PURVANSEQ1 FY2023August 12, 2022

Puravankara Limited

9,426words

146turns

11analyst exchanges

4executives

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Management on call

Samar Sarda

AXIS CAPITAL LIMITED

Abhishek Kapoor

EXECUTIVE DIRECTOR &

Vishnu Murthy

HEADING RISK & CONTROL - PURAVANKARA LIMITED

Neeraj Gautam

EXECUTIVE VICE PRESIDENT,

Key numbers — 40 extracted

Rs.513 Crore

ity, trust and customer experience that Puravankara brings to the table.The quarter sales touched Rs.513 Crores riding on the favorable market sentiment and rising home ownership aspirations. The entire sales

0.68 million

chieved from booking of inventory on ongoing projects. The sales volume during Q1 FY2023 stood at 0.68 million square feet up by 64% year-on-year basis. As a result sales value during Q1 FY2023 jumped by 63%

64%

ry on ongoing projects. The sales volume during Q1 FY2023 stood at 0.68 million square feet up by 64% year-on-year basis. As a result sales value during Q1 FY2023 jumped by 63% to Rs.513 Crores compa

63%

lion square feet up by 64% year-on-year basis. As a result sales value during Q1 FY2023 jumped by 63% to Rs.513 Crores compared to Rs.314 Crores in the first quarter of the previous financial year.

Rs.314 Crore

n-year basis. As a result sales value during Q1 FY2023 jumped by 63% to Rs.513 Crores compared to Rs.314 Crores in the first quarter of the previous financial year. Coming to the profit an

Rs.297 Crore

Coming to the profit and loss account for the quarter. Our consolidated revenue for Q1 FY2023 was Rs.297 Crores, EBITDA for the quarter was Rs.139 Crores, implying an EBITDA margin of 47%. During the quarter,

Rs.139 Crore

the quarter. Our consolidated revenue for Q1 FY2023 was Rs.297 Crores, EBITDA for the quarter was Rs.139 Crores, implying an EBITDA margin of 47%. During the quarter, we achieved a PAT of Rs.35 Crores implyin

47%

FY2023 was Rs.297 Crores, EBITDA for the quarter was Rs.139 Crores, implying an EBITDA margin of 47%. During the quarter, we achieved a PAT of Rs.35 Crores implying a PAT margin of 12%. We have co

Rs.35 Crore

ter was Rs.139 Crores, implying an EBITDA margin of 47%. During the quarter, we achieved a PAT of Rs.35 Crores implying a PAT margin of 12%. We have continued to maintain sustainable levels of debt during

12%

TDA margin of 47%. During the quarter, we achieved a PAT of Rs.35 Crores implying a PAT margin of 12%. We have continued to maintain sustainable levels of debt during the quarter. Our net debt as o

Rs.1,889 Crore

aintain sustainable levels of debt during the quarter. Our net debt as on 30th June 2022 stood at Rs.1,889 Crores. We have maintained similar debt levels for the last one year ensuring that we are optimally lev

10.69%

t track our growth while keeping our feet on the ground. As on June 30, 2022 our cost of debt was 10.69%. Coming to the cash flow management for the quarter, our operating inflows for the Q1 FY2023 wa

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Guidance — 20 items

Neeraj Gautam

opening

“I would like to take you all through the key highlights for the quarter following that my colleagues and I will be happy to answer any questions you may have while listening to feedback and suggestions from you.”

Neeraj Gautam

opening

“As a customer-centric entity our primary focus will be to offer our customers high quality products and a seamless home buying experience.”

Abhishek Kapoor

“As far as Provident is concerned we look at least a million square foot of salable area to start with so if you look at our realization, a topline of at least Rs.650 Crores, Rs.700 Crores would definitely be something that will be required because that is the attention we need to pay to the project and it should be worthwhile the time of the management, so that is the minimum size.”

Abhishek Kapoor

“So, on the management we have added a CEO from Katerra who specializes in precast, we added Satya Narayanan from Tata projects, he was Ex-CEO for Tata project, he has handled a very large book.”

Nikita Gupta

“I just wanted to know like since you launched your first AIF fund in April, have we been able to raise some money as of now and when do we expect to take the mark Rs.750 Crores assuming the green-shoe option is exercised first on that and how is the revenue sharing agreement going to work, can you throw some light on that as well?”

