Sunteck Realty Limited (512179) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Sunteck Realty Earnings Conference Call for Q2 and H1 FY '26. We have with us today Mr. Kamal Khetan, the Chairman and Managing Director of the company; Mr. Prashant Chaubey, the Chief Financial Officer; and Mr. Abhishek Shukla, the Vice President of Strategy and Investor Relations. Please note, this call will be for 30 minutes [Operator Instructions] This conference call is being recorded, and the transcript for the same may be put on the company's website. [Operator Instructions] Before I hand the conference over to the management, I would like to remind you that certain statements made during the course of this call may not be based on historical information or facts and may be forward-looking statements, including those related to business statements, plans and strategies of the company, its future financial condition and growth prospect. These forward-looking statements are based on the expectations and projections and may involve a number of risks and uncertainties and other factors that could cause actual results, opportunities and growth potential to differ materially from those suggested by such statements. I would like to turn the conference over to Mr. Khetan, the Chairman and Managing Director of the company. Thank you, and over to you, sir.

A very good afternoon, and happy Diwali to everyone, and thank you for joining us today. I would like to take you through the key development for this period. We achieved yet another good presales performance of INR 7 billion in Q2 of FY '26, representing a year-on-year growth of 34%. On a half yearly basis, our presales has strongly grown by 32% to nearly INR 14 billion. The growth in presales was driven by a project, both in uber luxury and premium luxury segment. We are confident of achieving similar growth for the full year of FY '26. Now on the cash flow front, we have generated a strong net operating cash flow surplus of INR 2.6 billion in first half of FY '26, a growth of 35% year-on-year. This has enabled us to maintain our net debt equity at negligible levels of 0.04x despite the strong investments and business development. We have invested INR 4.3 billion in first half of the year in business development compared to INR 1.8 billion for the full year of FY '25. This demonstrates that we are committed towards expanding our development portfolio. In the first half, we have added 2 projects in the western suburbs of MMR. The first one is large redevelopment project at Andheri near Western Express Highway, with a GDV value of INR 11 billion. And second one, in joint development at Mira Road on Western Express Highway, with GDV of INR 12 billion. Now I would like to share about our latest by invite only, a real estate lifestyle brand, Emaance. Emaance is a new word actually authored by Sunteck that unites magnitude and magnificence and immensity with indulgence. Through this brand, Sunteck aims to take the luxury living to the next level, and sets new benchmarks that the Indian real estate market has never seen. The inaugural portfolio under the Emaance includes our marquee project of Nepeansea Road, which will be the most luxury and the exclusive residential development of the country. Now last but not the least, on the sustainability front, the company has been awarded coveted 5-star rating by Global Real Estate Sustainability Benchmark, GRESB, with an outstanding score of 99 out of 100 in 2025, a significant 3-point improvement over the previous year, highlighting the company's strong focus on environment, social and governance excellence. I shall now hand over the mic to Prashant Chaubey to take you through the financial performance of Q2 of and H1 FY '26.

Thank you, sir. Good afternoon, everyone. I trust you had the opportunity to go through the -- our latest results and the investor presentation, which are published on our company website and the stock exchanges. I would like to take this opportunity to share a brief update on financial and operational performance of quarter 2 and first half of FY '26. The key details are as follows: we sold INR 702 crores worth of area in quarter 2 FY '26, which is a 34% growth over quarter 2 FY '25 of INR 524 crores. During the first half of FY '26, we booked presales of INR 1,359 crores, registering a growth of 32% over H1 of FY '25. Collections for quarter 2 FY '26 stood at INR 331 crores, which is a 24% growth over quarter 2 of FY '25. While for the first half FY '26, collection stood at INR 682 crores, a growth of 12% over H1 FY '25. The strong collections have resulted in a net operating cash flow surplus of INR 258 crores, which is a 35% growth over H1 of FY '25. On the profit and loss front, operating revenue stood at INR 252 crores for quarter 2 of FY '26 as against INR 169 crores in the same period last financial year. EBITDA stood strong at INR 78 crores in quarter 2 of FY '26, 108% growth over quarter 2 of FY '25 EBITDA of INR 37 crores. EBITDA margin stood at 31%, up by 8.73% on a year-on-year basis. We reported net profit of INR 49 crores, which is a 41% growth over quarter 2 FY '25 net profit of INR 35 crores. Net profit margin stood at 19%. On a half yearly basis, operating revenue stood at INR 441 crores as against INR 485 crores in the same period last financial year. EBITDA stood strong at INR 126 crores, 83% growth over H1 of FY '25. EBITDA margin stood at 28%, which is up by 1,433 basis points on a year-on-year basis. We reported a net profit of INR 82 crores, which is a 44% growth over H1 FY '25. Net profit margin stood at 19%. Net debt to equity stood at 0.04x. Thank you. With this, we open the floor for questions.

