Shriram Properties Limited

Shriram Properties delivered strong operational performance in Q2 FY26, achieving sales volumes of 1.14 million square feet, up 39% QoQ and 10% YoY. Sales value reached INR 685 crores, a 55% QoQ and 21% YoY increase. However, financial results were muted due to regulatory transitions in Bangalore, including the division of BBMP and eKhata issues, which deferred handovers and revenue recognition. Over 650 units, representing INR 420 crores in revenue potential, were deferred from Q2.

For the first half of FY26, the company recorded sales volumes of 1.96 million square feet, a 13% YoY increase, with a sales value of INR 1,126 crores, up 19% YoY. H1 collections stood at INR 725 crores, growing 6% YoY, and 1,504 units were handed over, a 34% YoY increase. H1 operating revenue was INR 475 crores, growing 33% YoY, with gross profit at INR 143 crores (up 53% YoY) and a stable gross margin of 32%. H1 PAT was INR 29 crores, compared to INR 17 crores in the prior year.

In FY26, Shriram Properties added 5 new projects with an aggregate development potential of 2.3 million square feet and a Gross Development Value (GDV) of INR 2,350 crores, with 3 projects concluded in October 2025. The company is in advanced stages of finalizing another 5-6 new projects, adding over 6 million square feet of potential in H2. The upcoming project pipeline represents a GDV of over INR 11,400 crores, and management aims to nearly double this pipeline within the next 18-24 months. A high-confidence launch lineup of ~2.7 million square feet with a GDV of INR 2,200 crore is planned for H2 FY26.

The company maintained strong financial discipline, generating a positive operating cash flow of INR 52 crores and net free cash flow of INR 99 crores in Q2. Closing cash balance stood at INR 286 crores, providing ample liquidity. Net debt is INR 407 crores, with a healthy net debt to equity ratio of 0.29x, well within the comfort range. The cost of debt has steadily reduced to 11.1%, and the company maintains a CRISIL A- positive rating, reaffirming its financial prudence.

Shriram Properties remains committed to its 'Mission 1234' for FY28, targeting a 10% PAT margin and INR 1,000 crore revenue. As of September 2025, 9.8 million square feet of area is pending revenue recognition, representing over INR 5,000 crores in potential revenue over the next 3 years. To achieve its mission, the company plans to add 15-20 million square feet to its pipeline over the next 12-18 months, supplementing the existing 22.4 million square feet visible today.

Management noted the Bengaluru real estate market is performing very well with strong demand, growing from 45,000-55,000 homes annually to over 75,000-80,000 homes. The company expects a steady pricing environment, with sustainable annual price hikes of 5% to 8%, which are sufficient to cover construction cost inflation. Consolidated company-level margins are expected to improve due to portfolio upgrading and increased average realization for mid-market products (from <INR 5,000 to INR 6,500-7,000 per square foot).

Shriram Properties has successfully entered the Pune market, with strong traction for new launches like 'Code Name Superstar' and 'Code Name The One' (80% sold in 3 months). The company plans to focus on stabilizing its presence in Pune with 4-5 projects before considering further expansion into markets like Hyderabad or Mumbai. Management is actively engaging with analysts, fund managers, and family offices through roadshows to enhance investor confidence and coverage.