Suraj Estate Developers Limited (SURAJEST) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY '26 Earnings Conference Call hosted by Suraj Estate Developers Limited. [Operator Instructions] I now hand the conference over to Mr. Rahul Thomas, Whole-Time Director from Suraj Estate Developers Limited. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone. I welcome you all to our Q2 and H1 FY '26 Earnings Conference Call. Along with me, I have our CFO, Mr. Shreepal Shah; Mr. Ashish Samal, our Internal IR; and SGA, our Investor Relations advisers. I hope all of you have gone through our investor presentation uploaded on the stock exchange and our company website. The Mumbai real estate market continues to present significant growth opportunities, particularly in the redevelopment segment. Within this, South and Central Mumbai remain the most attractive micro markets, characterized by strong end user demand, premium pricing and limited supply. Despite the inherent challenges of fragmented ownership and legacy tenancies, these markets continue to see steady traction as demand for high-quality residential products remain robust. This environment creates a favorable backdrop for well-located luxury and value luxury projects where established developers with a credible brand and strong execution track record are best positioned to capture growth. For us at Suraj Estate, our deep presence, brand recall and execution capability in South and Central Mumbai allows us to leverage this opportunity effectively. Our focus on value luxury and luxury residential developments enables us to capture premium realizations while maintaining strong sales momentum even in a competitive market. We are pleased to report a strong quarter, supported by solid operational performance and the successful launch of 2 key residential projects, Suraj Aureva Prabhadevi and Suraj Parkview 1 at Dadar West. These launches have been instrumental in driving presales traction and reinforcing our leadership in South Central Mumbai market. Suraj Aureva located in Prabhadevi micro-market is a 21-storey tower under the value luxury segment offering 1, 2 and 3 BHK homes, ranging from 450 to 800 RERA carpet area with prices starting from INR 2.47 Cr. The project with a saleable area of 0.24 lakh square feet with an estimated GDV of INR 120 crores witnessed a 39% sales at launch, reflecting a very strong buyer confidence. Suraj Parkview located at Shivaji Park, Dadar is an upscale value luxury tower offering a blend of heritage sea-facing views and modern design. With a saleable area of 0.53 lakh square feet, and an estimated GDV of INR 250 crores, the project achieved 42% sales during launch, driven by strong demand and its excellent connectivity to the Dadar Metro, BKC, the coastal road and Bandra-Worli sea link. Beyond these launches, Suraj Estate continues to maintain a robust pipeline of approximately 13.6 lakh square feet across 17 projects concentrated in South and Central Mumbai. These include a healthy mix of residential and commercial developments spanning the luxury and value luxury segment. On the residential front, our portfolio comprises of marquee projects such as Lumiere in Dadar, Bandra 1, 2, 3 Project, Marinagar Phase 2 & 3 in Mahim, while our commercial segment includes SURAJ One Business Bay and the Marinagar Commercial at Mahim West. Our ongoing projects continue to perform well with a total area of 4.89 lakh square feet and an average realization of INR 45,409 per square foot. We have achieved cumulative collections of INR 1,363 crores with a balance receivable of INR 881 crores with an estimated GDV of INR 285 crores from our unsold inventory, translating into a combined visibility of approximately INR 1,166 crores as on September 25. The strong visibility of cash flow reflects our solid financial footing and underpins growth momentum for the coming quarters. During the quarter, we have also completed an acquisition of a prime 644-square-meter land parcel at in Lower Parel for INR 6.44 crores, including stamp duty and registration charges. This parcel will be merged with an adjacent existing project called Ambavat Bhavan & RK Mansion, creating a combined land area of 1,310 square meters with a salable area of 0.32 lakh square feet with an estimated GDV of INR 130 crores. The project will be developed under Regulation 337 of the DCPR and will comprise of premium 1 and 2 BHK apartments with optimized layouts, wider frontage and enhanced parking facilities. Strategically located in Lower Parel, the project enjoys excellent connectivity to the Western and Central railway lines, monorail and coastal road as well as proximity to key commercial retail and lifestyle hubs. This acquisition enhances our footprint in high-value South Central corridor and aligns with our strategy of deepening our presence in the premium predevelopment markets. Our marquee Mahim commercial project also continues to progress well, planned on a combined land parcel of approximately 3,000 square meters. The development will offer a salable area of 2.09 lakh square feet with an estimated GDV of INR 1,200 crores. Most regulatory approvals have been secured and the RERA registration is expected by the end of November, the following month. Once launched, this project will serve as a key growth driver for Suraj Estate, expanding our commercial portfolio and strengthening our presence in the Mahim submarket. Together, these launches, acquisitions and ongoing developments reinforce our presence in South and Central Mumbai, positioning us to capture the sustained demand for high-quality housing and commercial assets in one of India's most premium real estate markets. With this, I would like to hand over our call to our CFO, Shreepal Shah, who will run you through the financial highlights.