Abhishek Kapoor

“In the next 12 months time frame we are looking at total as I mentioned earlier the target is actually by the March of this financial year to launch 16 million square foot.”

Dikshit Mittal

“In terms of target completion for this year, what is the target?”

Abhishek Kapoor

“Today we have over 5,200 laborers on our site and it is only increasing by the day, so there is a lot of delivery planned in this year 3,000 units minimum we should be able to achieve that is the target we have set for ourselves, but most of it will constantly start coming from the third and the fourth quarter.”

Dikshit Mittal

“What is the square foot, can you give some any guidance?”

Dikshit Mittal

“In terms of million square foot, how many a million square foot will be delivered or may be completed this year?”

Risks & concerns — 2 flagged

Abhishek Kapoor, ED and CEO of the company, we also have Vishnu Murthy who is heading risk and control and Neeraj Gautam, Executive Vice President of Finance.

— Samar Sarda

The objective of diversifying your risk and taking equity instead of debt I think comes from the fact that we want to be very, very mindful of the market conditions that obviously continue to go into cycles as we go along in the economic cycle.

— Abhishek Kapoor

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Q&A — 11 exchanges

Good afternoon Sir and congratulations on the good result. My question is regarding the land parcels, you already have a good presence in South India, are you also looking towards some more land parcels in other parts of the country or will you focus on these areas and in that case by when it will happen and what could be the size of these land parcels?

Abhishek Kapoor

Hi Aryan, thank you for the question. So while we have the current land bank of almost about 57 million square foot which is spread across south and west, our further growth which is increased acquisition activity is happening in majorly five markets, which is Bangalore, Chennai, Hyderabad, Mumbai and Pune and these are the markets where we want to go deeper. For the rest of the market, it is more opportunistic because we have been in these markets which are like Kochi, Coimbatore, Goa, Mangalore these are markets that we have always been present in and we look at it more opportunistically bec

Good afternoon Sir. Thank you so much for the opportunity. I just had a couple of questions on the Purva asset management front. I just wanted to know like since you launched your first AIF fund in April, have we been able to raise some money as of now and when do we expect to take the mark Rs.750 Crores assuming the green-shoe option is exercised first on that and how is the revenue sharing agreement going to work, can you throw some light on that as well?

Abhishek Kapoor

Thanks Nikita for the question. The answer is yes, we have been able to do the first close which was targeted at about a little over Rs.200 Crores that has already been done. Now we are in the process of additional further capital which is also lining up and we will hear soon about the next round of closure. The second piece is on how do we see the revenue shared with the fund. So basically the way we look at this entire structure, the fund structure is that the fund potentially is participating in the land which is where maximum value is and the acquisition is happening from the capital of th

Good afternoon Sir. My question is on new launches, so though you have maintained the pipeline of around 15-16 million square feet but during this quarter there was no new launch in particular the reason for that?

Abhishek Kapoor

There is no reason except that we are in the final leg of some of them are in registration, some are at the final leg of approvals so that is the only thing, there is no other reason per se so we are pretty much on track, we are pushing hard on these launches, so I think you will start hearing it from this quarter itself. Because in your last presentation you had mentioned one million to be launched in quarter itself so that is why we are asking is there any approval related delays or anything like that? Yes, so there is marginal delay, because these were expected anyways towards the end of th

Good afternoon everyone. Now that you are present in six big markets, what is the medium- term sales per market that you are targeting, you can quantify the same?

Abhishek Kapoor

Over time, let me break it down first business wise, so we are looking at about 35% of our business from Puravankara, 35% from Provident, about 20% coming from Purva land, about 10% from commercials that is the general breakup of the categories we are present in and the brands. Now if you look at geography, today majority of our business comes from the south and a very large portion, this is coming from Bangalore. For some more time because of our land bank and because of our current availability of lands which are already in the portfolio and paid for is from the same region and of course, th

Thanks for taking my question. Sorry I joined the bit late, so one question on the cash flows reversal in the investment by IFC, if you can explain what is that?

Neeraj Gautam

Good that you have asked this question. it is not a reversal, we have repaid IFC investment of Rs.68 Crores from the project collections, rather we have paid Rs.100 Crores including accurued interestt As you are aware y that IFC had invested in two of our projects. In one project we have repaid them about Rs.100 Crores during the quarter from the project receivables and we have fully repaid them in the month of July. What is balance amount, in terms of how much you have paid in July additionally? We have paid about Rs.205 Crores for complete exit to them from the project. They invested about R

I have a question on your launch pipeline, all the launchers that you are planning in future will be launched in March 2023, is that the right statement?

