Sunteck Realty Limited ($512179)

Ladies and gentlemen, good day, and welcome to the Suntech Realty Earnings Call for Q4 and full year 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 that this call will be for 30 minutes. [Operator Instructions] This conference call is recorded, and the transcripts for the same may be put on the company's website. After the management discussion, there will be an opportunity for you asking questions. There will be a Q&A session, and we will request you to restrict your questions to 2 per participant. [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 our financial condition and growth prospect. These forward-looking statements are based on 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 now hand the conference over to Mr. Kamal Khetan from Suntech Realty Limited. Thank you, and over to you.

Good evening to everyone. -- and thank you for joining us today to participate in our company's earnings conference call for the fourth quarter and full year of financial year FY '26. I would like to take you through the key development for this period. And before that, to share the general outlook on the real estate, we believe that uber luxury and premium luxury to continue to do well and the aspirational luxury segment is also showing some signs of initial recovery given the decrease in home loan rates and income tax benefit. . Coming to our results. Now we delivered a strong financial performance for the full year of FY '26 with revenue growth of 32% year-on-year. EBITDA growth of 64% year-on-year and a PAT growth of 34% year-on-year. Demonstrating our robust operational resilience and sustained profitability. Over the last 3 years, since FY '24, we have doubled our revenue growth and grown our EBITDA by to 2.6x and nearly tripled RPAC. On the operational performance front, I'm pleased to share that we have closed FY '26 on the strong note our full year presales stood at INR 32 billion, registering a robust growth of 25% over FY '25. This strong performance reaffirms the guidance we had shared at the start of the year. Sales contribution was well distributed across projects with our uber luxury and premium luxury segment, continuing to drive a larger share of our presales. This segment mix carries a high EBITDA margin, and we expect it to contribute meaningfully to our margin expansion going forward. It's important to note that our unsold under construction inventory is to date less than months amongst the lowest in the market. And the ready unsold stock in our marquee projects gives us our required liquidity when needed. On the cash flow front, we have generated a strong net cash flow surplus of INR 5.5 billion for the full year FY '26, representing a growth of 48% year-on-year. This has enabled us to maintain our net debt to equity at negligible level of 0.06x despite the strong investment in business development. We have invested INR 8.1 billion in full year of FY '26 compared to INR 1.8 billion for full year of FY '25. This demonstrates our commitment towards expanding our development portfolio while preserving the balance sheet discipline. On the business development front, in FY '26 has been a strong year for the portfolio expansion. During the year, we added 3 new projects to our portfolio with a combined gross development value of approximately INR 50 billion, which includes first 1 to 2.5 acres redevelopment project at Anderi near Western Express Highway. The second one, near 3.5 acres joint development project at Mira road the outright acquisition of 1.75 acre land parcel at Andheri near International Airport, which with these additions, the total GDV of Sunteck as of FY '26 stands at approximately INR 441 billion gross of presales. We remain firm and continue to evaluate more opportunities with a strong focus on high IRR and high equity multiple philosophy. We are incredibly proud of our sustainability leadership. In the 2025 Dow Jones Sustainability Index assessment, we achieved an impressive ESG score of 78 out of 100, placing us among the top 3 Indian real estate developers on the global benchmark. Along with that, we have also earned a stellar 99 out of in the 100 in the 2025 Global Real Estate Sustainability Benchmark, securing the coveted the green 5-star rating. I shall now hand over the call to Prashant Chaubey to make you through the financial performance of Q4 and full year FY '26.

Thank you, sir. Good evening, everyone. I trust you have had the opportunity to go through 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 4 and 12 months of FY '26. The key details are we sold INR 1,064 crores worth of area in quarter 4 FY '26, a growth of 22%. During the full year, we booked presales of INR INR 3,157 crores, a growth of 25% year-on-year collections for quarter 4 stood at INR 432 crores, a growth of 39%. And for the full year, collections stood at INR 1,433 crores, a growth of 14%. On the profit and loss statement front, operating revenue stood at INR 339 crores for quarter 4 of FY '26. EBITDA stood at INR 97 crores with a margin of 29% and net profit stood at INR 63 crores with a net margin of 19%. On the full year basis, operating revenue stood at INR 1,124 crores for FY '26. EBITDA stood strong at INR 305 crores with an EBITDA margin of 27% and net profit stood at INR 202 crores with a net profit margin of 18%. Net debt to equity stood at 0.06x with a net cash surplus of INR 552 crores during FY '26. Thank you. With this, we open the floor for questions.

