment that we have -- high capital commitment that we have made towards investment towards building pipeline. We've added about 2.8 million square feet during the 9-month period. Another 3 million to 4 million square feet is likely before we end the year FY '26. So what has already been added, they aggregate to about INR 2,900 crores of GDV. That's 2.8 million square feet equals to INR 2,900 crores of GDV during the 9-month period. As I said, we unlocked significant capital from operations. As a result of this, even with the large investments in pipeline, our debt equity remains conservative, one of the lowest in the sector at [ 0.30. ] Given Q4's historical strength, we are confident '26 on a robust and comprehensive note. I must say here, we believe we are on track for delivering revenues in excess of INR 1,300 crores, INR 1,500 crores range and earnings in the INR 90 crores to INR 100 crores range for the full year. So Q3 or 9-month earnings is one part of the story. Based on the visibility we have for Q4 now that we are almost at the half of Q4 is over, based on the registrations we have done and based on the registrations we have lined up for income recognition, we believe we should be ending the year with the full year revenues in excess -- in the range of INR 1,300 crores to INR 1,500 crores and earnings in the range of INR 90 crores to INR 100 crores for the full year. We have at least 80% to 90% confidence on reaching this number depending on how reliable the Bangalore registration system behaves, which we believe has improved now remarkably. And therefore, we should be able to -- with a great confidence we should be able to reach this number almost entirely. Now let me shift focus on some of the specifics of Q3 and 9 months. Slide #10 talks about 9-month performance with value growing by 5% year-on-year at INR 1,691 crores. Volumes are slightly lower at 2.86 million square feet. We believe we should be able to -- with the 2 to 4 launches that we have lined up for ourselves over the next 6 weeks, we believe we should be able to grow higher than last year's sales volume, maybe slightly lower than our earlier indicated annual number of about 5 million square feet target place, but we would be reaching -- we are fairly confident about reaching higher than last year numbers. On collections, we are about 12% higher at 1,150. On handovers, we are 20% higher at 2,117. We believe we are on track to deliver 3,200 to 3,300 homes for the full year as originally envisaged. Q3 numbers show a bit of a mixed trend. Sales values at INR 565 crores, sales volume at about 0.9 million square feet, collection INR 424 crores and quarterly handover at about INR 613 crores (sic) [ 613 units ], all of which compare -- reasonable compared to our performance last year same time as well as the previous quarter. Shifting focus on financial metrics, Page #11, talks about a 9-month revenue of INR 694 crores, 27% higher -- 27% growth on a year-on-year basis. Gross profits at about INR 184 crores, EBITDA at INR 83 crores and PAT of INR 22 crores. As I said, we have lined up a robust handover projects and the pipeline of handovers is very full. And we believe based on what we have done over the last 15 -- 45 days, and we believe we will be able to do over the next 45 days based on the registrations lined up, we believe we should be able to deliver a robust and -- very robust Q4 for our stakeholders. Slide 12 talks about some of the same factors that I mentioned over the last few minutes. So I'll shift attention to Slide 13, where we have talked about our pipeline additions. During the 9-month period, as I said earlier, we have added 2.8 million square feet. Accelerated pipeline efforts are paying off. 6 projects with 2.8 million square feet and a GDV of INR 2,900 crores has been added so far in FY '26, the details of which is visible on Slide 13. Five projects with over 6 million square feet potential are advanced stage of closure. 3-plus million square feet is at the stage -- and you should be hearing these acquisition completions in the coming weeks in the public announcements. Several projects are at an advanced stage of diligence and documentation. In all, we have close to 20 million square feet under evaluation at different stages. Our focus remains on Bangalore, Pune and Chennai in terms of pipeline addition and aggressive development focus on Kolkata with the resolution of the impediments recently. We remain focused on asset-light acquisitions, but the right balance is being made between asset-light as well as outright purchases for immediate growth. Slide 14 talks about the same pipeline at a different composition in terms of our own projects, JDA, JV and DM as well as ongoing in future. All I wanted to highlight was a table there on the right-hand side top, 18 million square feet of potential pipeline, which is not launched as yet, carry a GDV of INR 11,670 crores. So close to INR 12,000 crores of [ GDV ] is sitting in our pipeline. Our focus is on unlocking this at a faster pace across all markets so that we can bring these projects to market and start realizing the sales value potential. At this stage of talking about the pipeline growth, I must also say our launches have also done well, which is equally important like pipeline addition. So pipeline monetization, pipeline liquidation is happening successfully. We did 6 launches during the year, 4 new product launches, 2 new phase launches. During the quarter, we did the Skybloom Villa, which has far exceeded our own expectations. It's villa -- villa -- to the micro market that we are in, Uttarpara in West Bengal. And the product has taken off well, has received tremendous response, and we are very encouraged by the fact that this model can -- this product can therefore be extended to much larger land base given that now we have a completely hurdle-free development potential in Kolkata over 314-acre parcel, less what we have developed and less what we have conveyed back to the government. We also -- monetizing the small commercial space that we have in Kolkata. Simultaneously, we did launch an apartment -- new apartment wing called Shriram Springfield as well as we have done new product launch during the quarter at Chennai called Shriram Subham, a second phase of the project was launched. Overall, it has been a reasonable quarter 9 months from a launch perspective. But what I wanted to highlight is Page #16, summarizes the launch-ready pipeline that we have, barring a couple of projects which are still awaiting regulatory approvals, meaning RERA and plan sanction, plan sanction in one case and RERA approval in another case. Rest of the projects are under our control in terms of timing of the launches. We believe at least between 2 to 4 projects out of the 6 will get taken off from the ground to a launch mode before end of this financial year. We will also be soon adding a couple -- 2 more projects to this space where we are at an advanced stage of both acquiring an approved project as well as we are at an advanced stage of submission of plan for another project. So we have a very tight and busy launch pipeline for Q1 and Q2 as well. So we are very excited about what's in store for us, not only in the remainder of the Q4, but also for Q1 and Q2. By then, we believe the subsequent part of our pipeline will become launch ready pipeline. So a busy year ahead in FY '27 from a launch perspective. Slide 17 talks about the overall potential we have for handovers based on where we have received OCs and where we are either received e-Khata as well or waiting for e-Khata in Bangalore. In case of other cities, there's no concept -- the relevant approvals have been received, so that handover will commence fairly soon. So in all, as you can see from this column there, pending handover, 2,490 units will be available for a handover -- with us or it is getting ready for handover over the next couple of weeks. Slide 18 talks about some of the honors and accolades that we have received, including re-endorsement of our certification as a Great Place to Work with much better and higher ranking that we have got this year, which is well above mid-cap and small cap sector average has been far exceeded from a ranking perspective, which is an encouraging point to note that we are becoming much better organization from an employee perspective. With this, I would pause here. I would request my colleague, Mr. Ravindra Pandey, CFO, to walk us through the presentation on the financial performance and where do we see as an outlook. Over to you, Mr. Pandey.

