Sobha Limited (SOBHA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Sobha Limited Q3 FY '24 Earnings Conference Call hosted by ICICI Securities Limited. [Operator Instructions] please note that this conference is being recorded. I now hand the conference over to Mr. Adhidev Chattopadhyay. Thank you, and over to you, sir.

Good evening, everyone. On behalf of ICICI Securities, I'd like to welcome everyone to the Sobha Limited call today. From the management, we have with us, Mr. Jagadish Nangineni, the Managing Director; and Mr. Yogesh Bansal, the Chief Financial Officer. I'd now like to hand over the call to the management for their opening remarks. Over to you. Thank you.

Thank you, Adhidev. Good evening, everyone. Sobha team and I are happy to interact with you for financial results of quarter 3 for this financial year '23, '24. As most of you would know, the investor presentation can be accessed from our website, sobha.com. In this call, we will briefly touch upon our last quarter and 9-month performance and provide an outlook for the last quarter as well. Firstly, on real estate sales, the first 9 months of this financial year was the best ever for us in terms of real estate sale value with an achievement of about INR 5,140 crores and 4.74 million square feet. In this quarter, we again achieved the highest ever quarterly sale value of INR 1,951 crores and 1.66 million square feet. This is the tenth straight quarter where the pre-sales have been better than the previous quarter. Our average price realization has also been the best ever at 11,732 square feet. Thanks to the increasing contribution of super luxury projects across all our operating fields. About 77% of the sales in this quarter has come from Bangalore due to the new launch. Also, 70% of this quarter sales have been contributed by INR 2 crores less ticket price due to the mix of the projects that are ongoing. We are optimistic that good sales numbers in this quarter too will contribute in the -- from the ongoing projects and new launches if they come in and will add to the momentum. Overall, for the year, we expect to go over 20% of the previous financial year value of INR 5,198 crores. Secondly, on the project launches. We launched two projects in Q3 of this year. Sobha Neopolis in Bangalore and Sobha Metropolis in Thrissur, both put together about 3.84 million square feet. We have a project pipeline of 16.77 million square feet in residential, we launched, majority of which we are aiming to do by the end of next financial year. For quarter 4 of this financial year, we hope to do another 3 million square feet of launches. Since they are back ended towards the end of March, there is high chance of radiation as well. Apart from minor delays, most of the remaining activities and time line towards launches are intact. Sobha's share in these forthcoming projects would be about 80%. In addition to this 16.77 million square feet, we are working on our next 20 million square feet launches as well, which we will start including in the forthcoming projects during the next financial year. Thirdly, on our cash flow. With the help of our best ever sales milestone achievements in projects, collections from long-standing contractual customers, our operational cash inflow has also been the best in this quarter at INR 14.93 crores. We have generated positive cash flow for the 13th straight quarter and reduced our net debt. We will continue to aim to generate positive cash flow during the growth phase as well. And directionally, we would like to continue to reduce debt. However, with more focus towards increasing the scale of our real estate operations, going forward, the net cash flow generation might be lower due to higher spend towards ongoing and new project opportunities. With this, I request our CFO, Mr. Yogesh Bansal, to take you through the financials and open the floor for questions.