[Operator Instructions] We have the first question from the line of Kunal Lakhan from CLSA.

Quickly, if you can give an update on the Dubai project in terms of launch time line now considering the Middle East issue? .

Kunal, thank you for the question. So we all know obviously the impact of -- due to the impact of war. So the project is launch-ready for us. And whenever we see the event settling down, we will be looking forward to launch the project as soon as possible ASP. Just to recap, our land parcel is 1 of the most prime location next to Dubai Mall in Burj Khalifa Community Downtown Dubai. And our land cost to GDP is very healthy and there is no debt on the project. So we maintain our earlier communications that this project will continue to remain highly profitable. We are very comfortable situation, and this does not impact any of the company's growth trajectory. As far as the launch exact time line, obviously, we'll have to see that event settling down. And only then we will be able to launch ASAP. I can repeat at the cost of reputation. We are project launch ready right now.

Understood, sir. Just 1 thing, in terms of like the interest or the demand that you're sensing for this project pre-war. Do you sense the same kind of excitement around the project once the settle down?

So it will be only -- if I make any statement, it will be more of a speculative. I think it is -- it's very important, Kunal, that we see them how this settles up and just again that the reputation cost company has no debt on the entire balance sheet of Sunteck , and also at the SPV project level, we don't have any debt at -- no, there is a 0 debt at Dubai project level also. So -- and our cost of acquisition is like compared to even the post war, whatever settles, even if the market comes down, I continue to maintain once again, the profitability will continue to remain very high in this project irrespective of what happens because our cost of acquisition is very, very low compared to the pre -- even if the market corrects by 10%, 20%, we are not worried about it. But we will be looking to launch this project ASAP. .

Understood, sir. My second question is on the business development side. Like we did some substantial spend this year, INR 800 crores. What should we expect for, say, 27%, like -- should this number be higher than INR 800 crore or let's say, 20%, 25% growth over last month

Yes, so business development, we -- like last year, we have put like closed less than INR 2 billion -- INR 200 crores. And this year, we have done more than INR 800 crores -- we are obviously looking at our cash flow, strong cash flow and we will be investing aggressively. But at the same time, we are very, very clear that our profitability and IRRs are not compromised. And it's obviously all depends on the good opportunity which we do. So in my -- in my remarks also, I makes it very clear that while doing the BD, we will always maintain our philosophy of high IRR and high equity multiple philosophy. So we are very clear. And we will be, at the same time, looking at our strong cash flows, and we see the same cash flows coming in years -- in current year as well as the next financial year. So we are very, very optimistic about the BD investments as well.

Sure, sure just a follow-up on the cash flow, sir. Like if you look at the collections, right, this your -- like the collection rate of 13%, which is significantly...

We are losing you. We -- can you repeat.

Am I audible, sir? No?

And now you're perfectly fine.

Yes. Just a follow-up on the cash flows. Sir, if you look at collection, this year, the collections grew 14% Y-o-Y, significantly lower than the sales growth of 25%, right? And is a collection as a percentage of sales, also like it's less than 50%. I mean, in terms of cash flow, most so driven by collections, we should see a substantial jump going into FY '27, right? .

Yes, definitely. So FY '27, we will have a better, obviously, percentage. That's why you see the growth will continue to grow -- it will have to become better and better. Yes, I agree with you. FY '27 and FY '28, you will see a very, very strong cash flow. That's why we're very, very bullish and optimistic about our acquisition strategy. At the same time, again, just repeating that without compromising on IRR and the multiples on the investment. .

We have the next question from the line of Pritesh Sheth from Axis Capital.

Yes. Congrats on the continuation on growth trajectory. So that's on the continuation of growth trajectory. Just a couple of questions. First, on the launches expected in FY '27, apart from Dubai, obviously, which is an uncertain one. But apart from Dubai which all launches, should 1 expect to come by in FY '27 and total GDV if you can elaborate on that as well. .

Prashant, you like to answer this question.

Pritesh. So in terms of launches, we have a slew of launches that we are planning for the next 12 months. So as you are already -- we have already launched LTV Fifth Avenue. So that project is already launched. Separately from that, -- we have a project redevelopment project coming up in Andheri Western Express Highway. Then we have a new tower coming up in Sunteck Sky Park in Mira Road then we have 2 more towers coming up in Sunteck Beach Residences in Vasai. Then a new phase will come up in Sunteck world in Nigaon plus the new acquisition in Mira Road that will also be launched in the current -- in the next 12 months. And already, you have APMCs -- an APMC Road project is already there. So all these are the key launches that we are, we see ourselves in the next 12 months. .