Thank you, sir, for setting the context so clearly. Good evening, everyone. I will take a few minutes to walk you through our financial performance, cash flows and balance sheet position and also our outlook for the Q4 and the full year. Let me begin with the Q3 performance. As we are aware, the quarter was impacted by continued procedural delay, receipt of e-Khata and intermittent issue with the Kaveri online registration portal. Despite our best efforts operationally, these external factors led to deferment of revenue recognition, which in turn impacted reported numbers. That said, there are a few important positives. For Q3, revenue stood at INR 203 crores, reflecting a healthy 13% year-on-year growth. Gross profit came to INR 41 crores, up by 19% year-on-year. Margins were impacted slightly due to commencement of revenue recognition in project Sunshine in Kolkata, which is a relatively low-margin project, but overall project level profitability remains stable. EBITDA for the quarter was INR 13.1 crores. The year-on-year decline is largely attributable to the lower revenue base and higher operating expenses related to our Kolkata launches. Reported a loss of INR 7 crores for the quarter compared to profit in the previous year. However, I want to emphasize that, that this is a timing issue, not a structural issue. On underlying strength of the business is clearly visible. 9-month revenues from operations grew 51% to INR 627 crores and total revenue grew 27% to INR 690 crores. Gross profit for 9 months stood at INR 184 crores, up 40% year-on-year with gross margin stable at around 29%, which clearly reflects the strength and stability of our project portfolio. EBITDA for 9 months was INR 82.9 crores versus INR 113.7 crores last year. The softness is entirely due to deferred revenue recognition from completed projects, not due to margin erosion. Importantly -- by 16% year-on-year, reflecting disciplined capital management. PAT for 9 months stood at INR 22.4 crores. Had the e-Khata process moved in line with the expectation, both top line for 9 months would have been meaningfully higher. Since this is only deferment, we remain confident in our full year earnings. Our operational engine remains strong, margins are stable and resilience of the business is evident even in a disrupted quarter. Referring to the next slide, we just spoke about it. We'll move on to the next slide, consolidated cash flow. Let me now move to the cash flows, which, in my view, is where the real state of the quarter is visible. We have maintained a strong financial discipline throughout the year. In Q3 alone, we collected INR 302 crores, reflecting our sharp focus on milestone-led collections and execution intensity. We generated INR 117 crores of operating cash flow during the quarter, a significant jump sequentially. During the quarter, we repaid INR 67 crores of scheduled debt and invested over INR 100 crores into new business development opportunities. On a 9-month basis, operating inflow stood at INR 787 crores, and we generated INR 193 crores of operating cash flow. At the same time, we have invested nearly INR 250 crores into new projects over 9 months, building a strong and visible pipeline for the coming years. Importantly, while we continue to invest for growth, we are working to fast track approvals and mitigate the challenges we have faced this year. Our closing cash balance stands at INR 217 crores, giving us ample liquidity to support construction launches and new opportunities. Overall, cash flows are healthy, well managed and positioned to accelerate meaningfully in Q4 as registrations normalize. Moving to next slide, debt profile. Coming to the balance sheet. Our balance sheet remains robust and conservative. Net debt stands at INR 418 crores with a net debt-to-equity ratio of just 0.3x, well within our comfort zone and providing significant headroom for growth. Our cost of debt 11.1%, reflecting improved credit profile and disciplined management. We continue to enjoy A- positive outlook rating from CRISIL, which reaffirms our credit strength and governance standard. In summary, we have a strong balance sheet, ample funding capacity and the ability to confidently support our growth pipeline. Moving to the next slide, outlook for Q4 and FY '26. Prolonged approval delays and slippage in launch time lines did impact our earlier sales guidelines; however, we are confident that our full year sales will outperform FY '25, supported by a strong Q4 launch pipeline and improved regulatory momentum. Encouragingly, all other KPIs are broadly in line with the guidance given earlier. We expect to end the year with upwards of 4.5 million square feet of sales and revenue of around INR 2,600 crores. Collections are expected to cross INR 1,700 crores, reflecting healthy growth despite some moderation in launch collections. While deliveries commencing in Kolkata and strong Q4 handovers, we expect to deliver close to 4 million square feet during the year. On the business development front, with the Pune deal closure and additional pipeline additions under documentation, we are confident [ INR 4,500 ] crores to INR 5,000 crores of GDV during the year, strengthening our forward visibility. To conclude, while Q3 numbers reflect temporary external disruptions, the fundamentals of the business remain intact and strong. Our cash flows are robust. Our balance sheet is conservative. Our pipeline is expanding and Q4 momentum is clearly building. On behalf of the management team, I would like to assure you that we are fully committed to bouncing back strongly in Q4, delivering a comprehensive performance for FY '26 and carrying this momentum into FY '27. Thank you once again for your continued support. Now I'll hand over the call to the operator. And myself, along with our CEO and CMD will be glad to answer all your queries.

