Kolte-Patil Developers Limited (KOLTEPATIL) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Kolte-Patil Developers Limited Q3 and 9 Months FY '25 Earnings Conference Call. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Smit Shah from Adfactors PR. Thank you, and over to you, sir.

Thank you, Manav. Good afternoon, everyone, and thank you for joining us on the Q3 and 9M FY '25 Results Conference Call of Kolte-Patil Developers Limited. We have with us Mr. Atul Bohra, Group CEO; and Ms. Dipti Rajput, Vice President, Investor Relations. Before we begin, I would like to remind you that certain statements made in today's discussion may be forward-looking in nature and may involve certain risks and uncertainties. A detailed statement in this regard is available in the Q3 and 9M FY '25 results presentation that has been shared with you earlier. I now hand over the call to Atul Bohra, Group CEO, to begin the proceedings of this call. Thank you, and over to you, sir.

Thank you, Smit. Good afternoon, and warm welcome to everyone present on this call. Thank you for joining us today to discuss operating and financial performance of the company for the third quarter and 9 months ended 31st December 2024. Let me begin by sharing with you my views on real estate environment, followed by an overview of key developments during the quarter. Dipti will then take you through the key financial highlights. Following this, we will open the forum for question and answers. The residential real estate sector in India reached new milestone in 2024, recording its highest annual sales in over a decade. This growth underscores the sector's resilience and the strong appetite of the homebuyers. Demand remained robust across the major cities in India. Recently announced Union Budget 2025 emphasized inclusive development, economic expansion and fostering private sector participation while maintaining the macroeconomic stability. Among the notable highlights, income tax relief for the middle class and tax benefit for 2 homes stands out as a key driver that could encourage homeownership. Reduction in repo rate will further enhance affordability and favorable impact on the housing demand. The government's commitment to housing for all large-scale infrastructure investment and business-friendly policies frameworks are collectively laying strong foundation for sustained expansion across real estate asset class. In our core market of Pune, Mumbai and Bengaluru, we continue to see strong customer sentiment and absorption rate. Let me take you through the operational performance for the quarter and 9 months ended 31st December 2024. Our performance over last 9 months of FY '25 has reached to a new milestone in terms of booking and collection. Sales booking reached to INR 2,161 crores, collections stood at INR 1,729 crores, making a 17% year-on-year growth. This performance highlights our commitment to redefining living, enhancing the customer price value proposition and strong execution capabilities. Average realization improved 7% during 9 months, and we have successfully been able to take rational price hikes across all the projects. As mentioned previously, we -- previously, our endeavor is to balance average price growth as well as the volume to ensure healthy margin across the geographies. During 9 months of the financial year, we launched -- new launches contributed approximately 31% of the total sale value. Our 2400 premium luxury segment continues to gain momentum, reaffirming the growth demand for aspirational living spaces. Here, I would like to mention that Life Republic township projects continue to deliver strong performance during 9 months FY '25, sales volume at Life Republic reached to approximately 1.5 million square feet, highlighting the township's sustained demand and growing appeal among the homebuyers. Life Republic continues to witness growth in realization, which has improved by 6% over the same period of last year. Over time, we have strategically widened our price bracket within the township offering diverse mix of residential options that caters to a broader spectrum of homebuyers with township evolving into a well-established urban hub offering residential and lifestyle amenities. We remain confident in Life Republic's long-term growth potential. In quarter 3 FY '25, our presale value reached to INR 680 crores, supported by the sales volume of 0.81 million square feet. A key highlight for the quarter was improvement in the average price realization, which stood at INR 8,394 per square feet, marking an 11% year-on-year increase. This uptick was primarily on account of strong traction in our premium and luxury segment. Higher realization at Canvas project within the Life Republic, along with robust demand for our 24K brand in Baner and Pimple-Nilakh played a pivotal role in driving this growth. To further enhance our portfolio, we are actively building our business development pipeline that aligns with evolving market preferences in our target markets. The business development pipeline remains robust. As you are aware, we recently signed a 22-acre joint development project in Pune with expected gross developable value of INR 4,000 crores and potential saleable area of 5 million square feet. It's a revenue share structure strategically located in Southwest part of the Pune with strong connectivity and proximity to essential social infrastructure. This development will strengthen our presence in high potential micro market of Pune. This project amplifies our vision of creating vibrant community-centric neighborhoods while delivering high-quality living spaces. Likewise, we are focusing on strengthening our presence in Mumbai and Bengaluru as well and constantly evaluating the opportunities. Moving on to the launches. We are hopeful of launching project GDV of INR 5,000 crores in FY '25. Let me dwell a little on this. Our Pune project, we have secured most of the approvals and expecting to receive RERA approval soon. We have mentioned in the past that moment -- most of the Mumbai launches are slated at quarter 4. However, we have experienced certain regulatory approval delays in the Mumbai portfolio on account of elections and quite a few approvals to come in the couple of quarters. Basis on this, we expect recent number of the year moderate marginally. Coming to the financial performance, as highlighted earlier, we are on track to close to the year with strong deliveries. During the 9 months, we recognized highest ever 9 monthly revenue of INR 999 crores. Profitability has been improved. 9-month EBITDA and PAT stood at INR 69.5 crores and INR 41.43 crores, respectively, as compared to 9 months '24 EBITDA of INR 58 crores and PAT of negative INR 42.3 crores -- looking ahead, and we anticipate the demand momentum to sustain. Additionally, as homebuyers, developers and landowners increasingly seek participation, partnership with reputed brands that offer reliability, quality and financial strength, KPDL is well placed to capitalize on those opportunities. Our commitment to strong financial discipline is reflected in a resilient balance sheet and robust cash flow, ensuring that we remain aligned in capturing the new growth prospects while maintaining operational efficiency. Our strong collection alongside steady sales performance and disciplined approach to project acquisition have positioned us well sustained growth. With this, I now hand over the call to Dipti to share the financial highlights.

