Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mahindra Lifespace Developers Ltd (BOM:532313, Financial) reported a significant increase in quarterly presales, reaching INR1,119 crore, a threefold jump from the previous year's INR345 crore.
- The company has a strong sales pipeline with new launches planned for the current financial year, including projects in Pune, Bangalore, and Chennai.
- Inventory overhang has reduced significantly across key markets like MMR, Pune, and Bangalore, indicating healthy market conditions.
- The company has added more than INR2,000 crore in GDV in the current financial year, showing strong business development efforts.
- The IC business has shown good performance with leasing of 19 acres, translating into INR76 crore, indicating strong traction in the industrial sector.
Negative Points
- The company acknowledged that the business is lumpy and subject to seasonality, which could affect quarterly performance.
- There are concerns about the impact of indexation on the real estate sector, which the company is still trying to understand.
- Despite strong presales, there are worries about the company's ability to keep up with business development efforts to sustain future growth.
- The company has faced delays in project approvals, particularly in Q1 due to elections, which could impact the timing of future launches.
- There is a significant focus on managing profitability and ensuring that new projects meet financial thresholds, indicating potential challenges in maintaining margins.
Q & A Highlights
Q: My bigger worry is now that you, maybe, the presales runs it now though I'm not analyzing it, but seems to be now running ahead of your business development efforts and business development is up. And so I mean, you have been last year and almost accruing to us about INR4,000 crore of business development. So now so how do you look into your guidance of INR8,000 crore to INR10,000 crore by FY28, which implies 50% presales kegger, it even if I take the midpoint of that guidance of INR9,000 crore from, say this year INR27,000 crore, INR28,000 crore on my assumptions. So how -- given that kind of growth which you need to deliver to achieve that, so how do you think on the business development side, you need to step up? We have given INR2,000 crore financial year to date. So you think that now this year is, like I mentioned, are going to be a transformational year where we will see these efforts of last three years, four years or in INR4,000 crore are going to maybe in INR7,000 crore to INR8,000 crore and then going ahead further into the coming years, so that is kind of a quantum you need to do to achieve these numbers?
A: Yes, thank you. Let me -- this is a critical question that you asked is probably the biggest one that we are carefully analyzing on a daily basis. So let me answer this into three parts. The first part is I now -- it's been a year for me here. I now feel much more comfortable with the flow of deals. The kind of deals that we are seeing is quite healthy. So it's up to us to close those deals if it meets our financial and other thresholds. So I think the first part, important one in the past, I feel that we are not seeing the deals that are, where we are first port of call, it was rejected by others, potentially less interest reduced to come to us. So I think that's starting to change. It's not changed but we are starting to see movement on that. So that's the first part. The second part is just wanted to highlight to you, what is our total GDV looks like. We have signed between Q4 and Q1 roughly INR4,000 crore. So Sai Baba Nagar and a couple other small deals in Bangalore, Windsor and (inaudible) that's INR4,000 crore. Of unsold phases of roughly INR4,000 crore from Vista, Citadel, [Alcove], and a few others. I have unsold inventory of more than INR1,000 crore. So INR4,000 crore, INR4,000 crore, and INR1,000 crore, so INR9,000 crore. I have some land in projects. I think that we are first launching significant land in and therefore we have in Chennai, which we're doing plotted and we have a new, which was known to all of you in terms of growth, we are thinking of launching it at the earliest. Across all these three, it's somewhere around INR3,000 crore of full potential value of those. So for INR4,000 crore, INR4,000 crore, INR3,000 crore, INR1,000 crore. So that's INR12,000 crore and pan area, we have applied for IC&IC policy after 63 1A exit, that's INR8,000 crore. So that's INR20,000 crore of GDV that we currently either own or have a path to, let's say, launching. Obviously concentrated GDV like Thane doesn't get materialized in the short term but to multi-well pads. So we are sitting on a decent, let's say, a new GDV, but our work is cut out. That's the Part three. In terms of what we intend to do. My goal is to sign the right deals at the fastest speed. Briefly though the land owners expectation in this market are very, very, large and they look at the pricing in the market. And so that's how the land should be priced. And it's our job to make sure that those deals are set up really well received by the land it or do a JDA or do anything that is assuming price of the land and if market slowdown two years, three years, four years, five years later, then we'll be sitting on a project that will not give us the bottom line that we are seeking from a financial point of view. So first up, so we have good flow of deal. We have a strong base of project that we have to bring to market and be earlier. And our business, the lower part on the GDV addition side will continue. That's something that I personally look after and I pursue that seriously. And that's something we will see more action coming on, but it will not be chasing growth for the sake of chasing deals for the sake of growth, but it will be the right deals for us for the future of this company. So those are the three part of answers I just wanted to give you Parikshit.
Q: By any sense, directionally, like the house of the INR4,000 crore number look like from a mix point of view and beyond the land parcels as you exit the whole existing land parcels? We also -- so how do you think this could maybe if you can give this number growing that INR4,000 crore in addition?
A: INR4,000 crore plus from GDP or sales, you're talking?
Q: GDP, talking about GDP.
A: So last year was like INR4,400 crore right? So our goal this year is to definitely go beyond that. But we'll be measured about it. But that's what I just want to. I don't want to give a number and then say, you said something and then you didn't score well against that. I guess my goal is to scale this business to for us to achieve INR8,000 crore to in INR10,000 crore, that's the raw materials. So we're not going to stop, but we will be cautious about it or rather I see, let's say instead of 8 to 10 years I'll achieve INR7,500 crore but good quality deal, that is more value, which gives us bottom line is much more valuable to me than trying to do INR10,000 crore, which doesn't give the bottom line. So that's what I'm trying to optimize. My goal definitely do more than INR4,400 crore that we did last year.
Q: So we should be looking at something like INR7,000 crore to INR8,000 crore, profitable deals, then chasing to INR9,000 crore to INR10,000 crore, you may see some dilution, right?
A: I can't answer that question that. I'll keep it a little bit open from my side.
Q: Okay. Next question on the last one is on the delivery so I mean, we have seen EBITDA negative for quite
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