Good afternoon, everyone. Our strong presale numbers with improved utilization demonstrate not only the [ indiscernible] of our brand, but also puts us in a strong position for the business. This robust pre-sales will play [ race with the water hole ] in generating even higher cash flows, enabling us to allocate resources [ specifically ] for a sustained growth. Once they come for recognition, these sales will boost our EBITDA margin in the future. Our constant focus on cash flow management has resulted in 13 consecutive quarters of quality net cash flow, we continue to generate improved operational cash flow quarter-on-quarter. During Q3, '24 quarter our collection resulted in overall a cash inflow of INR 14.93 billion with real estate contribution amounting to INR 12.93 billion, the highest ever in Sobha's history. We achieved a positive net cash flow of INR 97 crores during the quarter. Similarly, for the first 9 months of FY '24, cash inflow was INR 42.98 billion with real estate contribution being INR 37 billion, again the highest 9-month comparative period. To strengthen our future pipeline we invested INR 1.72 billion in first 9 months in land payments and achieved a positive net cash flow of INR 2.96 billion in the first 9 months. I would like to highlight that we have good visibility of marginal cash flow of INR 120.68 billion from our residential portfolio with INR 64.7 billion from ongoing projects and INR 55.98 billion from forthcoming projects. Realization of these amounts over coming years have facilitated to deploying more capital towards growth opportunities. Our net debt to equity is reduced from peak of 1.32 about 3 years back to 0.54 now. On the P&L side, for the quarter we recognized 5.21 billion of revenue in real estate with total income of INR 7.14 billion for the period of 9 months, total income was INR 24.27 billion. For the quarter, EBITDA was INR 1.03 billion (sic) [ INR 1.02 billion ] with a margin of 14.4%. And for 9 months, EBITDA was INR 3.01 billion (sic) [ INR 3.07 billion ] with a margin of 12.7% (sic) [ 12.6% ]. As indicated and explained earlier, margin continued to be due to the recognition of pre-COVID sales. Going forward, margins are expected to [indiscernible] once more decent [indiscernible] recognition. As on 31st December 2023, we had about INR 127 billion worth of RE revenue to be recognized. I would like to thank you once again for your participation. And now we can open the floor for the question-and-answer session.

[Operator Instructions] We have our first question from the line of Parikshit Kandpal from HDFC Securities.

Congratulations on a good quarter, especially on the pre-sales. So my first question is that you on the call said you are readying a pipeline of about 20 million square feet of projects beyond the existing launch pipeline which you have. So just wanted to get some more color on how much is the pending CapEx on land payments to be done in this? How much will be our share in this? How much will be JDA? So if you can give some light on that?

Parikshit, the 20 million square feet, the details of those, we would, of course, declare as we convert them into projects over the course of next financial year. But largely, these projects which we are planning to do will be in Bangalore, and those will be from our own land banks and a couple of lands that we have done in joint development for the years ago. So the mix would be roughly, again, there, the Sobha share should be over 90% and the majority -- like I said, the majority of the projects are for our base -- are based in Bangalore.

Does it include the Hoskote land, the 20 million square feet?

Part of the Hoskote land is included in this. Yes.

So how much would be that land if you can quantify out of this 20 million?

So that would be about -- it was between INR 8 million to 10 million would be from Hoskote.

And sir, in terms of development potential, what will be the value of this $20 million? Is it right to assume that average realization would be about 10,000 plus.

Yes. The average realization we are expecting should be similar to what we are currently doing in Bangalore, about roughly between 10,000 to 11,000 square feet.

This on top of this already 22-odd million square feet which you have given in the presentation, take the total to about 42 million square feet, which is 40,000 crores [ JDA ]. So these kind of numbers are we looking -- what kind of numbers on presales are we looking for the next year?

The planning for the next financial year has just started, Parikshit, that we will be able to sort of disclose and give a guidance probably in the next call.

Okay. Just the last question is on the 3 million square feet of launches which you said will happen during this quarter, which could be back ended around March. So if you can give a broad breakup in which locations are these launches and what could be potentially the sales which will be opened.

Sure. I mean, these -- although and we are saying it's 3 million square feet. We have a possibility of launch of about 7 projects, 1 project in Bangalore, 2 projects in Chennai, 1 project in Trivandrum and a couple of projects in Gurgaon and 1 project in GIFT City. So all of these are possible to be launched very soon. But given the uncertainty sometimes of [indiscernible] in the launches even if you can achieve half of these launches, then I think we should be able to do what we expected.

[Operator Instructions] The next question is from the line of Dhruvesh Sanghvi from Prospero Tree.

Yes. Congratulations to you, the entire team. Sir, any thoughts on why we are doing with the rights issue. Of course, it was suggestion from multiple investors like us, but it was the suggestion around then the price was probably INR 400, INR 500 and INR 600. It would be one of the few promoters in the history who would have sold at INR 500 and probably now buying at much higher rates in the rights. And that is why I just wanted to understand what is the rationale that they think and they want to put the money. If you can give us a broad indication, that is one. I mean I have a couple of questions after that, and I'll try to sum it up in the next one.