Thank you, Atul. Good afternoon, everybody. I'm now here to take you through our financial performance for the quarter and 9 months ended 31st December 2024. Under CCM-based accounting, our Q3 FY '25 revenues from operations increased to INR 349.7 crores from INR 75.8 crores in Q3 FY '24, driven by higher deliveries. For the 9 months ended December '24, we recorded milestone revenues at INR 998.7 crores compared to INR 845.1 crores in the previous year same period. Our reported profits have also been improving. EBITDA for Q3 FY '25 reported at INR 25.5 crores, a significant improvement from a loss of INR 36.7 crores in Q3 FY '24 while 9-month FY '25 EBITDA reached INR 69.5 crores as compared to INR 58 crores for 9 months FY '24. Our net profit after tax post minority interest stood at INR 25.3 crores for Q3 FY '25 and INR 41.3 crores for the 9-month period. As you are aware, revenue and profit recognition is determined by project completion as per statutory accounting norms. With continuous progress in construction, we have achieved strong collections, reflecting both efficient execution and high demand for our projects. Strong collection, financial discipline, operational efficiency support healthy cash flows. 9-month FY '25 operational cash flow stood at INR 641 crores. With a disciplined financial strategy, we continue to strengthen our balance sheet, ensure long-term stability, growth and expansion opportunities. Thank you. And I now request the moderator to open the line for Q&A.

[Operator Instructions] We have our first question from the line of Gautam from EverFlow Partners.

I have 2 questions. My first question was that how are you seeing the demand outlook in Pune and Mumbai markets? Are we on track to achieve our presales guidance that we've given of about INR 3,500 crores this year and I think the 3-year target of INR 13,500 crores. So are we on track to achieve this presales?

Thank you, Gautam. In Pune and Mumbai market, we have seen a good traction of demand. So far, quarter 3 as well as quarter 4. Quarter 4 eventually has to be one of the most performing quarter always, and we see this momentum still continue. In terms of our sales guidance, we have, as already mentioned in the commentary that in a few of the projects in Mumbai, we see a couple of delays in approval, which may moderately impact our sales guidance.

And what about the 3-year target? Are we on track to achieve that?

Three years target, I think we are in line with our long-term horizon because see, these are the temporary delays like maybe a quarter, 2 quarter, nothing beyond that.

Understood, understood. And at the current pricing level, what sort of project level margins and company level margins do you expect the EBITDA level?

So far, at least, we have seen a good amount of improvement in our EBITDA margin. This quarter as well, we have touched to around 7%, 7.5% of EBITDA margin. And in terms of adjusted EBITDA margin, it is 12%, 12.5%. And going forward, this margin exercise will continue to improve. And we see that as we have already discussed even over our last call that we see that it will be in early teens.

Project level margins are 12% to 12.5% and company level 7% and 7.5%, just to continue or improve sir?

No. So project level, it's all depend on the different projects. If this redevelopment and the joint ventures have a different margin vis-a-vis for luxury segment, we have a different margin. So for project level margin, I'm talking about the blended at a group level margin, what we are discussing.

We have our next question from the line of Shreyans Mehta from Equirus Securities.

So sir, Atul sir, in terms of Mumbai launches, how confident are we in launching it in '26? Because if you see the slide, we've actually moved into strategic rather than under approval?

