Sunteck Realty Limited (512179) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Sunteck Realty Limited Q1 and FY '27 Earnings Conference Call. We have with us today Mr. Kamal Khetan, the Chairman and Managing Director of the company, Mr. Prashant Chaubey, the Chief Financial Officer. Please note that 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 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 prospects. 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 Sunteck Realty Limited. Thank you, and over to you, sir.

A very good evening to everyone, and thank you for joining us today for our company's earnings conference call for the first quarter of FY '27. I will keep my remarks brief and focused on the key developments of the quarter. We have made a good start to FY '27. Presales for the quarter grew 20% year-on-year. Collections grew 17% year-on-year. And with the strong presales of the last few quarters, we expect collections to accelerate further through the year. The segment mix of our presales remains well balanced. Uber luxury contributed 29%, premium luxury contributed 50% and aspirational luxury contributed 21% of the quarter's presales. This mix carries a high embedded EBITDA margin. The embedded EBITDA margin on both our FY '26 and Q1 of FY '27 presales stands in the range of 35% to 40%, which will flow through to the reported profitability as the project reach revenue recognition. On reported financials, EBITDA grew 40% year-on-year with the EBITDA margin expanding 5% points to 35% and the PAT grew 26% year-on-year with the PAT margin expanding by 4.2% points to 22%. On the cash flow front, our net cash flow surplus grew 79% year-on-year. In spite continuing to invest in business development, our net debt to equity remains negligible at 0.07x and our ratings, AA long-term rating from India Ratings, Fitch Group, remains among the strongest in Indian real estate. We have consistently maintained that we run the business on cash flow, not accounting revenue. We have been sharing our total GDV numbers in our investor communication. But this year, we have broken down our total GDV into three components: Launched, and To-be Launched, and the third is Upcoming for Launch GDV in order to help investors understand our business better. Launch GDV indicates the projects that have received the relevant approval and it's already launched. To-be launched GDV indicates projects that are under the approval process and the upcoming for launch GDV indicates projects that are in the planning and designing stage. Our existing GDV gives us several years of launch visibility considering any new acquisitions. At the outset, we would also like to take this opportunity to update you on our Dubai project. As we have shared earlier, we have all the required regulatory approvals in place and the project is launch ready. Only the timing of the launch has been recalibrated due to the ongoing situation. Finally, on sustainability, our GRESB score of 99 out of 100 with a green 5-star rating and our S&P Global DJSI ESG score of 78 out of 100 keeps us rated among the best in global real estate, well ahead of the benchmark average of 68 and 30, respectively. I shall now hand over the call to Prashant Chaubey to take you through the financial performance of Q1 FY '27. Over to you, Prashant.

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 the financial and operational performance of the first quarter of FY '27. The key details of operational and financial highlights are as follows: we sold INR 787 crores worth of area in quarter 1 of FY '27, which is a 20% growth over quarter 1 of FY '26 presales of INR 657 crores. The segment mix remained well balanced. Collections for quarter 1 of FY '27 stood at INR 409 crores, a growth of 17% over INR 351 crores in quarter 1 of FY '26. On the profit and loss front, operating revenue stood at INR 191 crores for quarter 1 of FY '27 as against INR 188 crores in the same period last financial year. EBITDA stood strong at INR 67 crores in quarter 1 of FY '27, 40% growth over quarter 1 of FY '26. EBITDA margin stood at 35%. Net profit of INR 42 crores, which is 26% growth over quarter 1 FY '26, and net profit margin stood at 22%. We generated a net cash flow surplus of INR 193 crores during the quarter, a growth of 79% over quarter 1 FY '26 after deploying INR 170 crores towards business development and land-related capital expenditure. Thank you. With this, we open the floor for questions.

[Operator Instructions] First question comes from the line of Harsh Pathak with Motilal Oswal.

Kamal ji, just one question on the Dubai launch. So while you highlighted that the time line remains uncertain, is there a possibility this project will get launched in this financial or in FY '28?

So Harsh, we are very clear that we are -- all the -- as we shared earlier also, we have required all the required regulatory approvals are in place. And the project today remains launch ready. Only the timing of the launch has to be obviously recalibrated due to -- we all know that it's an ongoing situation, and we don't want to launch in such a situation. Just to recap, our land parcel is one of the most prime -- in the prime location next to Dubai Mall in Burj Khalifa Community Downtown Dubai. So that is one very big advantage whenever the markets -- we are almost launch ready. And whenever the market is there, we will immediately launch, but the market is right, I mean to say. And our land cost to GDV is very healthy, and there is no debt on the project. So we maintain that our earlier communication once again that project continues to remain highly profitable irrespective of the situation what we are. And just to bring it to your knowledge, like our investment in Dubai as on today on the project is close to not more than INR 200 crores to INR 225 crores. So that is again a very -- and from that kind of investment, we are looking at such a large surplus cash flow, which will be coming out. And we are definitely looking at this cash flow whenever it comes to bring it to India for the growth of it -- again, growth of the company overall.