And broader GDV of these launches, if you have the number handy? .

So it can be close to INR 6, 000 to INR 7,000 crores of close to approximately INR 7,000 crores of GDP. .

Got it. That's helpful. And just on the recent projects that we have signed, it's mix of -- been outside .

Yes, sorry, just to correct, INR 7,000 crores of GDP from plus Nepean Sea -- plus Nepean sea. It whatever can plus BKC and plus the existing inventory. .

Yes. Yes. Sure. Sure. So second, on the recently acquired projects, right? It's mixed of outright as well as on redevelopment. What should be the margin expectations from those projects? And if you can also highlight by bulk of the sales now is coming from the uber luxury project, both BKC as well as -- as well as Nepean Sea Road. What should be the blended EBITDA margins that 1 should assume for FY '26 presales that we have done? And for whatever we have signed in FY '26. .

So Pritesh, from -- if you see current sales, what we have done is INR 94 crores to approximately INR 100 crores that come from aspirational luxury and close to INR 300 -- INR60 crores to INR 70 crores have come from premium luxury. And close to INR 600 crores have come from uber luxury than other commercial as well. So total -- if you see 10% to 15% is from aspirational luxury, 40% to 45% is from premium luxury, and close to 50% is from uber luxury and other commercials, et cetera. So these are the -- this is the way. And when you come to -- when you're asking to answer your second question, what will be the kind of margin -- EBITDA margin, what we are looking at. So blended EBITDA margin, we are looking at minimum 35% to 40% -- even in the new acquisitions, we are not worried about coming down below 35%. We are very clear on that. Even in our new investment strategy or acquisition strategy or even a redevelopment or JD-- so we are looking at minimum 30%, 35% on each project basis.

Sure. So if I got you correctly, FY '26 sales, whatever we have done, the ended EBITDA margin should be 35%, 40%, and that is what we are hoping to maintain for the the recently signed projects as well .

Recently signed project, you can say, 30%, 35% margins, and blended will be close to 35% to 40%.

We have the next question from the line of Puneet from HSBC. .

My first question is on some commentary on pricing trend. Where are you seeing the direction of pricing in Mumbai market? Are you finding still room to grow beyond inflation? Or should 1 assume more flattish growth there? .

So Puneet, I gave -- in fact, I feel that we should not expect too much of price rise from here. I think a stable price in the most of this current situation should be good enough. And we see the demand in uber luxury and premium continue to maintain -- will be continued at the same momentum, we definitely feel we are very bullish on it. At the same time, we are also feeling months that even your aspirational luxury segment, affordable segment, which is also looking at positive pick that we are seeing a good demand picking up there also because of the, I think, income tax benefits and also maintaining the home loans at a lower level. So that is now driving slightly more demand than before.

And especially in the last 1 month, are you seeing any change in pattern given there is clearly disturbance or uncertainty on account of what? Are you seeing slower footfalls in your projects or slower conversion rates at all? .

Footfalls, I can say definitely must have dropped by 5%, 10% for sure. But I think conversion ratios are similar -- but I think this is not more worrisome. I don't see that. It's 1 month -- if you see 1 month trajectory, I don't think we should be worried about it. We are quite confident, again, at the cost of reputation. I've maintained that we are quite confident on uber luxury as well as premium luxury segment. And we have seen -- you have seen we have grown by throughout the year, 25%. Even in the last quarter, we have done very well. So we are very bullish on it. We are very optimistic on it, I would say. And at the same time, we have seen in the last quarter, even the demand picking up in aspirational luxury segment. .

Okay. And any shortage of material labor that you're experiencing currently? .

Yes, definitely, there is some shortage, but that I feel is more because of the like West Bengal elections, all these elections. So people labors tend to go for the voting purpose and all for various reasons. So -- and again, that is -- we'll see that coming back again because of the elections are over by the end of this April. That's not again a worrison. Otherwise, we don't see much problem. Maybe in some finished goods, there is the prices increase like in tiles and all some of the goods which are import dependent, which are maximum imports are happening. But again, we look -- see it as a temporary thing because of this event, which is going on. We are all waiting to waiting and watching it. I think -- but that is not for a real estate in Mumbai, like our average selling price would be more than INR 25,000, INR 30,000 square feet. That will, for us, even if construction cost goes up by, let's say, 2% or 3% should not impact our profitability to that extent. So -- and we consider this is very temporary. So we are very particular in buying our raw materials like when what is required immediately only that much we are buying because we see those sensitive materials obviously not to buy right now. But definitely, there is some problem in certain supply chain -- certain supply chain.