Thank you, Rahul. I will run you through the financial highlights for the quarter and half year ended September 2025. For H1 FY 2026, total income grew 14% year-on-year to INR 278.6 crores compared to INR 244.3 crores in H1 FY 2025. EBITDA stood at INR 115.9 crores in H1 FY '26 versus INR 128.2 crores in H1 FY '25. And PAT stood at INR 54.4 crores for the half year ended September 2026. On a quarterly basis, total income grew 32.6% year-on-year to INR 145.4 crores in quarter 2 FY '26 from INR 109.6 crores in quarter 2 FY '25. EBITDA increased to INR 65.6 crores versus INR 64 crores in quarter 2 FY '25. And PAT INR 33.1 crores in quarter 2 FY '26 from INR 31.8 crores in quarter 2 FY '25, supported by operating leverage during the quarter. Operationally, presales grew by 88.8% quarter-on-quarter and 42.4% year-on-year to INR 152.9 crores in quarter 2 FY '26. H1 FY '26 presales stood at INR 233.9 crores with realizations at INR 43,850 per square feet in quarter 2 and INR 45,515 per square feet in H1 FY '26, remaining moderate due to the higher share of value luxury segment during this quarter. Collections stood at INR 71.2 crores in quarter 2 FY '26 and INR 185.9 crores in H1 FY '26, primarily reflecting lower cash flows from new bookings concluded at the end of the quarter. As on September 2025, the company's gross debt stood at INR 545.8 crores, compared to INR 456.3 crores as of March 2025, while the net debt increased to INR 497.6 crores from INR 414.2 crores over the same period. The increase in debt level was primarily driven by expenses, including construction, approval and preconstruction costs for 2 of our projects called Parkview 1 and Suraj Aureva. Additionally, we also drawn down further debt for approval related payments for our upcoming commercial project at Mahim, which has contributed marginally to the rise in the gross debt. Overall, the increase reflects the company's continued investment in growth and project pipeline expansion. With this, I would like to open the floor for questions. Thank you.

[Operator Instructions] Our first question is from the line of Sucrit Patil from Eyesight Fintrade Private Limited.

I have 2 specific questions. First, I would like to ask Mr. Shah. Looking ahead, what internal practices or financial levers do you see most important for maintaining discipline across varying project time lines and market cycles?

So primarily, we are going to invest in upcoming portfolio of projects and we ensure financial closure by availing debt and also maintain healthy collections, to fuel the growth of the projects to enable us to complete the projects in a timely manner. And also, without saying that we also would like to maintain a very healthy debt-to-equity ratio while we are expanding our projects.

And my final question is to Mr. Thomas. With regards to one of your properties, Ocean Star, I believe a lot of other projects which were ongoing in the area has been completed. But this particular project is still under construction or taking a lot of time. So can you, sir, please highlight why it's taking so much? And what are the delays accounting for?

So, Sucrit, in terms of delays, I think we have to understand that we are within -- well within the RERA date. The RERA date for the Ocean Star project is June 2026. So we're confident that we will be handing over that project within the RERA date.