Sure, Dhruvesh. See there are a couple of things we respect to the rights issue. We -- like we have been indicating, right? First, with respect to towards our fiscal -- I mean, financial management, we want to be lean in terms of debt. At the same time, we would like to capture the growth prospects that are available in the Indian residential sector and which we think are long term in nature. Two is financial goal, which is less burdensome than the debt. So in that context, there are several services. One of the choice, of course, the rights issue wherein the promoters also can contribute towards this fund. And the visibility of this funding from the promoters has come in, in the last few months. And hence, their outlook is also very positive in the long term. And hence, they've -- given their long-term nature in terms of continuing commit capital deployment point of view, so price is not the biggest matter, but the ability to deploy the capital is far more important.

And a small related to this is by when we will have the context of the rights issue available? Any sense? I mean, is it going to be a couple of weeks or it will take 2, 3 months?

We are working the details out, and I think it should take another month or so to finalize those.

Sure. So -- and one last question about the overall growth because this is the first time we are hearing such big project lineup, including the Hoskote. Is it now safe that the bottom range for us should be 8 million, 9 million square feet and that too within the grasp of 1 to 2 years for the year, the presales, 8 million to 9 million square feet. Is that a fair estimate now?

So we will not be able to clearly say how much is the sales in future. But we clearly have seen in the last few years, we have consistently grown. They have done consistently about 4.9 million square feet FY '23, we did 5.65 million square feet and FY '24, we are already about 2.7 million square feet. So these numbers have been steady and we can increase price realization as well. So our focus has been for a steady growth. Now the -- one of the important things that we need to remember here is that these tailwinds for the sector has been fairly good in the last few years. So I think the long -- I don't know about the short term whether if there's going to be any dips. But in a long term from a goal point of view, yes, we should -- we are aiming for those numbers that what we mentioned. If it's going to happen in the next couple of financial years then we work towards it and if there is a -- macroeconomic environment supports it, then we should be able to aim for those numbers.

The next question is from the line of Puneet Gulati from HSBC.

My first question is on the margins. Look, there was an expectation that margins will now started turning around by the second half of this fiscal. What is the new guidance now? And what's still holding back the margins?

On the margin front, Puneet, this particular quarter, yes, you're right that we have guided that towards the end of the financial year, we will start looking at slightly better margins than what we did last financial year in the first 2 quarters. However, the one of the significant reasons for this particular quarter is also because of inability to recognize some of the projects where we have completed, but we have not achieved the OC because of certain delays in obtaining those. And this is not a tariff -- current characteristics as such in terms of delay, but it so happened that the OCs got delayed. And hence, which we could recognize far higher revenue and margins, we could not. And as you know, as the revenue recognition itself is subject to the overheads and the other costs are largely fixed in nature, and hence, the margins seem to be lower. But I think those we will still catch up from this quarter onwards.

Understood. That's helpful. Secondly, you guide for future projected cash flow. Are those cash flow calculations assume the current price realization? Or are they still based on what you've historically done maybe in previous quarters? Have you revised those numbers up?

You are talking about the marginal cash flow that we have showcased in our investor presentation?

Correct, correct. 4.7 billion of potential future number.

We -- typically, when we do that, then we are a little bit conservative in terms of our pricing and then we take our current pricing. And if there is anything upside that will come in once the project gets launched.

Just lastly, once again on the rights issue. Your balance sheet is quite decent at almost 0.5x net debt to equity. You're largely going to launch your own parcels of land next year. What's the need for equity then?

As you know, Puneet, the majority of our land bank has been -- is concentrated in a few cities. That particularly in Bangalore and some in Kerala. And so hence, if we are aiming growth in multiple other cities as well. And for that, we will need certain upfront capital and that's what we are planning to use it for. The cities that we would like to focus going forward, apart from, of course, at Bangalore, which contributes the most even today are where -- our NCR, in Pune and Hyderabad, like we have been saying but we could not make -- have good traction there because, again, the requirement of capital for growth there is reasonably significant. So balancing growth and investing has certain limitations. And that limitation we would like to overcoming by having an equity capital with us and seek opportunities in these cities. And also while we are doing this, we would like to also explore some new cities as well. So given the nature of our outlook, not just from the existing operating cities, but also enhancing our presence in our other non-Bangalore cities and new cities, we think that this equity capital will really enhance our capability to focus on long-term growth.

