Puravankara — Q2 FY25 earnings call

Call held 8 Nov 2024

Management summary

Puravankara reported strong operational performance in Q2 FY25 with significant growth in sales, collections, and revenue, despite a net loss. The company highlighted a robust launch pipeline for H2 FY25, strategic land acquisitions, and a focus on debt reduction. Management expressed confidence in its geographic expansion strategy, particularly in Mumbai and Pune, and outlined clear targets for commercial rental income.

Highlights

  • Q2 FY25 Sales stood at INR1,331 crores, with a volume of 1.53 million square feet.

  • Customer collections for Q2 FY25 increased by 18% YoY, and H1 FY25 collections grew by 27% YoY.

  • Average realization in Q2 FY25 was INR8,697 per square feet, a 9% increase YoY.

  • Total Revenue for Q2 FY25 grew by 36% YoY to INR520 crores, and H1 FY25 revenue grew by 67% YoY to INR1,195 crores.

  • EBITDA margin for Q2 FY25 was 28%, and for H1 FY25 was 24%.

  • The company reported a net loss of INR19.88 crores for Q2 FY25 and INR5 crores for H1 FY25.

  • Net debt as of September 30, 2024, was INR2,430 crores, with a net debt-to-equity ratio of 1.29.

  • A robust launch pipeline of 15.7 million square feet is planned, with an expected GDV of approximately INR13,600 crores for H2 FY25.

Key financials

3 periods

Headline

  • Sales Value
    ₹1,331 Cr
  • Sales Volume
    1.53 million sq ft
  • Average Realization
    ₹8,697/sq ft
    YoY +9%
  • Net Debt (Sep 30, 2024)
    ₹2,430 Cr
  • Net Debt-to-Equity (Sep 30, 2024)
    1.29
  • Debt per sq ft (under construction)
    ₹928/sq ft
  • Cost of Debt (Sep 30, 2024)
    11.6%

Q2 FY25

  • Revenue
    ₹520 Cr
    YoY +36%
  • EBITDA Margin
    28%
  • Net Loss
    ₹19.88 Cr

H1 FY25

  • Revenue
    ₹1,195 Cr
    YoY +67%
  • EBITDA Margin
    24%
  • Net Loss
    ₹5 Cr

What they filed

Q1 FY27: revenue up 306.3%, net profit up 126.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue275 189 155 126 334 +21%723 +283%1,119 +622%512 +306%
EBITDA10 -9 -46 -31 13 +30%124 +1478%195 +524%82 +365%
Net profit-25 -82 -76 -68 -36 −44%64 +178%111 +246%18 +126%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Sales
₹1,330 Cr Total
  • Provident Housing ₹628 Cr 47.2%
  • Puravankara Limited ₹612 Cr 46.0%
  • Purva Land ₹90 Cr 6.8%

Guidance & targets

Volume

  • Launch Pipeline GDV Volume · H2 FY25 · Medium confidence INR13,600 crores
    the GDV of the launch pipeline is approximately INR13,600 crores

    — Abhishek Kapoor, Executive Director, Group Chief Executive Officer and Chief Financial Officer

  • Land Bank Volume · next 2-3 years · High confidence 45 million sq ft

    Previously 28 million sq ft → 45 million sq ft

    That net 15 million square foot, we would like to take it up to 45 million square foot. And the logic behind that is that we should have over the next 3 years' time frame, not today, not tomorrow but over 2, 3 years' time frame.

    — Abhishek Kapoor, Executive Director, Group Chief Executive Officer and Chief Financial Officer

  • Launch Capability (in system) Volume · next 2-3 years · High confidence 22.5 million sq ft
    you're looking at about 22.5 million square foot of launch capability in the system of new launches.

    — Abhishek Kapoor, Executive Director, Group Chief Executive Officer and Chief Financial Officer

Sales

  • New Launch Sales (expected) Sales · H2 FY25 · Medium confidence INR8,000 crores
    of which we are expecting to totally open for sale approximately INR8,000 crores.

    — Abhishek Kapoor, Executive Director, Group Chief Executive Officer and Chief Financial Officer

Revenue

  • Commercial Rental Income Revenue · Next FY · High confidence INR150 crores
    in the next year, we would expect by next year, financial year, March, we should get to INR150 crores.