[Operator Instructions] Our next question is from the line of Himanshu Dugar from Stylus Holdings. Mr. Himanshu Dugar, you may proceed with the question. Since there is no response from Himanshu, we'll move to the next, [ Mr. Raghvendra Singh ].

I had 3 sub-questions on Bandra projects. I mean, in the investor presentation, we can see there are 3 projects there. So what might be the GDV for the 3 projects combined? What is the time line for launch? And financing-wise, do we depend on the cash flows from our commercial project launch to finance that? Or will we also go for a preferential share issue as there is a motion for that?

Thanks for the question. So if we look at the investor presentation, the total square footage, which we have for sale is approximately 2.76 lakh square feet. So the area, the broad range of pricing in Mount Mary ranges between INR 1 lakh to INR 1.50 lakh. If you take a INR 1 lakh potential also, it comes to about INR 2,760 crores. So roughly, you can take a price of INR 3,000 crores as a top line. In terms of the funding requirements, we are ideally wanting to use our internal accruals for now, but there could be a possibility that we will be raising some funds to at least kickstart the initial level of the project.

[Operator Instructions] Our next question is from the line of Maitri Shah from Sapphire Capital.

Hello, am I audible?

Yes madam, you are.

Yes. Firstly, congratulations on the 2 launches. Since you are planning to launch close to INR 2,000 crores of GDV n FY '26, what sort of presales targets do we have for the first half of the year?

So we're targeting -- so touch wood, we've seen good velocity in our new launches. And we're quite confident that since we're in a commercial bull run as well, we see that we're going to get good traction once we launch our commercial, which is due in November. So I feel -- strongly believe that we'll be able to at least reach our presales of INR 600 crores for this year.

That is great. And any sort of guidance could you give for the revenue and margins for the next 2 years, FY '26 and FY '27?

Margins, which we have -- I mean, if you see broadly it's ranging between 30% to 35%. So I think you can take that as an average.

And any presales guidance or the launch guidance for FY '27.

Sorry, can you repeat that again?

The launch guidance for FY '27, do we have any number on that?

I think it's too early to let us focus on getting the launches in place. And I think that's -- I think this year is very critical because we have a lot of launches. We may come back to you on the next year, but I think this year is what we are focusing on.

And did you mention the revenue guidance for FY '26?

No, revenue guidance, we are following the percentage completion method. So it's difficult to tell you an exact figure right now. But I think presales is what is -- I think what everyone understands very easily.

[Operator Instructions] Our next question is from the line of Bhavin Modi from Anand Rathi Wealth Management.

Sir, can you just repeat about the presales guidance for this year? What is the guidance?

Hi Bhavin, so the guidance, which we expect, including the commercial is INR 600 crores.

And sir, second thing, I would just like to know what is the expenditure towards the approval cost for this quarter for the commercial project in Mahim? What is the amount we have spent for the approvals?

Close to INR 20 crores to INR 25 crores we have spent in the project.

And for the Bandra project, did we spend anything on the approvals?

No, nothing on the approval, Bhavin.

Our next question is from the line of Tushar Sarda from Athena Investment.

My question was on -- you have some 13 lakh, 14 lakh square feet, which you say estimated available for sale. So while the commercial you are launching this year, what is the time line for other projects?

So Tushar, as I said, the larger project, which is the commercial is we are -- as I said, in November is what we're expecting the RERA. So that's when we can officially launch it. Having said that, Mount Mary is something which we are again focusing on as a group. It is again, you require a lot of capital to be infused to because the size being what it is, it requires a lot of capital upfront. So we can give you an exact time line, maybe a bit later in the -- maybe after 1 quarter on the Bandra land parcel because we're just tying up some loose ends there. But the commercial is something which we are very confident that we'll be launching in November.

Just apart from these 2, there are 8, 10 other projects, which are also smaller. So any time lines on that? Because you seem to have now run out of inventory to sell, almost 90% is sold.