Okay. And you think NCR, Pune has ever would not be more JV will be more land purchase transactions.

Well, the nature of the transactions will continue to be mixed. Wherever we think that we can find good opportunities in an outright purchases or a joint development, we will continue those. I don't think the outlook of how we pursue the opportunities will change. But of course, this larger capital base available for us if something makes sense for us to do outright,We will -- that choice that we currently do not have will be available to us and we will exercise it based on the opportunity and the economics around it.

The next question is from the line of Parvez Qazi from Nuvama Group.

Congratulations for the great set of numbers. So a couple of questions from my side. When we look at this 3 million square feet proposed launches in Q4 or the 16.8 million square feet of projects in the launch pipeline, what would be our share in the project.

Both put together in the -- for the 16.7 million square feet that we have that -- our share would be roughly about 81%.

Okay. Sure. and including the 16.8 million square feet and the 20 million square feet projects that we are working on, what is the kind of let's say, approval costs, et cetera, which we might need to incur over the next 1 to 2 years to bring these 36 million, 37 million square feet project to the launch date?

The details of those, we are still working on Parvez. But largely, the land is paying for us. And if I have to clearly -- for incremental investments which I have to do and proudly acquire more land in and around where we already have, then it might incur additional outlook. But otherwise, these requirements for approvals or any sort of consolidation of remaining payments that need to be done for the -- for land and for the partners. Those I think we'll be able to cover from our -- from our operating cash flow.

And lastly, I mean, you mentioned we are looking at maybe increasing the land spend and entering new cities or go into cities other than Bangalore. Do you have any number in mind as to our annual land CapEX and maybe it will be about INR 200 odd crores in FY '24. Are we looking to, let's say, escalate it up to INR 500 crores, INR 600 crores on an annual basis going ahead? Is that the number in your mind or it could be even higher?

So that -- I'll not be able to give clear numbers at this stage. But if we have to grow in outside cities, outside Bangalore cities and if we have to look at a higher volume of projects -- sorry, higher volume of sales, then clearly we will need more investment in land going forward. And I think we -- it should be about that number, that what we have mentioned.

The next question is from the line of Abhinav Sinha from Jefferies.

Congrats to the team. A couple of questions. Firstly, the 3 million launch, I think you mentioned for fourth quarter. So does this include Karma Lakelands? And what is the product that we are looking at there now?

We -- like I mentioned, just in the previous question, we have about seven projects that we can launch in the next couple of months. So some of them might come in this quarter, some might spill over to the next quarter. So one of them is Karma, and Karma specifically, we are going to launch an apartment project some 31 acres and it's a golf course project with about 2 million square feet.

And this was supposed to be a DM project, right? What is the structure now?

The structure of the [indiscernible] continuous to be the same, which is the development management.

Okay. So ex of this, all the other projects would now be largely owned, right? Because if this is a 10%, 12%, then the remaining and you are saying 80% of your stake in the total pipeline? So...

Yes, that's largely correct yes.

Okay. Sir, second question is on the rights issue. So what are the time lines you're looking to deploy the money?

Like I said, Abhinav, the specific to rights issue matter, we are still working on the details in terms of the number of branches in which we can -- we would like to raise the capital and also deployment and deployment specifics. So we will be able to share those details in the next -- over the course of the next month or so.

The next question is from the line of Pritesh Sheth from Motilal Oswal.

Just firstly, on the forthcoming pipeline while I see not many cities being mentioned there, but we have had a very successful project launch in Thrissur in Sobha Metropolis. But I don't...

Hello, Pritesh?

The line of Pritesh got disconnected, sir. By that time we'll take the next question. The next question is from the line of Mohit Agrawal .

And sir many congratulations to your team for showing consistent growth in presales and also debt reduction. My first question is on your pricing. So if I look at the average realization over the last 2 years that has moved up by from INR 8,000 average to almost INR 11,500, INR 12,000. So if you -- can you give some color on what you mentioned about this premiumization of project, so that is one. And the other is the like-to-like growth that you would have taken the pricing growth you've taken in projects. So could you kind of bifurcate broadly what would have been the like-to-like growth annually and the premiumization impact?