[Operator Instructions] First question comes from the line of Pritesh Sheth with Axis Capital.

Firstly, Diwali wishes to everyone at Sunteck and their respective families. My first question is on -- I think we are seeing a very steady scale up in terms of presales over the last -- quite a few quarters. So congrats for that. Question is on the collections. I know we were facing some challenges in terms of execution and all. But what would be the exact time line of improvement in collections going ahead? Will it -- will we see the scale up this year onwards or probably sometime next year is when we expect? That's my first question.

Pritesh, we have registered a growth of 24% in quarter 2 FY '26 on a year-on-year basis. And as we progress with deliveries of our projects, we continue to build on the momentum. Moreover, all our projects are construction linked, and we book the collections accordingly for all our ongoing projects. From our ongoing and completed projects, our collection efficiency for the first half of FY '26 stands at 80%.

So Pritesh, collections, you will definitely obviously see further improvement as the new projects, like the many presales are coming from the Nepeansea Road. So we all know that and from the luxury. So it will catch up for sure, and you may start seeing that catch up in maybe the last -- Q4 of this financial year and definitely in the next financial year for sure.

Sure. So launch of Nepeansea officially would be Q4 of this year or Q1 next year?

So if you see, we are already doing the sales for the existing customers and all, and we have done the substantial sales there. So official, official launch, yes, we are looking definitely Q4.

Sure, sir. Just on the second one, we did INR 500 crores of pref issue recently, and we have seen our BD activity also going up since last, I would say, couple of quarters and even more. How should one think about it going ahead, whether this capital that we have raised would largely be utilized for unlocking the existing business development that we have done or if we would continue to look for new projects as well, yes.

So Pritesh, definitely, obviously, we don't want to definitely slow down our BD activity. But at the same time, we were seeing that there will be a lot of requirement of the funds, which will be required in the Nepeansea Road and Dubai as well as commercial building of 5th Avenue plus the new business development. So we don't want to slow down our business development at any point of time because of the existing commitments. And so we were -- we wanted to be overcautious and hence, I think we did this, and that's how we will be liking to put our money going forward, including the new business development, which we are already aggressively looking at some of the good new opportunities over and above the existing ones.

And just a follow-up, in which segment you are eyeing to build further, will it -- since you are now doing more of luxury, uber luxury, that is a segment we want to target or eventually, at the stage that we are in terms of the cycle, we also will start looking at mid-income segment, which might, probably a couple of years down the line, start doing well. So your segment of interest?

Yes. So we don't want to speculate too much. So that's why looking at the market, we see already a good demand like in the ODC already. So we -- and most of the sales that you are seeing is not only coming from uber luxury segment, but also the premium luxury. So we are looking in both the segment, definitely not in the aspirational luxury segment, but more into the premium luxury subsegment going forward than the uber luxury segment. But we want to be balanced in both the segments.

The next question comes from the line of Sourabh Gilda with JM Financial.

Diwali wishes to everyone, and congrats on a great set of numbers. So just wanted to take up the last question forward and get more details on your strategy for commercial development. I understand you mentioned about the construction for Nepeansea and Dubai also. But given that these projects are largely high margin and can become self-funding after some initial capital infusion, but is there any sort of complete strategy to build up your commercial portfolio? And can you share any time line, if any, for the 5th Avenue specifically?

So Sourabh, happy Diwali to you as well. So if you see 5th Avenue commercial, we are very clear that we want to start the construction of even 5th Avenue commercial also, and we want to continue to build our commercial portfolio. But as we are awaiting our approval for our 5th Avenue residential, at the same time, we will be similar time lines, we'll get the approval for our commercial. So you will see the construction of both the -- starting 5th Avenue residential as well as the 5th Avenue commercial both to be starting at a similar time line. And that's how -- and definitely, we want to build the commercial portfolio more and more, and we are exploring that while we are doing our BD activities.

And just one more last question from my side. If you can highlight the launch pipeline for next 2 quarters? Which one can come first? I hope we [indiscernible] the advanced stage of launches, but anything if you can highlight from a launch perspective for the next 2 quarters?