Correct. So just give you a time line on the launch pipeline for this year. So we have the commercial, which is about INR 1,210 crores. We have another project called Gudekar House, which is F.P. No. 280 that has INR 150 crore top line. That's also expected in H2 of FY '26. We have a third project, which we discussed in Lower Parel, called Ambavat Bhavan, again, that is planned for launch in H2. We have a project in Mahim called Lobo Villa, which has a top line of INR 180 crores, which is again planned for launch in H2 and a small project with a top line of INR 80 crores in Shivaji Park, which is again planned for H2. So we have technically 5 new launches coming up, including the commercial for plan for H2.

That's good to know because it's not mentioned in the presentation, so I was wondering what the plan is. And commercial, how are you going to finance? It's going to be sale model? Or are you going to lease it? What is the plan?

No, it's the sale model.

Sale model, okay.

[Operator Instructions] Our next question is from the line of Himanshu Dugar from Stylus Holdings.

Hi, is my voice audible?

Yes.

So I just have one couple of questions that a new project is going to launch in November. So there is any expected date for the launch?

Expected date, as I said, the RERA is expected in November. See, we cannot give an exact date because finally, we need a RERA certificate, and that itself is the process. So I can't give you an exact date, but you can take it within November month. We are confident that we get the RERA certificate.

And there is any regulatory delay in any kind of projects like upcoming projects, did you see?

No, not any regulatory delays. As I said, there will be certain projects which have to be launched in H2, require certain IOD and CC. So that is a work in progress as we speak. And we're confident that we'll get the launch pipeline which we have committed.

[Operator Instructions] Our next question is from the line of Tanya Desai from DS Securities.

I had a couple of questions. My first question was that have you seen any kind of change in the buyer behavior, let's say, like payment time line or reference shift this quarter compared to the previous year?

Not that which is very alarming. We see it to be the same as before. Only shift we are seeing is the value luxury, which we have launched, we've seen good response. So I think the ticket size is also very relevant for the [ masses]. And I think that's a good spot to be in where we kind of cater to the larger audience.

Okay. Sure, sir. Sir, my second question was that any significant cost overruns or any kind of project delays in any of the key projects that investors should be aware of?

So as the earlier gentleman has said that most of our, we have hardly any unsold inventory and any -- from the ongoing sites. So the new projects are very important to get launched. So that's why we are very confident that once the commercial comes in, we have enough inventory to sell. We've got good response in our new -- 2 new projects, which we've launched recently. So I think we're excited that about this commercial launch, which is expected in November.

[Operator Instructions] Our next question is from the line of Tushar Sarda from Athena Investment.

On commercial, what is the kind of investment that you will need to make? Because even if you do sale model, payment will come linked to construction, right? And it also takes time to sell. So how much investment would you need? And how are you planning to finance that?

So with regards to the investment, we will need some approval for further payments this particular quarter, post which, I mean, once sales are done, so we will be good with the cash flows as soon as. Generally, we collect 20% on our launch. And then further as milestone-linked construction plan, we provide. So that will have sufficient financial closure is also there in terms of -- we already have sanction limit of INR 250 crores for the said project. So I think initial investment may be to the extent of INR 15 crores to INR 20 crores, which will be required. And post that, we see good collections coming in once sales kick in.

So you won't need to take any construction-related debt in this project?

[indiscernible] will be required only when there is a gap. So depending upon the sales, which we achieved, on a required basis, we will take to fill the gap in construction. But again, that will be supplemented by the cash flows from the project and as and when the sales happen.

No, no, that I understand. I'm just saying any plan for peak debt for this project? What do you think is the funding that you would need to put in and therefore, borrow that much money?

So maybe another INR 50 crores to INR 100 crores may be required for this project.

And for the Bandra project....

The RERA [ projection ] comes under plinth level. So post plinth level, we will not require that much of collection -- debt to fund the construction.

And for Bandra project, since it's a very large project, I don't know you're planning to launch it in [ phase ] or one go, but the approval cost will be substantial. So will you be getting a partner there or you're planning to do it on your own 100%?

