Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Puravankara Ltd (BOM:532891, Financial) reported a significant year-on-year sales growth of 39%, reaching INR1,128 crores in Q1 FY25.
- The company achieved a 6% year-on-year increase in average realization to INR8,746 per square foot.
- Puravankara Ltd (BOM:532891) has a robust launch pipeline with approximately 12.7 million square feet of new projects.
- The company deployed INR762 crores for land acquisition in key markets like MMR, Goa, and Bangalore, indicating strategic expansion.
- Total revenue for Q1 FY25 grew by 101% year-on-year to INR676 crores, showcasing strong financial performance.
Negative Points
- Net debt increased from INR2,151 crores in Q4 FY24 to INR2,237 crores in Q1 FY25, raising concerns about debt management.
- The cost of debt stood at 11.64%, with a slight increase due to higher rates in land loans.
- Interest expenses in Q1 FY25 were INR119 crores, implying an average cost of borrowing of 14.5%, which is relatively high.
- The company's net debt to equity ratio at the end of the quarter was 1.17, indicating a higher leverage.
- Despite strong sales, the sales value at Purva Land was lower due to new launches, which could impact short-term revenue.
Q & A Highlights
Highlights from Puravankara Ltd (BOM:532891) Q1 FY25 Earnings Call
Q: Recently, the Board approved INR1,000 crores of QIP. Will these funds be used for debt reduction or land acquisition?
A: Neeraj Gautam (EVP Finance) - The Board and shareholders have approved raising funds through QIP. We are evaluating options, and the allocation will likely be between debt reduction, new acquisitions, and operations. Specifics will be shared once a decision is made.
Q: Can you provide background and recent developments regarding Keppel Puravankara Development Private Limited?
A: Abhishek Kapoor (CEO, CFO, Executive Director) - This joint venture with Keppel Land, where Puravankara holds 49%, has completed its projects. The partnership was closed in FY23-24, and Keppel Land was given an exit.
Q: The interest expenses imply an average borrowing cost of 14.5%. Can you explain the components of this debt?
A: Neeraj Gautam (EVP Finance) - Our debt includes INR3,200 crores of serviceable debt and INR417 crores in debentures issued to HDFC CARE, plus INR162 crores investment by Purva Investment. The interest cost includes fair value accounting for these instruments.
Q: Regarding the launch pipeline, will the Lokhandwala and Thane projects be launched in phases?
A: Abhishek Kapoor (CEO, CFO, Executive Director) - Both projects will likely be launched in two phases, depending on market response.
Q: What is the company's guidance for FY25 in terms of units, launches, and collections?
A: Abhishek Kapoor (CEO, CFO, Executive Director) - We expect to launch 17.25 million square feet, including 12.7 million of new projects and 4.56 million of existing projects. The distribution includes 9.3 million square feet for Puravankara and 3.28 million for Provident.
Q: Will the per square foot realization maintain positive momentum throughout the year?
A: Abhishek Kapoor (CEO, CFO, Executive Director) - The average realization depends on the mix of inventory. We expect an average growth of about 9% in the industry, though it varies by project and market.
Q: Why is the company not reducing debt despite having significant cash reserves?
A: Abhishek Kapoor (CEO, CFO, Executive Director) - We focus on replenishing land banks and scaling the business. The current debt levels are comfortable, and we aim to maintain them while growing the business.
Q: What is the expected pre-sales trend rate over the medium term?
A: Abhishek Kapoor (CEO, CFO, Executive Director) - We do not give specific guidance but aim to continue the momentum from previous years. Our CAGR for units sold has been 48%, and for value, it has been 57%.
Q: How are the approval processes for new projects, considering the upcoming elections?
A: Abhishek Kapoor (CEO, CFO, Executive Director) - We aim to meet our annual launch targets. There might be minor delays due to elections, but we strive to bring products to market on time.
Q: What are the company's EBITDA margin expectations, and will new Mumbai projects bring higher margins?
A: Abhishek Kapoor (CEO, CFO, Executive Director) - Current EBITDA margins are around 22%. New launches and marketing costs impact margins, but we aim for 30% EBITDA margins. Mumbai projects are expected to have higher margins, especially in outright sales.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