So yes, Sourabh, so we definitely don't want to -- which one we will be able to -- but Sourabh, can you mute yourself just, if you don't mind, or someone. So Sourabh, we don't want to commit which one will come first and which one will be second. But as you see, there are enough launches which are going to happen, plethora of launches, I would say, for Sunteck, which we are seeing. ODC obviously, 5th Avenue residential. Then when we are talking about our -- the new redevelopment project, which we have acquired, even that is in the advanced stage in Andheri, Western Express Highway. Then we are looking to launch one tower in Mira Road, which is Sunteck Sky Park [indiscernible] tower. And then Vasai, we are looking to launch 2 more towers. Again, Naigaon, we are looking to launch now since we are depleting the inventory there also. We want to launch one more phase in Naigaon as well. Plus, obviously, we know that Nepeansea Road, although we are selling some apartments, but we are looking forward to launch that. And increase the GDV value while we are doing BD activity to expand that portfolio, plus obviously, the launch of Dubai, which, whenever it comes, even that we are looking at. So there is -- there are a plethora of launches going forward, and we are looking forward for all these launches for sure.

[Operator Instructions] The next question comes from the line of Harsh Pathak with Emkay Global.

Congratulations on the strong quarter and unveiling of the Emaance brand. So my first question is on the Emaance brand itself. So what is the status of the construction at Nepeansea? When do we expect to start the construction there? And when can we expect the Dubai launch?

Yes. Harsh, so in Nepeansea, already started the demolition of the main building, which is Bagasara, the first phase of Nepeansea Road. And so demolition is very, very at advanced stage. We should complete the demolition in next 15 days to 1 month. And our approvals are at a very advanced stage. So we would look for those completion of approval and obviously, thereafter, RERA, and we'll be looking to launch that ASAP. Then when it comes to Dubai project, so just to give you one good news that, obviously, we have already taken a big office with -- where we can do a sales pavilion as well as in Dubai. And we have already started setting up already that -- interiors and everything have started on that Dubai office and the sales pavilion. Designs of all the full project in Dubai has been totally finalized and as good as freezed. Approvals, again, to mention, is in the advanced stage. And looking forward to the launch ASAP. That's how it is both the projects, Dubai and Nepeansea Road.

That's encouraging to hear. And so like you mentioned, we have deployed INR 430 crores in the first half towards BD. So how much more deployment do we expect since we have also done the fundraise? So how much deployment there? And so our inventory GDV, which is currently at around INR 39,000 crores, where do we see that in FY '26 and maybe in FY '27?

So we have been always very clear that our -- we will never -- looking at the strong balance sheet, we will not stop our BD development activity anywhere looking -- due to any fund constraint for Sunteck. Sunteck has -- today, the balance sheet strength is so strong. I think one of the strongest balance sheet in the industry. The reason we didn't want it to even have a 0% hesitation while we do BD. Hence, we raised that INR 500 crores also as a pref. And that's the reason that we don't want to compromise on BD at all when we are -- and we'll continue to pour money as and when we see a good opportunity coming with a Sunteck style where we have a good IRR and good ROI. We will continue to take good projects.

Sure. So our GDV target, which is at INR 39,000 crores right now?

So we have always -- you see, doubled almost the GDV in 3 to 4 years, and we will continue to do that.

Sure. And my last question on the presales mix. So how do we see the presales mix evolving in terms of the share of uber luxury, premium luxury and aspirational maybe over the next 2 to 3 years? Since we have this in...

So if you see our GDV -- if you see in the presentation also what we have uploaded on the website and everywhere, GDV mix is very balanced. If you see, the uber luxury is now 38%, and premium luxury is close to 29%, and aspirational luxury is 34%. So we can look at some similar sales momentum as well when it comes to the split of sales. And that's how -- we want to be very balanced. We don't want to exactly time the market that which -- you cannot predict really the market. Obviously, we would like to time it well. But it is very difficult to predict any market, what it will be. So we want to be prepared in every 3 segments, and we will continue to maintain this. That's why we are confident of 30%, 35% growth in even our presales and GDV as well.

No, sir. I think that answers my question. Diwali wishes to you and the entire team.

Diwali wishes to you as well.

[Operator Instructions] That was the last question for today. I now hand the conference over to the management for their closing comments.

Thank you all for taking the time out of your busy schedule to join us today for the call. In case if any of your queries have been left unanswered, please feel free to reach out to us. We truly value your continued support, and look forward to strengthening this relationship. Lastly, once again, I would like to wish you all and your loved ones, a very happy and prosperous Diwali. Thank you. Thank you once again.

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