Understood, sir. That's clear. Coming to your launch pipeline, like you highlighted that you have broken down the GDV in 3 parts. So to-be launched GDV is close to INR 16,000 crores. Can you please break down what quantum can be launched in FY '27 and FY '28 and which would be the key projects here?

So, to-be launched GDV, if you go, that includes obviously INR 9,000 crores coming from Dubai project. So if you remove that INR 9,000 crores, so to-be launched GDV is close to INR 8,370 crores or INR 7,100 crores, sorry, INR 7,100 crores, close to. And which is like ODC, the additional tower in ODC, our Andheri redevelopment project near Western Express Highway, then what we are looking at Sunteck Park Mira Road 2, Mira Road 1 is already ongoing. So we'll be launching now -- looking to launch the new project, which we have acquired last year. And the Vasai, there will be 1 tower. We recently launched 2 towers, and we are targeting to launch one more tower this year. Then Naigaon, we are looking to launch again 1 or 2 towers. Again, we launched last year. Again, we are launch planning to launch this year again. So looking at all these things, if you see, this is all put together is close to INR 7,100 crores.

Sure. So I believe this entire inventory will come into launch in this financial year.

Yes.

Anything Yes, anything additionally that will be added to this launch pipeline? And what can we look for in the -- for the next year?

So uncertainty is definitely only related to -- we can talk about Dubai because we don't know how long the situation will be there. Otherwise, all the other projects pipeline, what we are looking to launch this year is close to INR 7,000 crores, what we are looking to launch.

Understood. And sir, one last question. What is the growth guidance for the presales for this financial year and maybe even for FY '28 also, if you can just throw some light?

So looking at the project pipeline, Harsh, we are very confident that we'll maintain -- although this quarter, we have done 20% growth in presales, but we are confident overall in the full year, we will match our -- what we have given the guidance of 25% to 30% growth in our presales. Considering the full year of '27, we'll be at least 25% to 30% higher than the last year. With strong pipeline, we are really very confident about it.

Sure. And any new business development?

I'm sorry to interrupt you, Mr. Pathak, but you may please rejoin the queue for questions. Our next question comes from the line of Rishith Shah with Axis Capital.

So a couple of questions. So first, on the sales mix. So we -- this quarter, we have seen a good increase in the sales coming from affordable segment as well as on the premium side, like ODC, SBR, et cetera. So I mean, on the aspirational luxury specifically, what led to this growth? And similarly, some views on the premium luxury segment as well.

So aspirational luxury, in fact, obviously, we are seeing the market getting improved because of the -- the reason I feel is aspirational luxury slightly, we feel is picking up because of the lower interest rate and also some sign of recovery somehow we are seeing. And mainly it came -- basically, we see that coming from Naigaon and Kalyan, -- both are now giving, and we are very bullish on now Kalyan picking up more strongly. So obviously, we have a large GDV there. So we want to monetize as early as possible. So we are -- that 2 projects, obviously, both are in aspirational luxury, only those 2. It has come from both the projects. And when it comes to premium luxury, obviously, Sunteck City and Sunteck City in Goregaon and Sunteck Sky Park in Mira Road and the Sunteck Beach Residences, SBR, all 3 contributed for this INR 391 crores. And coming quarter, we are again very confident because we'll be launching in this segment, Sunteck Sky Park 2, which is the next acquisition what we have done and also the Tower 2 in Sunteck City, which will be coming. So due to this, we see the growth picking up. And that's why we are confident that we will be able to achieve 25% to 30% growth in our presales for the FY '27.

Sure, sir. Just a follow-up. So launch that we had this quarter was just the SBR and nothing in the aspirational segment, right?

So yes. So this quarter, we didn't do any launch. In spite of this, we could do good aspirational luxury sales.

Perfect. Secondly, I mean, regarding the collections, so how are we looking at the collections overall for this full year? Can you give any guidance? And related to that, anything on the RERA approval for the Nepean Sea project?

So proportionately, obviously, the collection has to grow, and that I made the same remark in my speech also opening speech. And obviously, the bigger collection will start happening once we start the construction of Nepean Sea Road. That will definitely give us a big collection. But if you see trailing months, if you see, our collections are close to INR 1,500 crores, which is again stronger than the past 12 months. And this will continue to become stronger and stronger, looking at the last few quarters, what we have been doing the presales.

Would you like to attach some number to it for this year?

We'll see a similar growth, I would say, 25% to 30% growth in the presales also.