Release Date: August 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sunteck Realty Ltd (BOM:512179, Financial) achieved INR500 crores in presales for Q1 FY25, marking a 30% year-on-year growth.
- Operating cash flow grew by 32% year-on-year, reaching INR100 crores during the quarter.
- The company remains net cash positive with gross debt down over 60% since FY22.
- Significant progress in project execution, including the completion of Sunteck Maxxworld at Naigaon and nearing completion of SunteckCity, 4th Avenue at ODC, Goregaon West.
- Upcoming projects in Dubai and Nepean Sea Road have strong potential, with the Dubai project expected to generate over INR9,000 crores in sales.
Negative Points
- One-time charges affected the core EBITDA, which would have been close to INR170 crores instead of the reported INR79 crores.
- The company is still awaiting certain height approvals for additional FSI in the Sunteck City Avenue 2 project.
- The Dubai project, while promising, involves a significant investment of INR2,000 crores and carries inherent risks.
- The Nepean Sea Road project is still in the approval and site clearance stages, with a launch expected only in Q4 FY25 or Q1 FY26.
- The company's growth projections are heavily reliant on the successful launch and sales of new projects, which may face market and regulatory uncertainties.
Q & A Highlights
Q: Can you help me understand the broad economics of the Dubai project? How much did it cost you to build? And how would the money flow in from India to Dubai and back? Are there any tax implications?
A: The Dubai project is a 100% subsidiary of Sunteck. We have invested approximately INR250 crores, making it an asset-light model. The project is located in the heart of Downtown Dubai near the Burj Khalifa Community. The total project cost is around INR2,000 crores, most of which will come from presales. The project is expected to be completed in three to four years, and the construction partner is MAS Group.
Q: What is the status of the Nepean Sea Road project, and when do you expect to launch it?
A: We have vacated most of the tenants and are in the process of clearing the site. Approvals are underway, and we are at an advanced stage of designing the project. We expect to launch it either in Q4 FY25 or Q1 FY26.
Q: What is the launch pipeline for this year, and how much unsold inventory do you have in all projects except BKC?
A: We plan to launch new phases and towers in several projects, including Sunteck World in Naigaon, Sunteck Sky Park at Mira Road, 5th Avenue at ODC Goregaon West, Sunteck Beach Residences, and Sunteck Crescent Park at Kalyan. The combined GDV value of these launches is close to INR5,000 crores. Our unsold inventory in ready-to-move-in projects is around INR1,200 crores, and in ongoing projects, it is around INR1,600 to INR1,700 crores.
Q: What is your presale and EBITDA guidance for FY25 and the next two years?
A: We are targeting a presale growth of 30% to 35% for FY25. We expect to maintain this growth rate year on year. Our EBITDA margins are published in our presentation, and we aim to continue this performance.
Q: Can you provide more details on the Dubai project launch? Will it be phased?
A: The Dubai project will be launched as a single project, not in phases. It consists of one or two towers and will be launched at one time.
Q: How do you see the cash flow from BKC impacting your overall operating cash flow?
A: While BKC collections have positively impacted our operating cash flows, it is important to consider cash flows from all projects. Last year, we had an operating cash flow surplus of INR484 crores without significant BKC collections. Therefore, BKC collections are beneficial but not the sole contributor to our cash flow.
Q: What is the status of your business development projects, and what is the GDV of these projects?
A: We are evaluating several projects, but it is difficult to disclose specifics at this time. We aim to add significant GDV value through these projects.
Q: What are the receivables from your ongoing projects?
A: The receivables from our ongoing projects are close to INR2,300 crores to INR2,400 crores.
Q: What are the drivers for your presale growth in FY25 and beyond?
A: Our growth in FY25 is driven by existing projects and new launches. We expect to achieve 30% to 35% presale growth from these projects. Additionally, the launch of major projects like Nepean Sea Road and Dubai will further boost our growth in the coming years.
Q: What is the status of the Borivali project, and when do you expect to launch it?
A: We are awaiting approvals for the Borivali project and have not added it to our GDV value yet. Once approvals are expedited, we will provide a timeline for the launch.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