Thank you, Mohit. Like you said, the price -- the volume growth -- sorry, the pricing growth has been from about INR 8,000 about 2 years ago to about -- I mean, this particular quarter is about INR 11,732, but for the first 9 months is about INR 10,800. So the main -- the reason for this increase is in the change in the mix of the project. As we are launching new projects, we were able to launch it at a price higher than the replacement inventory we make also. And that has yet to be increasing the pricing mix for us. So hence, to give a like-to-like comparison, it is very tough because the change in the mix is not from the same project, but from new projects. But if you have to take it -- a specific case study of certain projects. The -- like for example, we started selling one of our projects called SOBHA Brooklyn and SOBHA Manhattan. Both of them, we started around INR 6,500 to INR 7,000 and today, it is about INR 9,000. So that's still an increase of about 30%. So similar would be the case in -- similar is the price increases we have seen for a similar location projects where we launched -- completed the new one. So from a like-to-like -- from a pricing point of view, I said it's similar from INR 8,000 to INR 10,800. And the volume has been -- volume growth has been roughly about again -- around about 4.9 million, 5 million square feet to this year, if all goes well, we can probably do another 2 million to about [ 16 ] million square feet.

Sir, my second question is on business development. We've been talking about adding more projects. My question is are you comfortable with the valuations being offered. You mentioned that you want to expand to NCR, Pune, Hyderabad especially markets like Gurgaon, Hyderabad. Any thoughts on if you're going for outright or JDA, what has been the landowner expectations? We keep on hearing about land prices going up. So any thoughts on valuation? And do you think on these prices, you'll be able to make healthy IRRs.

Good question. When the market is up and very optimistic, the land prices are also -- also have -- there has been a raise in the land prices too. So that is where, I think, having capital with us and ability to chase opportunities where we can pursue opportunities which are not -- where the competition is lower, will be where we'll have an advantage. Whether we will be able to achieve the kind of financial objectives that we have whenever we do a transaction, that is something we think that we are optimistic, and we for that our -- the redevelopment process has to be far more robust and we take little bit of conservative estimates. It's a tougher market for us to do new deals. And that's why we -- I think we need to be a little bit patient. That is where probably our advantage comes wherein we already have a good pipeline of projects lined up. And hence, the additional to that having operational cash flow and capital without the rights issue will give us a vastest of kind of capital to -- and patience to pursue opportunities which will be profitable.

Understood. And sir, just a last clarification. In your initial remarks, I heard you mentioning that the spends on construction are likely to increase going forward. So does that mean that your operating cash flow margins currently on an average, which is around 20%, could that see a change? Or will higher collections kind of take care of the higher outflows as well?

So our focus is going to be a higher cash flow, okay? So higher cash flow once we get cash flow that only we are going to spend on construction. So our operating cash flow is going to be similar lines.

Sorry.

Construction outflows is also from higher cash flow.

So margins will remain stable, right?

Margin is going to remain similar.

What if I could paraphrase it. So essentially higher outflow in construction will lead to higher inflow because of the milestone achievements. And particularly in the last couple of not -- but in the last year, whatever we have launched the construction outflow for those will start coming in more in terms of structure completion. Those, we will be -- and some of the other projects where we will start doing initiates. So a combination of that, we think that more outflow will lead to higher billing for us for the sales and will lead to higher cash inflows. So it's a positive cycle of spend, spend leading to billing, billing leading to cash inflows and so higher cash outflow, higher cash inflow.

The next question is from the line of Pritesh Sheth from Motilal Oswal.

So first question is on your forthcoming project pipeline, while we have mentioned quite a few cities. But being at Thrissur where we have had a very successful project launch. It's kind of missing from that -- I mean, the -- next project is not mentioned there, while I assume we might have some land in the pipeline in Thrissur as well. So what's your plans in that market?

Specifically in Thrissur? Pritesh?

Yes, specifically Thrissur.

No. We have 2 ongoing projects there. One is Lake Edge and the second -- there are 3 projects, Lake Edge, Silver Estate and Metropolis. So we have just released -- in the last quarter, we have launched the Phase 3 of the Metropolis. So we have a good set of inventory there. And I think it might take a few quarters for it to be [ contingent ]. And while that is happening, we are looking at other opportunities in Thrissur as well.

So we do have more land in that market, right?