    — Abhishek Kapoor, Executive Director, Group Chief Executive Officer and Chief Financial Officer

  • Commercial Rental Income Revenue · by Oct 2026 · High confidence INR200 crores
    The year after, we should get to about INR200 crores by the end of the year. Or 6 months later, I would say possibly by October 2026 is what we are expecting. So that will get us to the year after next to about INR200 crores.

    — Abhishek Kapoor, Executive Director, Group Chief Executive Officer and Chief Financial Officer

  • Commercial Rental Income (larger portfolio) Revenue · next 5 years · High confidence INR500 crores
    For the larger portfolio, our the target is, of course, to get the rental income over the next 5 years of INR500 crores.

    — Abhishek Kapoor, Executive Director, Group Chief Executive Officer and Chief Financial Officer

  • NCR Contribution Revenue · 12-24 months · Medium confidence —
    we keep saying it will take anywhere between 12 to 24 months.

    — Abhishek Kapoor, Executive Director, Group Chief Executive Officer and Chief Financial Officer

Debt

  • Net Debt-to-Equity Ratio Debt · ongoing · High confidence <1
    Our goal -- ideal goal is to keep it sub-one.

    — Abhishek Kapoor, Executive Director, Group Chief Executive Officer and Chief Financial Officer

  • Net Debt Debt · next 3-4 years · Medium confidence 0
    So the goal is that once we have reached a certain level of growth, then we'll focus only on bringing the net debt down towards 0. In fact, that would be our goal over the next 3 to 4 years' time period.

    — Abhishek Kapoor, Executive Director, Group Chief Executive Officer and Chief Financial Officer

Profitability

  • Redevelopment Project EBITDA Margin Profitability · High confidence 23-24%
    If you look at the redevelopment project, the EBITDA margin will be anywhere between 23%, 24%.

    — Abhishek Kapoor, Executive Director, Group Chief Executive Officer and Chief Financial Officer

  • Thane Project EBITDA Margin Profitability · High confidence ~30%
    So if you were to look at Thane, EBITDA margin would be about 30%.

    — Abhishek Kapoor, Executive Director, Group Chief Executive Officer and Chief Financial Officer

Realization

  • Lokhandwala Realization Realization · High confidence INR36,500-45,000
    So in Lokhandwala, you would expect anything between INR36,500 to INR45,000 a square foot.

    — Abhishek Kapoor, Executive Director, Group Chief Executive Officer and Chief Financial Officer

  • Pali Hill Realization Realization · High confidence INR105,000-115,000
    And for Pali Hill, we would expect an average realization of anywhere between INR105,000 to INR115,000 square foot.

    — Abhishek Kapoor, Executive Director, Group Chief Executive Officer and Chief Financial Officer

Capex

  • HDFC Platform Deployment Capex · shortly · High confidence INR300+ crores
    we are expecting to deploy another approximately INR300-plus crores very, very shortly.

    — Abhishek Kapoor, Executive Director, Group Chief Executive Officer and Chief Financial Officer

New Launches

  • Project Launches New Launches · before March 31 · High confidence Thane and Lokhandwala
    in the coming two quarters, we are anticipating we should take Thane and Lokhandwala to market, that's our target before 31st March.

    — Abhishek Kapoor, Executive Director, Group Chief Executive Officer and Chief Financial Officer

Risks & concerns

  • Project approval delays due to election process

    medium

    Plan sanctions across the country were deferred, causing almost a quarter of delay in new launches for H1 FY25.

    Management acknowledged

  • Lower new launch contribution in H1 FY25

    low

    New launch sales were INR148 crores in H1 FY25 compared to INR700 crores last year, primarily due to approval delays.

    Management acknowledged

  • Cautious approach to NCR market entry

    low

    While keen on NCR, the company is taking a cautious, asset-light approach with JDAs, expecting contribution in 12-24 months.

    Management acknowledged

Q&A highlights

3 direct
Impact of new launches on H1 FY25 sales and future launch pipeline GDV Direct
total launch contribution in the first half of the year has been INR148 crores, approximately. It's been the new launch contribution, versus last year, where the new launch contribution was INR700 crores... the GDV of the launch pipeline is approximately INR13,600 crores, of which we are expecting to totally open for sale approximately INR8,000 crores.

Clarifies the reason for lower new launch contribution in H1 and provides significant forward-looking guidance on the scale and value of upcoming launches, which is a key driver for future sales.