[Operator Instructions] The first question is from the line of Saumil Shah from Paras Investments.

Yes. Okay. So I mean, in last quarter presentation, we had mentioned about INR 420 crores of revenues were deferred due to nonreceipt of OC and e-Khata. And I think there were a total of 5 projects which got delayed. And now in this quarter also, out of that 4 projects still we are seeing it as delayed. So why is there so much of delays? Can you please help us understand?

Yes. So in Bangalore, they have migrated -- it's not a Shriram problem. You would have seen this in all the company presentations. I don't know how much disclosure they have made. So in Bangalore and Karnataka, they have migrated to the concept of e-Khata last year. And they have their own reason of why it is not stabilizing for so long. It seems to stabilize and then again goes out of control. And same is with their Kaveri 2.0, which is a registration portal like we all have in Maharashtra. It's going through turbulent times in terms of registration. So registration gets set up and then get canceled. So customers come and go. So that has been continuing till recently. Even now interruptions are there, but very few interruptions on a daily basis. But in the past, like till recently, it was a nightmare for most registration departments and most customers. So OC issues got solved. So we got all the OCs now. Projects have been lined up. And so this INR 380 crores, INR 350 crores or 380 homes and INR 350 crores is not only from the past. It is -- previous ones got liquidated as well as we got added the new projects as well. So it's a net outstanding as of date. So we have achieved some good progress in terms of registration. Otherwise, we would not have handed over 600-odd units. So it is happening, but it's happening at a slower pace in Government of Karnataka. It's beyond any industry bodies or any of our peer group's ability to fix this. So industry body is taking up with the government and they have assured stabilization fairly soon. We expect the current stable trend to continue at least for the remainder of the quarter.