The current developable land currently we do not have. But there are certain land banks, which we are trying to get approvals upon. If that do not fructify, we are looking at other opportunities in Thrissur. Thrissur has been our home market for a long time, and we have developed one of the most iconic projects Sobha City there. which has both -- which has apartments, villas and one of our retail portfolio in that project. So we have a great brand name and recognition. So we will look forward -- we will continue to look for opportunities in having a presence there.

And this 20 million square feet of upcoming pipeline, you mentioned there is Hoskote, which is included there. Is there Hosur project also included in that pipeline? And if yes, how much would be the size in the first phase?

Good question. Hosur, we are in the last leg of obtaining the permissions there or resolving one of the issues which has been long pending. If we are able to resolve that, then we should be able to launch plotted development in our Hosur land. Remaining parts of the Hosur land holdings, we don't think that they are in developable stage. So as and when we find the opportunity we will we will monetize that. But otherwise, the remaining land that we have, which is a small core -- which is about 60-plus acres that we will do it as a plotted development.

Sure. Got it. And one lastly, on the contractual margins in this quarter. So last quarter, we had seen that improvement clocking 14% EBIT margins, 14%, 15%. It's come down to 3% now. How should we look at that going forward? This quarter was just an aberration or there might be some quarters where we still might go through the same sort of subdued margins?

It's more of an accounting treatment that has undergone this quarter. So wherein some of the revenue that we have recognized earlier had to be reversed because of short closing of the PO or we not continuing the project because of the ambiguity in the scope of the project. So that, I think, has led to the reduction in the margin. But the -- overall, in the contractual and manufacturing business, the manufacturing business continues to look very good in terms of opportunities and in terms of the margins that we can achieve through these opportunities. In contractual projects, the ones which we are -- which we had got in 2021 or so, those are still under little bit of stress. But otherwise, which we have started in the last financial year and this financial year, those look to have a good margin. So we recognize the revenue and close out the older projects, there will be a little bit of stress, but I think largely it's over.

Sure. Got it. So sustainable new margin should be somewhere between 10%, 15% for this segment?

It should be.

The next question is from the line of Himanshu Upadhyay from Buglerock PMS.

I have this question on capital allocation strategy for us, okay? And again, the capital raise what we want to do. I have 3 points and a question following it. Our network is around INR 2,500 crores, okay, which is the total capital on which this company has been built. And we want to raise something like INR 2,000 crores of incremental capital, which is a quite large based on what historically we had used capital, Okay. The first poIntuit . Secondly, in the last cycle also we invested huge capital in land bank and which led to high debt, low profitability also means. Okay, we may not use high debt but the profitability in IRR may be low. And we have not used that land also completely what we built in the last cycle that was point 2. And third, how do you ensure that capital, which we'll be raising now will get used more cautiously than in past? And what will you not do with this capital means? And finally, the timing of this capital raise because what we understand of where is that prices of land have gone up significantly in the last 3, 4 years. So can you give you complete idea on these 4 points? And how are you looking at the things? And how should I understand it as an outside investors in your company. In the last cycle also, we invested huge capital in the land bank. And the that capital land bank is also not fully utilized is what we understand, okay? And it also led to poor profitability in bad years. So the question is, how do you ensure that the capital which you'll be raising will get used more cautiously than in the past. And what will you not do with that capital, okay? And finally, on the timing of this capital raise, what we understand here is that prices of land have gone up significantly in the last 3, 4 years. So how do you be confident that this large chunk of capital will be able to be deployed in let's say, in the next 2 years, where we can get high IRRs or decent IRRs. So this is the question.