But no short...

Puneet, request you to kindly come back in the queue for follow-up questions. We have the next question from the line of Rishith Shah from Axis Capital. .

Sir, 2 questions from my end. So firstly, on the deliveries from the P&L language, what kind of deliveries or completions are we targeting for...

Rishith, in terms of delivery in the coming financial year, we are looking at our project at Sunteck One World in Niagaon. So that project will come up for delivery. And along with that, all the ready inventory, which is there from there also, revenue recognition will happen. .

Fair enough. And on the lead so under that is commercial part. So we started working on the construction of it?

So Rishith, 5th avanue construction to start very soon. Most of the approvals are in place. That's why, first, we wanted to launch our residential tower in the 5th Avenue, which is we did recently, and we got a good response. And for the commercial bid, now the approvals almost we are through with most of the approvals. And very soon, you will see this construction starting now. .

And just a follow-up, how is the contribution from Fifth Avenue this quarter or maybe in the second half?

So I said we got a very good response. And I would not be able to give you immediately the but I have given you, which we considered as a premium segment. In the premium segment, this quarter, we have done close to INR 370 -- approximately INR 370 crores sales and quite a bit has come from that. .

If I can just add 1 more question. Any guidance that you would like to do for FY '27 and the presales .

So FY '27, see, we remain very confident of sustaining similar growth, I can say. So whatever we have done right now, in terms of good percentage, we will maintain that momentum very easily in coming years, for sure. And with improved margins also. -- because of our -- because of the prices have gone up. And whatever we have booked right now until now, so the profitability that was from the historic sales -- and now going forward, we'll have only better margins, better and better margins. .

We have the next question from the line of Abhinav Sinha from Jefferies.

Yes. can you hear me now? Yes. We can Sir, on resales, just following up on the previous one. Do you expect similar growth comment that you have given, even of Dubai .

Yes. 100% confident that the irrespective of Dubai launch happening or not happening. We are seeing a similar growth because hence, we are preparing ourselves to do more launches, and we are very confident that we'll maintain our growth, maintain our growth. .

Okay. And sir, you said that maybe the footfalls are down a little, but conversions are flat. So do you think the first quarter could be a little soft and most of this growth will be in the later part of the year? .

No, I don't think so. So I said only 1 month, we saw this, but because we can see that's a peak of the event, especially in the uber luxury and premium luxury people would definitely like to wait and watch. -- only due to that, maybe some drop in conversion for a footfall. Otherwise, if you see the quarter, we have done -- in fact, the best only in that segment. That's why we continue to maintain the bullishness in the premium luxury segment -- go ahead. .

Yes. So on the nascent project, I mean, the slide appears to be shaping up quite well with the progress that we now see on ground. I just wanted to get a check on how large you think this can become? And do you think a proper RERA and plans can be floated and approved this year, FY '27

Yes, 100%. We are -- in fact, you will see everything happening maybe in this first 2 quarter itself coming first 2 quarters. And you will see the action on the construction side also, construction side also. We'll start construction on our Bags plot, the first phase, and we are very confident on that. We're very, very confident on that. .

Okay. Sir, finally, on the Andheri JP Nagar project. So are you thinking of this as a commercial or a residential right now? .

So it will be -- Abhinav, we slight early to mention that whether it will be residential or commercial, -- but we are definitely exploring both residential or commercial. It's located because just of 1 very cola road and Saha road very near to the international market. So in fact, it has a great opportunity for commercial rentals. So that is making us feel and looking at a strong balance sheet, we would like to also increase our rental portfolio -- at the same time, we are seeing the good residential demand in that location. So we are like in 2 minds, but we will take this decision in the next 15 days, and we will start accordingly. And we are quite confident at least we'll break the ground in Q1 or maximum Q2 itself at Andheri KB nagar. .

We have the next question from the line of Harsh from Motilal Oswal. .

So my first question is on the presales. So what is the contribution that is coming from the BKC and Napean Sea projects? .

So Harsh, in Q4, if you look at the full 12 months, uber luxury segment, we are -- and we are giving a mix of uber luxury and the commercial. So in uber, actually, we have definitely 2 projects, which is BKC and Nepeansea project. And so in Q4, the sales has been total put together is INR 609 crores. And in 12 months, if you see it is close to INR 1,500 crores. .