So this quarter, I mean, almost -- sorry?

Other residential -- if you have seen the press release of other residential players, a lot of numbers are floating around on 2,000 homes pending. There are players in Bangalore have more than 2,000 homes listed player. I think -- so it's an industry -- Bangalore-wide or industry-wide problem in Bangalore players story. Hopefully, you can...

Okay. And how is this product shaping up? So we are almost halfway mark. So is it stabilizing or still there is a issue?

I think it is -- but it is far superior than Q2 and Q3 that we have seen in terms of registration process. That's why we are saying -- and in our context, out of the 1,400 homes or 60% of our handovers during this quarter coming from other cities. Kolkata and Chennai account for, I think, about 60-odd percent of our registration or revenue recognition. Bangalore still accounts for balance 40%, but the situation is far more better than what we saw worst was in Q2 and then Q3 was better, Q4 is far, far better.

Okay. So in this quarter presentation, if we are seeing you have mentioned that 7 projects with INR 800 crores of revenue recognition in Q4. So I mean, are we on track for that? Or we could see delays in that as well?

That's based on the confidence only, I said that we will end the year with INR 1,300 crores to INR 1,500 crores of revenue, which means a large part of this INR 800 crores will get recognized.

Because sir, last few quarters, we are seeing -- I mean, there is -- every quarter in our presentation, we are mentioning there is a delay of revenue recognition and the delay in -- I mean, it would be shifted to the next half or next quarter. I do understand our industry is such that there are possibilities for delays. But sir, why don't we do -- be on a safer side and commit for 6 months later only? And then maybe we do it early and surprise the investor community. So why don't we do the other round?

No, investor community is one part of the stakeholder different. Yes, we can underplay that. We will consider the suggestion. It is an unpredictable situation from an external perspective. So we can play that. We can underplay that. There's no big issue around it. So that's just one stakeholder, Capital Market will be one part of the stakeholder. There are other people watching this as well. Customers will feel [indiscernible]. There are multiple angles to it and there's a RERA angle to it and the handover time line. Irrespective of what happens to the governmental systems or registration system, RERA still remains a governing, right? Customers will seek other remedies under various other context.

Okay. Okay. And sir, on the Kolkata land, we have mentioned that we will be developing 10 million square feet and balance we will monetize. So that will be -- I mean, how much million square feet and the amount we could realize with this sale and by when we can expect?

Overall, the site has a potential of about INR 1,500 crores of cash flow, both from our own development as well as the monetization. Very difficult for me because we have gone through this long battle or long persistent effort to get to this situation. Difficult for me to put a time line on like a few minutes ago said we shouldn't be committing that without a degree of confidence. So I wouldn't be able to put that kind of number now on how soon we can monetize and all that because like it will get question next quarter, saying you said this and what happens in the progress. It's very difficult to comment, but I can say 3 to 5 years is the development time line. So monetization can happen faster, as you know. So maybe a 3-year window for monetization and a 5- to 6-year window for completing and handing over. You said 10 million, that's the total development we might do. Out of which 5 million is already in progress. Several of them are being handed over. So we should complete the construction and handover in about 5 to 6 years. 3 years for land -- surplus land monetization could be a good target. Maybe we'll try before the next analyst meet or next -- by the year-end call, we'll see whether we can give you a granular visibility on approximate time line for monetizing and launching new projects. So you are able to do an NPV of the cash flows, the value of that...

It would help us because monetization, how much value we can create. So that would be helpful.

Yes, sir.

And sir, my final question, our guidance on this 5.2 million to 5.5 million square feet. Now we have revised it to 4.5 million. So are we seeing any slowdowns or any particular reason?