So Himanshu, to answer your question, the we got the gist of the question. So coming to each point, you are right that the -- our equity is about INR 2,500 crores, and we are raising the capital of about INR 2,000 crores, which is more than double of what we had raised from all the capital raises that we have done in the past. That -- in fact, that shows the -- our -- the ability to scale the company from where we are today. So I think that's a very positive kind of development wherein with that kind of equity base where we have reached and from this new capital base, the growth opportunities that are present for us seem to be far more, and considering that the current sustainable positive economic environment, we should be able to put this capital for the best use in terms of opportunities. Second is, yes, we did raise capital in the last cycle. It's not -- I'll not say last cycle, but last to last cycle. As a company, we have been operating for the last 30 years. And collectively, we have gone through at least 3 real estate cycles. And wherein, there have been multiple lessons that we have done. And one of the biggest things that we have done, particularly in the cycle where in 2008-9, was that we stopped -- we were earlier allocating capital for land banking. And that's something that we have said we will not undertake in future. And when you asked one of the questions, which is what we're not going to do, and that is precisely what we have not been doing in the past 10-odd years. And in the last 10-odd years, our ability to allocate capital and actually gain or convert the investments in the projects and in a profitable investment has been really good. And unfortunately, in some of the -- in the last cycle, which was the 2014 to '18 it was stagnant. And after the post COVID, the cost increase also had played a big role in terms of margins. But otherwise, we have been deploying our capital judiciously. And going forward also, we'll follow the same principles of prudence and make sure that the capital investment is done to achieve multiple objectives, both organizational and of course, financial.

And one thing, would you like to build your commercial portfolio significantly over the years?

That's also a good question. We have -- our focus has been largely residential, and that's what we are good at. And we would like to maintain that focus in the medium term. The reason being we think that there are enough opportunities for us to continue to pursue in residential. And at this juncture, where there is a clear visibility of good opportunities, I would rather focus on that rather than moving to another asset class which we are not as good. But at the same time, we will start experimenting a bit if the right opportunity comes by in a small scale. And if it makes sense, then we will look at it once we see through this residential opportunity asset.

The next question is from the line of Sabyasachi Mukerji from Bajaj Finserv AMC.

First question is on the -- in your initial comments that you said that will do a 20% growth on -- in FY '24 on the FY '23 number of INR 5,198 crores. 9-month FY '24, we are already up by 38%. Do you expect a very soft Q4 in terms of bookings?

This quarter sales is largely, again, like I said, is dependent on the -- our ability to do new launches and considering that the new launches are a little bit back ended. So I think that they can -- there is a possibility for us to not repeat the same sales numbers. But like I said, that it's completely dependent on our ability to launch. And that's where we would like to guide or we would like to keep all the investors informed. So that's something which is -- which can cause variance. Not that it is going to impact the medium term or short-term sort of objectives of the company. But when it comes to quarter-on-quarter, these are things which can come in or not. So that's a delta that is to be cognizant of.

Got it. Just a follow-up here. So does it mean that probably launches will get spilled over to next quarter Q1? And is it a fair assumption that '25 also, FY '25, we'll see a decent growth in terms of sales, 15%, 20%? Do you have guidance over that?

Sorry, Sabyasachi, currently for the next financial year, we don't have -- neither have a guidance nor we have planned it out in detail. As and when that -- we do that, then we'll be able to sort of discuss that.

Okay. Last one from my side is in our last quarter earnings call, you said that probably in the next 6, 7 or 8 quarters, we have a launch pipeline of 15 million square feet around. So does this remain intact? I mean, how are they planned in terms of launch pipeline, let's say, for the next 1.5 years, let's say?

Yes. I mean the last quarter's pipeline was about 15.3 million square feet. And this quarter, that has increased to 16.77 million despite launch of about 3.88 million square feet. So I think that's what I was mentioning in the initial remarks, we should -- we are aiming to launch majority of pipeline in the -- by the end of next financial year.

Majority of the pipeline by end of, let's say, FY '25 that you are mentioning?

That's right.

That was the last question for today. I would now like to hand the conference over to the management for closing comments. Thank you, and over to you, sir.

Thank you, Adhidev. I express my gratitude to all the participants in the call today. All the factors contributing to residential demand, which is high income growth economy, job creation in urban centers, migration to cities, higher income levels, optimism for the future, need for living in larger communities, steady interest rates would continue to play out in the long term. And we, as a company, has very strong foundation built by a dedicated team, which pursues the organization goals with passion. And hence, this -- both those coupled with our brand, operational and financial model, we are positioned to experience a steady growth. And I hope that we will work towards it and we are pretty optimistic about our future. While we continue to pursue our short-term goals, we have a very clear view of the long term as well. So with that, I thank you. Thank everyone, who have participated in the call. I hope we have answered some of your questions satisfactorily. In case you have any further questions, please do reach out to us. Thank you.

On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.