No. So we won't be taking any partner there. We definitely want to do it ourselves this thing. But as we said, the investment is large. So we are just focusing on our ongoing sites and on the sales so that we can have enough cash flows internally to kind of kickstart that project.

So one can expect Bandra to be done only after a year or 2 years once your -- this commercial is done? Is that the plan?

Yes, I would say at least 1 year. I think by the time we get approvals because it's a larger layout, which we have planned, maybe 1 year is a good time line. And we are seeing good buoyancy in the commercial. So we're quite confident that we'll be getting some good sales in the commercial as well.

So you're not looking at any private equity kind of participation there?

Not as of now, not as of now.

[Operator Instructions] Our next question is from the line of [ Rajendra Passi], an individual investor.

My question to Mr. Thomas is we had the discussion around May after the Q4 results regarding the fundraising. And at that point in time, you mentioned like there were no plans during that time. So what changed in these 4 months that we are looking to have another fundraise of around INR 500 crores. So if you can point something around that.

Can you repeat that? Sorry, I didn't follow the question.

Sure. So my question is like Mr. Thomas, we had the discussion after the Q4 results in May, where I ask you like are there any plans to go for any other further fundraise basically? And at that point in time, you mentioned that there are no plans as of now. So my question is like what change in the 4 months that we are looking to have another like are we doing it for business development? Or is it mainly to reduce our debt and complete the current...

Yes. So the provision which we have made is an enabling provision, so that we could get an approval of the shareholders. Having said that, we are not saying that we are not going to raise any funds. We may raise like if we have launched our Bandra project, where it requires a lot of capital upfront, we would require a fundraise right now if we have to bring that project into light immediately in the next 6 to 8 months. So that investment is required. So there would be, of course, if we are looking at it strategically, whether we -- if we do a fundraise, whether we can kickstart Bandra in a faster pace. So that is why there was a decision to take an enabling provision. And subject to market conditions, we will decide whether we can go for a fundraise or not.

So it's not like 100% sure as of now, like it is still in the pipeline?

Yes, there's a possibility depending on market conditions that we may go ahead with the fundraise.

And will that -- will the complete fundraise will be for that Bandra project? Or are we looking for some other [indiscernible].

So there are 2 big sites of ours primarily which we are focusing on. One is in Mahim and one is for Bandra. So primarily, it will be used mainly to kickstart both these projects.

[Operator Instructions] Our next question is from the line of Rahul Jain from Agarwal Securities.

Just a couple of questions from my side. First of all, I would like to understand what is our target mix between the luxury and mid-segment housing going forward? And also how do you see the demand shaping up in the Mumbai micro market in which we operate?

So Mr. Rahul, we are focusing entirely all our new inventory and our new launches in the value luxury concept because that's what we are seeing traction, and I feel that's the way forward, at least as part of our strategy. Having said that, commercial, again, is like I mentioned earlier, we'll be going for a sale model, not a lease model. And touch wood commercial is doing well. However, for Bandra, when we start -- as and when we start Bandra, that will be in the luxury segment because the per square foot rate in Bandra starts with INR 1 lakh. So doing value luxury does not make sense there. So that would be the only project which would be in the luxury segment. But predominantly, all the new launches will be in the value luxury.

That's helpful. My second question is with we are facing rising costs and tight market -- contractor market, how are we planning to secure the vendor contracts? And do we have any cost escalation clause in our contract? Or are we [indiscernible].

Can you repeat that? Sorry, I didn't follow that. Can you repeat that again?

Yes. So my question is that with the rising cost and tight contractor market, how are we planning to secure the vendor contracts? And are we passing on the same through cost escalation clause? Or are we securing the cost escalations?

So whenever we give contracts, we obviously -- they have basic rates mentioned in the contract. So we give with material because that's what the larger contractors do. But having said that, the basic rates, even the contractors, if there's inflation rate in steel or concrete for that matter, there's always basic rates mentioned in the contract. So that would obviously come at some -- depending on how much it rises, some part will be -- have to be borne by us, but there's a range mentioned in the contract. So we kind of mentioned at least the current market prices with a little bit of inflation in our contract to make sure that we don't overshoot our contract value.