We are not seeing a slowdown in the market. Whatever we are launching, we're getting sold. I'll give you 2 instances. We launched one project in Bangalore called Shriram The One Codename. It's called Songs of the Earth in Anekal. Within now about 3 months -- 4 months, 3.5 to 4 months, we have almost 75-plus percent is sold. And these are like a high ticket size. It's not a INR 40 lakh, INR 50 lakh, INR 60 lakh kind of product. So -- and similarly, West Bengal, when we launched, we tried a new product format in West Bengal at the cover page of this presentation that you see is the recently launched Shriram our villas. They have taken off -- this is a product which has not been tested in the micro market that we operate in Uttarpara in West Bengal. We've tried, and I think it has been a big success that large -- all the large villas. These are all like INR 1.8 crore ticket size from the apartments that we are selling are in INR 40 lakh, INR 50 lakh, INR 60 lakh ticket size. So a big transformation from -- the micro market perspective is a big transformation in ticket size, but they're all sold. Nearly all of our 4- and 5-bedroom inventories are sold within now about 3, 4 weeks of launch. So that's the kind of market is willing to absorb. It is the -- in Bangalore, Kolkata, Chennai and Pune. All 4 markets, we have seen a good traction. Even in Pune, we made meaningful progress during the quarter in terms of overall volumes sold. I think we are about 40% sold now. So I think markets are doing well. It is the ability to supply. And as I mentioned and as you rightly pointed out, there is a challenge for all of us to supply ready products or supply -- to the market, especially in Bangalore. So there is -- now things are improved after a bit of a long struggle between the industry and the regulators. Hopefully, the supply will pick up now. We are not banking on Bangalore launch right now. As I said, 2 to 4 launches for the remainder of this quarter -- remainder of this quarter. And we are banking on Kolkata, one more product to launch. We have plotted development. We have launches coming up in Chennai. And if all goes well, we would have another launch in Pune as well in the near future. So I think the markets are doing well. It's our ability to -- industry, our company's ability to supply and that's constrained by some external factors and that's what is showing lower numbers than market slowdown. I think market has misunderstood the trend because I saw for the last 4 weeks, there's a lot of talk about demand slowdown. I don't think that is -- we are not seeing that on the ground. Our partners in home loan businesses are also not seeing that kind of slowdown in home loan demand. So I assume on-ground trends remain positive.

The next question is from the line of Rohit Kumar from ADM Business Advisory LLP.

You mentioned that there is a 5, 6 MFS development potential. So may I know what is the expected IRR from these projects?

In Kolkata, you are meaning?

Yes.

Difficult to predict at this point of time because it depends on the timing of launch and the product and the pricing. We have certain assumptions in mind in terms of what products can be launched at what sequence. The timing will depend because it's a 5-year -- 3 to 5 years for launch of this 5 million to 6 million square feet. So it will be very difficult to project, but we will not do projects if it is less than 25% IRR in general. In Kolkata, because it's our existing land, we would imagine IRR will be significantly higher at current price points. But overall -- to see what is the site can generate, right, between the surplus land that we have and the projects that we are going to launch should generate about INR 1,500 crores of cash flow in 5 years' time.

Okay. Got it. And sir, my second question is to achieve 3x of revenue and 4x of profit, what is the company expecting the peak debt levels? What should we expect?

I will approach this question in another way. We are currently at 0.3. Our most comforting zone is about 0.5, not more than that. But towards reaching peak pipeline addition and towards reaching the revenue, we might intermittently on a short-term basis, we might go close to 0.7, but we would be very uncomfortable to go beyond that kind of number on a consol basis.

The next question is from the line of Karan Mehra from Mehta Investment.

Sir, following the Kolkata settlement, what is the quantum of surplus land now available for monetization? And based on current market transactions in Uttarpara, what would be the indicative price per acre there?