Yes, Shreyans. I think for Mumbai launches, there are a couple of few projects we have already secured launches like sanctions like Laxmi Ratan. But in redevelopment, the process is a little longer. It is not just securing the sanction, but there are vacation process and post that also, there are a few sanctions required. So as we see that a couple of projects since there is quite a few EC delay, there is a committee which was formed. But then again, there are a few delays, elections. So I think with all these things, we have factored out that maybe there is slight delays in a few of the Mumbai launches. But except that, we don't see any other such kind of changes in our plan.

Got it. So assuming if MMR comes into picture in second half of next year, what should be the presales number ideally we are looking at or what we are targeting?

So for next year, you are talking about BD or?

No, no presales number, assuming the Mumbai projects come on launches.

So presale number at a group level, we have a long-term guidance. I think we are still maintaining those guidance.

Okay. Okay. Sure. Second is, sir, in terms of margins, earlier, we were guiding for, say, closer to 12%, 13%. But if I see the first 9-month number, we've not even touched 10%. So do you foresee -- I mean, we'll be even closing nearer to 10% for this year?

So there is quite a good momentum even in quarter 4. We have already secured a lot of completions. So I hope that -- and as I said, okay, there is a steadily improving on EBITDA margin that is definitely on our priority. At the same time, if we go through the adjusted EBITDA margin, it is till 9 months ended, which is 12%. And by the end of financial year, we foresee that there will be marginal improvement in the EBITDA and adjusted EBITDA both.

Thank you sir. Mr. Shreyans you have 2 questions with them, we ask you to rejoin the queue. We have our next question from the line of Rohit from ithought PMS.

Sir, just 2 questions. In light of the change in approvals from -- I mean, the delay in approval, what kind of pieces are we now looking at? We did about INR 2,800 crores last year. So what -- and we had earlier said that we'll do about INR 2,500 crores. So what was the number that you're confident for the last quarter? And if you can share that? And. Secondly, sir, I mean, last call, you said that we are -- in terms of reported numbers, you are confident of doing INR 1,800 crores for the year. We have done about INR 1,000 crores in the first 9 months and 13% is the margin that -- I mean, you said about early teens we'll do the margins. So that would mean that we need to do a very strong EBITDA performance in the Q4. So can you just explain that? And you -- I mean, we are talking about this adjusted EBITDA. So I mean, we've not talked about this number before. So what does this adjusted EBITDA mean exactly? Because we are -- all along, you are talking about reported EBITDA only so far. So if you can just talk a bit about that. And my understanding was that this 13%, 14% is that we will close this year is on the reported EBITDA basis. So if you can just explain these 2 points, sir.

Thank you, Rohit. So I think on the Mumbai launches, I already explained that we are estimating quite a few approvals delays. And I hope that maybe beginning of next year, it will get launched. However, in terms of the presale guidance, there will be slightly marginal corrections based on those launches are not coming. So that kind of marginal changes will be there in terms of overall presale guidance. As far as on the revenue guidance, I think we have already touched approximately INR 1,000 crores in first 9 months, and we are quite hopeful like around INR 600 crores, INR 700 crores, and there are a lot of visibility in terms of obtaining our occupancy certificates. But we are still in the line with our overall revenue guidance. On the EBITDA part, as I already explained that there is a gradual momentum in that. We have seen EBITDA is picking up quite well. And in quarter 4 also, you will see a better EBITDA as well. At the last question, adjusted EBITDA is simply the EBITDA and added back our other income and the share of the profit from the joint venture company. Since this is factored out separately, so if we club together, that gives us an adjusted EBITDA.

Got it. So sir, from a presales point of view, so this year, do you see a growth over FY '24?

We have-- first 9 months we have already seen a growth of almost 4% and I hope that, that will continue in quarter 4, as quarter 4 has always better numbers, we will definitely see the growth in presale number.

Got it. And sorry, one clarification - can I just have one clarification on this adjusted EBITDA, please?

I think sir, Dipti will revert to you. Any further questions, Dipti can give you detailed answers on those.

No, sir, I mean, I just wanted once I connected also. So you said adjusted EBITDA is EBITDA plus other income and the share that we have from our partners, right?

Yes.

Thank you. [Operator Instructions] The next question is from the line of Bharat Sheth from Quest Investments.

Atul, coming back to [ Amkar ] plan launch, which was, say, now we have revised it to INR 5,000 crores, and we have done still INR 2,000 crores. So how confident are we to do, I mean, launches of INR 3,000 crores kind of a thing in Q4?