[Operator Instructions] Our next question is from the line of Anand Mundra from Mytemple Capital.

So sir, after a launch, how long does it take for the project to start contributing to revenue?

Generally, a quarter it takes.

Quarter lag. So maybe -- so if you launch the Mahim project, the commercial project in November, it should start contributing to revenue from the March quarter itself.

It also depends on the size of the project. If the project is a very high -- size is very big, then it may take 2 quarters also.

Got it, sir. And whatever launch projects we have now, currently, what would their approximate cost to complete be for the projects that are already launched ongoing projects?

So it will be close to INR 650-odd crores for these ongoing projects.

Against which we have sold plus unsold receivables about INR 1,100 crores or INR 1,200 crores.

INR 1,166 crores, yes.

How much of the number, sir?

Sorry.

The number is how much, the sold plus unsold receivables?

INR 1,166 crores.

[Operator Instructions] Our next question is from the line of Ishita Lodha from SVAN Investment.

What is the value of the unsold inventory from ready-to-move-in projects?

So there is no unsold inventory in ready-to-move in projects, all sold out.

And can you please highlight what is the initial funding requirement for the Mahim and Bandra project before launching it?

Which Mahim project you're saying?

Mahim commercial project and Bandra project, the 2 large projects, what is the funding requirement before launching it?

So as we speak today, at least we will require INR 15 crores to INR 20 crores in the approval part because we are in the advanced stage of obtaining CC and post which initial mobilization advance will be required. So close to INR 25 crores to INR 30 crores in approval and other expenditures, preconstruction expenditures.

And how do -- so this quarter, the collections was a bit subpar because it was sold towards the end of the quarter. But how do you see it going forward?

So we are seeing very good traction in collections. This quarter, we will -- considering we have done very good sales, it will follow. It's only a quarterly change because 1 quarter or 1 -- it is a spillover effect. So we are confident we will have a very good collection this quarter.

And we saw a very good response in the 2 launch projects this quarter. So now how do you plan the sales for the balance inventory left in these 2 projects? Like if there is demand, will you sell it now or wait for the realization to grow and sell it later...

So we will not hold the inventory as such because we want to do more pieces, and we also want to launch new sites. So we don't intend to hold, obviously, subject to some pricing as per expectation of our management. Otherwise, we are not holding any inventory.

[Operator Instructions] Our next question is from the line of [ Raghvendra Singh ], an individual investor.

This is on Bandra project. You mentioned it may launch after 1 year. So is it a little premature to give the guidance on the margins of that project if potentially you're saying top line of INR 2,500 crores or INR 3,000 crores on the 3 projects combined?

It's a bit early to get into that discussion.

And will the cash flow from the commercial project help guide your decision on the fundraise for launching the Bandra or fundraise is definitely required for.

No, I think it depends on the quantum. Of course, fundraise will be required, but the quantum will determine depending on the commercial sale.

And Mahim, if I look at comparables, there's not much commercial property up for sale. So is it a good submarket for commercial office space? I mean the people who are living in that area or close by?

So we're seeing the connectivity through that area is going through a sea change. There's a direct corridor coming, which is connecting BKC Western Express Highway to Senapati Bapat, where our particular project is located. So we're going to have a very good connectivity seamlessly to the coastal road and also the connectivity to the running Aqua line, which is the metro and the railway. So I think we are very confident, and we're seeing good demand for such offices.

[Operator Instructions] As there are no further questions from the participants, I now hand the conference over to the management for the closing comments. Thank you, and over to you, sir.

We thank you, everyone, for participating in our conference call. And we thank you, and we are happy to answer any questions. You can reach out to our Investor Relations advisers for any further details. Thank you very much.

Thank you, sir. On behalf of Suraj Estate Developers Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.