It will be difficult to comment on what the land price would be. Let me approach the question on the volume perspective first. Out of the 314 acres, we have utilized 48 acres for our ongoing projects. We have handed over about 42 acres to the government now. So roughly about 200-odd acres would be available for development, out of which there will be always areas to be utilized for roads, greens and water bodies. And therefore, we believe we should have -- beyond the projects that we have in mind, we should still have between 90 to 100 acres of land available in our hand. What would they fetch will depend on what the market can at that point of time will deliver. But it's always going to be a constant battle between evaluating, what is the per acre net realization of sales versus our own development. For example, the villa development that we have pursued now, we have launched about a month ago and has done very well. Contribution to us at the pretax level should be in excess of INR 7 crores per acre. Whereas if you don't -- whether we can monetize INR 7 crore per acre on entire surplus land not possible. So it will have to be a combination of a profitable, high-margin own development as well as a sale in the market. If you go to Uttarpara subregistrar data, publicly available land record data, you can see anywhere between INR 4 crore per acre to INR 5.5 crores, INR 6 crores per acre as well. So I think it will be a combination -- it's a portfolio, right? 300 acres cannot be an individual project. So it's a portfolio. So forward realization can be a lot -- more attractive than what the current prices were. So we currently see in the market between INR 3 crore and INR 5 crores per acre transactions happening. On own development, we can -- old -- historical development would have delivered less margin. I must candidly admit because the market was not developed at that time. And we have sold apartments in the INR 24 lakh to INR 40 lakh ticket size, INR 3,500 to INR 4,000 per square foot pricing. But today, we are selling at INR 5,500 per square feet pricing. So it evolves over a period of time. But overall, cash flow-wise, I remain unchanged on the expectation that of INR 1,500 crores from this surplus -- from the entire land bank that we have in Kolkata.

Sure. And sir, despite e-Khata and portal-related issues in Bangalore, are you seeing sequential improvement in price realizations in both Bangalore and Pune? And has pricing power remained intact? Or are incentives being used to sustain the velocity there?

So there are 2 questions there. I think the pricing and the e-Khata -- e-Khata issues are not really related to the current market condition. That's just a customer handover and income recognition for the residential players. I don't think it would have an impact on pricing capability. But market trends are conducive. If you are saying, will the pricing be going up like pre-COVID -- post-COVID 15%, 20% a year, I don't think so. Will it -- will the price be moving reasonably? I would imagine, yes, for the next couple of years, you can see anywhere between 5%, 6%, max 8% kind of annual increase in prices that we are seeing on the ground. We have seen same product, our own projects, we are able to move quarter after quarter, we are able to increase the prices by 1%, 1.5%, 2%, depending on the micro market. So there is a price -- sequential growth in pricing happening for the existing projects. New launches are being tested and priced at a very nice sweet spot, combination of both market conditions as well as the product quality. The product that we launched last in Bangalore was in Q2 end was called Shriram The One Codename. Prices are what we achieved, I think we have achieved about INR 7,350, INR 7,400 per square feet average. That is in excess of what we initially thought of, significantly higher than what we underwrote the project. So prices are doing well, but it is not likely to be 15%, 20% or 15% kind of annual growth rate that we saw in the post-COVID spike.

The next question is from the line of Sunil Jatakia from B-Fly India Opportunity Fund.

Congratulations to the management on amicable settlement in the Kolkata land issue. So my question related to the Kolkata land. Out of 314 acres of land, 43 acres goes to government, 48 for the ongoing project, another 50 acres towards a new project. So we left around 170 acres, 175 acres of land. Sir, in that, how much goes towards the infra development like road and water reservoir and what you have to develop, how much goes for that? -- you said is going to be around 90 acres, 100 acres, right? So is it 70 to 80 acres goes for the infra development? Is that the right understanding?

The infra and the existing water bodies all should take roughly about anywhere between 50 to 75 acres of area. So therefore, 90 to 100 acres, a developable area, post all of this that we have rightly pointed out. Our own development ongoing minus government, minus new projects, minus infra, hoping we should have 90 to 100 acres.

So this 90 to 100 acres, you want to monetize, right? There is no plan of development in that. You're already developing another 50 acre for the worth 5 million to 6 million square feet, right? So this monetization is going to happen within 3 years' time. Is that the right understanding? You quoted somewhere earlier?

Yes. We think the monetization will happen in a 3-year period. As you know, in large project, it's very difficult to put a -- freeze the numbers upfront. Yes, currently the 100 is the surplus beyond what we have thought about as a development, which is basically 2 apartment complex and plot development. If I do all of it, the50 acres get utilized. So therefore, we think 90 to 100 acres will be a surplus. I think circumspect or opportunistic in terms of if the per acre realization of -- quicker turnaround like a plot or a villa can generate per acre -- more than [ FSI, ] sale per se, then we should be open. We should -- ourselves into saying I have committed 90 acre sale, I have to sell 90 acres. Because if you look at a warehousing or a data center kind of business model, they will not be paying you more than INR 4 crores per acre. They can absorb volumes. But then -- you have done in villa, it can be INR 6 crores, INR 7 crores per acre contribution. So we have to really -- in terms of timing of cash flow versus actual per acre cash flow that can come, right? NPV at the end of it. So you have to give us some time through all of this. But primarily, what we are seeing is we will complete this 6 million set of our own plots and apartments. Maybe we can come -- think about a new product versus land monetization as and when the opportunities arise. But you can take that as a commitment that over a 3-year period, surplus land should be monetized. Over a 5- to 6-year period, this development will be complete. So we will be completing the entire site in about 6 years, hopefully.