Thank you, sir. I think on most of these Pune portfolio like Little Earth, we have secured the sanction and it is in the RERA approval process. Similarly, for 24K Manor, we have secured all the sanction. Altura, we have secured all the sanctions. And IBM, we have secured the sanction and still we have applied for the RERA. We are just awaiting. I think in most of this even in Life Republic, we have secured sanction on 3 more sectors, R14 and 34 and as well as R17A. And we are still in the process of obtaining the final RERA consent. So we are quite hopeful that these launches as we plan, will hit in quarter 4.

So balance around, say, INR 3,000 crores. So out of that, normally, typically, we do a booking of 30% to 40% on presales. So is that fair understanding that at least INR 1,000-plus crores kind of a thing is possible in Q4 in addition to that from the inventory. So around, say, our presales target of INR 3,500 crores. So does it mean that a single-digit kind of a decline will be there?

Yes, sir, yes. So I think there is already 3.6%, 3.75% of ongoing portfolio as well as we are adding out of the new launches. So we are quite hopeful that at least and as you rightly said that, there may be a slight correction in the presale number. So whatever the launches we are missing, maybe to the tune, there will be some correction on that.

Okay. And coming back our last 9 quarters, our run rate of presales has remained around INR 700 crores. So when do we expect that to break that kind of a thing? That is first question. And second thing, we had, I mean, guided for INR 8,000 crores kind of a business development out of which only INR 4,000 crores has been done. So how confident are we into reaching that INR 8,000 crores.

Yes. So you rightly mentioned that we have already have secured INR 4,000 crores worth of business development and we are quite hopeful that the guidance for business development for this financial year of INR 8,000 crores, we will achieve. There are quite a few deals which has moved to a very advanced stages. So at right time, I think there will be announcements about this deal and transactions. But yes, at least looking at the scenario, we are quite hopeful that this deal will definitely be announced.

Okay. And coming back to our P&L interest cost on the P&L, sorry.

We have our next question from the line of Nitin from Frontline Axis Capital.

My question is, I think a few of my questions have already been answered. But in terms of margins, what sort of revenue guidance is the company looking at for the next year? Because this year, I think we had guided for something like INR 1,800 crores and we have done something like INR 1,010 even though the margins were quite well. So have we had an internal calculation as to where our margins and revenue recognition would be for next year? That's my first question.

Can you please repeat [indiscernible] for this financial year?

I'm talking about the revenue recognition for the expected revenue recognition for the next financial year as well as the margins, which we are expecting.

So I think for next financial year, we can provide you a guidance separately but so far for this financial year, the guidance of revenue recognitions as well as on the EBITDA side, we have already explained that's roughly around INR 1,600 crores to INR 1,800 crores is somewhere we are targeting. And we have secured most of the OCs QR in pipeline. So considering that, we are quite hopeful that this year guidance on revenue will meet.

So next year, we haven't done any internal calculation. Got it. And coming to the launches, we have like kind of reversed back our launch pipeline. So in terms of new projects which you are like launching, what sort of internal EBITDA margins are we targeting? Because I think you kind of touched upon this earlier but it wasn't quite audible assets. So could you please repeat that? What sort of margins are we looking at for the projects which we are launching this year and as well for next year?

So the projects which are typically on the outright basis and where we invest on the land, we expect a margin of around 25% to 28% as well as those which are in redevelopment, joint developments where it's not margin, it is more of an IRR-based business model. So we try to blend it together like it's not just margin-margin. But at the same time, we have to play a little bit of a capital-light model wherein IRR-based equation works, and we target somewhere around 20%, 25% of IRR on those kind of transactions, even though the margins looks around 14%, 15%, but the IRRs are better in these kind of projects, wherein specifically on joint development and redevelopment sector. So we don't have a specific like in any every project despite we have an internal guidance while in our selection criteria as to how and what are the financial parameters to meet on every project, then only we commit to any projects if our number get meet or maybe the guidance gets meet internally.

Got it. And one final question. Do we have any unsold inventory because last year, we kind of report losses on our book revenue. So do we have any unsold inventory on those projects which were kind of not viable? So do we have any unsold inventory from pending legacy projects?

Hardly, like in most of the projects and even if you see today that the total ongoing unsold is hardly like 3.75 million square feet. So finished and unsold hardly we have anything in our portfolio.

[Operator Instructions] We have our next question from the line of Bharat Sheth from Quest Investments.

Sir, you said, Atul, we have 3.75 million tonne kind of unsold inventory. So in value terms, is it possible to quantify? That is first question.

Roughly around INR 2,500 crores.

2,500. And how do we see momentum whatever has been there, I mean, different projects? And is that fair under Life Republic is the largest. So momentum is still, I mean, good from those unsold?