Asked by Deepak Purswani

Strategic direction on debt to equity and long-term debt reduction targets Direct
Our goal -- ideal goal is to keep it sub-one... over the next 2 to 3 years, we would anticipate that we'll reach a stage where this debt number will become irrelevant for our conversation because we believe that more and more collections will come in... over the next 3 to 4 years' time period, then we'll focus only on bringing the net debt down towards 0.

Provides clear long-term debt reduction targets and the strategy to achieve them through improved collections, addressing a key investor concern for real estate developers regarding leverage.

Asked by Deepak Purswani

Geographic expansion strategy, focus markets, and opportunistic plays Direct
The strategy for us is to focus on these 5 or 6 geographies, which is Bangalore, Hyderabad, Chennai, Mumbai, Pune, and in NCR... 80% our focus will be on these 4, 5 markets, 20% will be more opportunistic on the markets other markets, which we are present.

Clearly outlines the company's core geographic focus for growth and explains the rationale behind opportunistic projects, providing clarity on future market entries and resource allocation.

Asked by Harsh Pathak

3 min read 6 chapters

Detailed narrative

Q2 FY25 Operational and Financial Performance Overview

Puravankara reported strong operational metrics for Q2 FY25, with sales reaching INR1,331 crores and a sales volume of 1.53 million square feet. Customer collections demonstrated robust growth, increasing by 18% YoY in Q2 and 27% YoY in H1 FY25, indicating improved operating efficiencies. The average realization per square foot rose by 9% YoY to INR8,697. Financially, total revenue for Q2 FY25 grew by 36% YoY to INR520 crores, and H1 FY25 revenue increased by 67% YoY to INR1,195 crores, with EBITDA margins at 28% and 24% respectively, though the company recorded a net loss of INR19.88 crores for the quarter.

Robust Launch Pipeline and Strategic Business Development

The company has a strong launch pipeline of 15.7 million square feet, including 12.27 million square feet of new planned projects and 3.44 million square feet for new trade launches. Management expects to open approximately INR8,000 crores worth of inventory for sale from this pipeline in H2 FY25. Strategic acquisitions include redevelopment rights for Miami Apartments at Breach Candy (Mumbai) with estimated rates of INR125,000-140,000 per sq ft, and an expansion in Lokhandwala (Andheri West) with a combined GDV of INR2,350 crores. A JDA for 1.95 acres in Electronic City, Bangalore, is expected to yield a potential GDV of INR250 crores.

Debt Management and Liquidity Position

As of September 30, 2024, Puravankara's net debt stood at INR2,430 crores, resulting in a net debt-to-equity ratio of 1.29. The company maintains a strong liquidity profile with INR939 crores in cash and cash balance. Management's long-term goal is to reduce the net debt-to-equity ratio to below one and eventually bring net debt towards zero within the next 3-4 years, driven by increasing collections and cash generation from ongoing projects. The debt per square foot of under-construction area has reduced by 26% to INR928 per square feet since March 2022.

Geographic Expansion and Market Focus

Puravankara's strategy focuses on 5-6 key geographies: Bangalore, Hyderabad, Chennai, Mumbai, Pune, and NCR (Gurgaon/Delhi), which are expected to contribute 80-85% of the business. The company is making strategic inroads into the Western region, with 49% of planned projects in Mumbai and Pune, and aims to launch projects in Thane and Lokhandwala before March 31. While NCR is a target, the approach is cautious and asset-light, with significant contribution expected in 12-24 months. Opportunistic projects in existing markets like Kochi, Coimbatore, and Goa will continue based on established presence and relationships.

Commercial Portfolio and Rental Income Targets

The company is actively developing its commercial portfolio, with 3 million square feet of plan-approved area. It expects to complete 2.2-2.3 million square feet in the next financial year, projecting a rental income of INR150 crores from this segment. The target is to achieve INR200 crores in rental income by October 2026 and a larger portfolio target of INR500 crores over the next five years, driven by acquisitions of city-center prime location projects.

Mumbai Market Performance and Brand Traction

Puravankara highlighted its strong brand traction and unique positioning in the Mumbai market, particularly in redevelopment projects. Projects in Thane are expected to yield an EBITDA margin of around 30%, while redevelopment projects in areas like Pali Hill and Lokhandwala are projected to have EBITDA margins of 23-24%. Realizations are anticipated to be INR36,500-45,000 per sq ft in Lokhandwala and INR105,000-115,000 per sq ft in Pali Hill, reflecting the premium nature of these locations and the company's ability to command a 15-20% premium in the market.

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