Sir, you quoted INR 3 crores to INR 4 crores for data center guys and maybe INR 6 crores, 7 crores, 8 crores per acre for land development -- villa development you said. So maybe you can take a figure of, say, INR 4 crores, INR 5 crore acre and -- is it a right assumption to assume like INR 500 crores or INR 600 crores of value can be realized out of this surplus land, INR 500 crores, INR 600 crores? I'm just saying a ballpark...

It can be much more. We are also evaluating how the villa project, which we launched, tremendous response. In fact, ticket size from INR [ 40 ] lakhs in the location, we -- I mean, discovered it's about INR 1.5 to INR 1.8 crores. So based on -- realign ourselves for being villa. So easily whatever the numbers you talked about it, we'll be able to realize.

Okay. Sir, another question on the numbers. Basically, in terms of our numbers, we have gone nowhere, in terms of sales volume, we were at the same level what we were in FY '25. Sales value, again, same collection, same, handover same. In FY '26, there is no growth as such going by this parameter. So where do you stand on your FY '28 mission, what you had conveyed sales value of INR 5,000 crores, revenue of INR 2,500 crores to INR 3,000 crores and earning of around INR 250 crores or so. So where do you stand on that? Now 2 years is left for that?

So one year has gone. We see the other way. It's always the half glass full. So we have one year of journey. And I would probably reserve this question -- reserve my answer for this question till our Q4 results, then you would see with more credibility and confidence as to is there a growth or not. I wouldn't like to comment on. We don't think the metrics are stable or staying stagnant. Yes, sales volume has not been up to what we thought about. But there are factors which is within our control. There are factors that are outside our control. Like it is like a capital market or fintech. There's an expectation you have and reality someway hits you in a different way. And does it mean that we all pull out of equity immediately? I don't think so. Do we expect the equity markets to go up over a 3-year period? I would imagine so. Like that's something similar. Quarter-to-quarter, we can't really keep -- it's not a manufacturing form where everything happens on a 97% capacity utilization, stable quarter over quarter. So I think this volatility will continue, will be there this year, will be there in the future also. Are we moving year-to-year? Are we moving ahead from a negative earnings in '22, we have come all the way to INR 77 crores last year, and we believe I told you that we are looking at anywhere between INR 90 crores to INR 100-plus crores. And in terms of revenue, we have said we will hopefully be the INR 1,300 crores, INR 1,500 crores, which would be almost like 50%, 55% growth year-on-year in recognition. So I would have more -- I would remember and I would request you to join, and we will have an offline conversation otherwise to talk about how we'll reach there at that point of time on next quarterly results, is only 45, 60 days away. Let's reconnect this topic, and you will have a much better...

So I was talking from Kolkata land issue context because it's been resolved now. So I thought it's may be achievable with the help of monetizing this excess land in 2 years' time. I thought ultimately, revenue and earning -- so basically, with the -- we still have a 2 years time for that. And with the monetization of land, I think revenue and earning numbers can be reached this what you have targeted for '28. So I was -- my question was in keeping in that context in mind.

No, no, I appreciate. I appreciate and I think there's a positivity to the approach that you're having. What I'm saying is from a core operation wise, if you look at the number of projects that we have added are adding, look at the pipeline and look at the pricing, right? We used to sell an average about INR 5,500 crores, INR 6,000 crores until recently, right? Today, we are -- all our new projects are getting to INR 6,000, INR 7,000-plus kind of ticket size. Therefore, the revenue faster than the volumes. That is point number one. Second is as the pricing goes up, the costs have been under control. So your margin profile will also change. It's changing real estate. Real estate, please don't look at it on a quarter-to-quarter margin profile. You see whether annually are they growing from a margin perspective. You would see from our perspective, we are confident that we will be there. So I think monetization is one part of the game, which I don't know all of them will have a kick in, in FY '28, which is our end target for the medium-term vision that we have taken for ourselves. With our full contribution from the monetization also, if you look at the pipeline -- the kind of capital that we're committing on pipelines, right, should translate into new launches, new volumes. And so that's where we get our confidence from. We remain fully confident, not just committed. We remain confident of reaching our milestone. Yes, there will be some variations will be there, but it is unlikely to be anything significant or material at that point of time.