Yes. This INR 609 crores, would it be possible to give a breakup between BKC and Nepean sea ?

Yes, I can give you the breakup if you want, I will -- you can -- Prashant -- you send the query will give you the detailed breakup on the projects because this is some portion of the commercial as well -- so all 3 breakup, Prashant, will be able to share with you. .

Okay.

We have the next question from the line of Puneet from HSBC. .

Yes. So just on the follow-up, there is no shortage of materials that you are facing, right? I mean .

It's shortage is a finished good materials. So we have some of the finished good material. So we are not fortunately in many projects where the finishing except the 1 world where it's going on. There is absolutely no shortage in terms of cement or steel or RMC or the stand or a break or those kind of things. So we don't see any construction delays or construction price rise because of that too much. only where the project is completing, we don't want to wait maybe there something which is not available where we are finding it's like difficult to source. But otherwise, it is not that that's a problem, which is which is perceived as the problem, which is like people are believing that much. .

All right. And while I appreciate, the way you have no debt and land cost to GDV is quite healthy. How much have you invested in Dubai so far? .

So exact number, I will be -- I'll give you -- so just to mention for the launch. So when we bought this land, so I'll just give you a glimpse to make you understand, we have partnered with the landlord at AED 385 million, AED 385 million. And that those days, we have sent AED 70 million to Dubai only AED 70 million, and that's to become a 50% partner in the 385 million property what -- and that AED 70 million was transferred from Sunteck at the price, approximately what I remember was close to INR 12 to a dirham. So that INR 12 today, almost more than AED 24 to the dirham. And that AED 385 million what value today, if we value the land today's market, it is AED 1.6 billion. So even if I give you a rough estimate, so we are 50% economic interest in the project from 70 million of the investment Today, even if I consider a land value of INR 1.6 billion, it is $800 million, so 10x and plus the currency benefit, which which Sunteck transferred at or INR 13 to a dirham, which is now today INR 24 to INR 25. So we are talking about 20x of the investment done by Sunteck .

But your investment is only to the extent of -- your book investment is...

[indiscernible] we transferred in the current year for the launch to we were almost launched ready that additional amount .

How much is that...

Yes, payment. So that exact number I will not have right now. If you want, you can send the query, we'll give it to you the exact exact number. . One second Prashant can share.

So Puneet, we have invested approximately AED 60 million. .

Okay. So 70 plus more, right? That's

Yes.

Current

We have the next question from the line of [Akash Gupta from Nomura. .]

Sir, congrats on the great results. So basically, I heard your commentary, it was fairly strong and you are guiding roughly similar PC growth in FY '27 versus the industry thinking -- I mean, investors thinking that there will be a real estate slowdown. My question to you is, what's driving this very strong demand for real estate according to you, even in FY '27 ?

I feel it's -- obviously, what we are seeing is wherever we are doing, it's obviously an end user demand. And it is more like at the cost of reputation. I think this is the fourth time I'm saying and seeing this demand also picking up. It was always there in for last few years, we have seen post-covid the demand was very good in uber luxury and premium luxury. Again, we have now the positive side we are seeing is the demand picking up in the aspirational luxury as well as. So -- so we have -- most of our projects are very large projects. So if this demand continues, irrespective of even -- although we have done new acquisitions, where we'll be doing new launches. Apart from releasing more inventory and more launches in the existing project. We are very, very confident about our growth of the whatever -- whatever we have done in the current year, similar growth in the coming year as well. The reason is also 1 move, which is very big positive. We are confident again of getting the RERA and starting the construction in the current year at the Lapino which will also give us a big boost -- and we have a very low base, and we need to sell very fewer unit compared to other developers, I feel. -- and aspirational luxury has become better. So all these points gives me -- makes us feel more confident while giving this guidance. .

Understood, sir. And my last question is that how much incentives are we giving like to customers -- I mean, to induce this demand in the sense that are we offering like payment plans, very aggressive payment plans to customers or we are giving heavy discounts? Is that the same? Or we don't have to do anything to induce demand? .

So I think if you see very frankly, that's why we are -- I say that we have strong cash flows, and we are -- we don't give any -- and they're saying we will get a better margin in current sales. And it's business as usual. In fact, it's business as usual. There is absolutely no discount. If there is a discount, then I would not be able to give a better margin coming year for sure. Everything is as usual. .

Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Kamal Khetan for 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 our continued support and look forward to strengthening this relationship. Thank you once again. .

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