The next question is from the line of Rajesh Agarwal from Moneyore.

Sir, my question was on Kolkata land. I think more or less it is answered. What I have understood, we can monetize 100 acres of land, which can fetch us INR 4 crores to INR 5 crores per acre without development. This is before tax?

Yes, sir.

Okay. And balance land will develop, which will have a GDV of value of around INR 3,000 crores?

Yes.

Okay. And in government, how we have settled in the view of that, we have given them some 42 acres of land?

Correct. Should have gone up. So we...

So they have settled at a very less price than 42 acres maybe INR 3 crores, INR crores acre, which is around INR 140 crores, INR 150 crores?

No, sir, if you have seen in the balance sheet of last year, this liability was estimated around INR 249 crores.

Okay. Okay. So I think they've agreed to settle for less. That is what I have understood..

Per acre is almost INR 6 crores now.

Okay. INR 6 crores. No problem. And sir...

If I can supplement, I don't know what they would have thought about. Either they've taken a liability reduction or they have taken a per acre valuation very -- it doesn't matter us. For us it's a set off at 42 acres and therefore, liability is discharged. What assumption they had, I don't know.

Okay. Sir, 3 years, can we sell the land in next 2, 3 years?

We are targeting monetization. If it is monetization, 3 years will be fine. As Mr. Murali pointed out to the earlier call -- earlier question, it's a dynamic situation, right? If the opportunity exists for like when I say 5 million, 6 million square feet, we are thinking of plot development and 2 apartment complex like we have done in the past, right, Grand One, Grand -- Sunshine, like that, there are 5 or 6 names that I can roll out. Really given us a new dimension to the whole story on a per acre contribution perspective. But it may not give you that kind of volume, right? The villa cannot absorb -- you cannot sell entire 100 acre into villa. So it is a weighted average mix that we are talking about. What should be the weightage is what he pointed out that we are still working through and thinking through. But there is a large capital available -- large unlocked value available, which I think will get reflected in our company value.

Understood. Sir, suppose -- just a hypothetical question. The balance land if we don't monetize and we join with a local developer or a developer of repute, so the land monetization may be much more the value of the land monetization...

That is also monetization. When we say monetization, it does not mean we have to sell it only to warehousing -- joint development where we are not in the operation and somebody else is giving us the revenue.

Okay. And sir, the last question, are we facing the same issue in Chennai also in Bangalore also for the regulatory approval of e-Khata or whatever?

Chennai, Pune and Kolkata have no such instances in our knowledge. All our projects are from an approval perspective or -- there is no e-Khata there, there is patta which is a different name for it. But that system stabilized long ago. So everything goes through the system, right? Income tax department went through software problem -- like that. So they don't have this issue now. Bangalore is going through the learning curve. There's no big...

It's a local Bangalore issue, whatever, Karnataka issue.

We don't have issue In Kolkata, Pune and Chennai.

The next question is from the line of Saumil Shah from Paris Investments.

Sir, just one bookkeeping question. This INR 250 crores of liability, which will be knocked off from our balance sheet. So will this increase our reserves and increase our book value or there will be no impact and it's just an accounting entry?

No, it may have some impact on the reserves eventually, but it's a gross liability and gross assets getting knocked off. But there will be some depending on -- we are still working with our statutory auditors, GT, Grant Thornton on the actual treatment of this. And if there are any surpluses, it might get eventually flow into reserves and surplus. It's a knock off against both sides of the balance sheet, but there may be some small difference in value, which may get added to reserves and...

As there are no further questions from the participants, I now hand the conference over to management for closing comments.

Thank you, everyone, for joining us on this call on a Saturday afternoon, Valentine's Day. I appreciate your interest in learning and listening to our perspective on the performance and the outlook. We would like to give you comfort and assurance that we believe the temporary disruptions are over, and we will end the financial year with a fairly robust financial performance and look forward to explaining our full year performance and the outlook at that point of time for FY '27 in the next -- in the interim, if you need any data, any information, please feel free to reach us directly or through SGA, our IR partner and look forward to connecting with you all again in another conference call fairly soon. Thank you.

Thank you, sir. On behalf of Shriram Properties Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.