Abhishek Kapoor

Will be launched by? March 2023 all the launch which is represented… 16 million square foot we are talking about launching in phases starting from this current quarter to the next two quarters, Q2, Q3 and Q4 correct. Okay. The other thing is that you have a target to reach to five to six million square foot as a potential run rate of pre-sales over the period of three to four years, is that also a right way to see? Again that there is a question of the quantum of launches we do and how many phases we open up, but I think the previous question or the previous discussion was more on the delivery

Thank you for taking my question. This quarter pre-sales is of Rs.513 Crores and in presentation you also projected cash flow where you give value of inventory if I calculate difference of this versus last quarter it is Rs.280 Crores while sales is of Rs.513 Crores so what explains this difference Sir?

Neeraj Gautam

This Rs.513 Crores we have sold out of unsold inventory of the last quarter. Which was Rs.4,674 Crores as per last presentation and in this presentation, the value of inventory open for sale is Rs.4,400 Crores, so it is a drop of Rs.280 Crores. Your question is right, the observation is right. I will answer it again what typically happens is you replace what you have sold by releasing more inventory from not open for sale inventory, so that is what will continue to show up so while my sales numbers will show up I keep opening this stock, because I cannot at any point in time have lesser choice

Good afternoon Sir. I had just one question regarding deployment of capital through institutions like IFC as our debt levels are at the levels and you do not want to increase the debt levels going ahead, so we may see in your further investments coming from third parties residential or commercial and you also provide them IRR in the range of 20% to 30% so my question is that how you are able to generate that because does that dilute your returns from the project also AIF, we are committing at mid 20s return so no able to leverage the balance sheet and getting this funds with a fixed kind of IR

Abhishek Kapoor

Let me answer this question in two parts. One is, it is never close to 30%, it is early 20s and it is not a fixed IRR, it is dependent on the performance of the project that is point number one. Point number two, I think is when we have to look at our capital is obviously far more expensive than the 20% kind of IRR that we are giving to these equity partners. The objective of diversifying your risk and taking equity instead of debt I think comes from the fact that we want to be very, very mindful of the market conditions that obviously continue to go into cycles as we go along in the economic

Thanks for the opportunity. I have some questions. What will be your marketing expense for the quarter as a percentage of sales and given that the sector is on an update, can we assume that the marketing cost would be expensively going up in the coming quarters?

Abhishek Kapoor

Typically our marketing expense is between 5% and 6% of the sales value, but during many quarters where you are incurring pre-launch expenses wherein the sales are not shown but to prepare for the launch you do marketing expenses those show up in the same quarter wherein the revenues do not show up or the sales numbers show up only in the next quarter, so to that extent yes, it may look higher in some cases, in some quarters but then in the follow through quarters on an annualized basis if you look at it, it should range around 5% to 6%. Okay. But that is different from what it is in terms of

Thank you for taking my question Sir. I just wanted to ask regarding the AIF, so where are we actually planning to deploy this fund like in terms of category that is Puravankara Provident, Purva land or also if you can throw some light in terms of geographical locations where are you planning to deploy this fund?

Abhishek Kapoor

Good question. This fund is planned for Purva land and Provident. The idea is to turn the fund around as quickly as possible and return the capital and we see both these businesses generating a faster return of capital, so that is the answer and the deployment in terms of geography of course south remains one of our favorite markets, so yes south will definitely be there, but we are adding projects in the west as well, so we are looking at some projects in the west as well, so it will be a mix of both south and west. Okay and so secondly I just wanted to ask regarding the land bank so if we se

Thank you once again ladies and gentlemen for your time and attention. I hope me and my colleagues were able to answer all your questions; however, if you require any further discussion we are always available for the discussions during the coming weeks. Thank you and wishing you a happy weekend and a very Happy Independence Day. Jai Hind.

Management

Speaking time

Abhishek Kapoor

Neeraj Gautam

Moderator

Dikshit Mittal

Niraj

Pritesh Sheth

Ashutosh Mittal

Akshay

Raj Shah

Aryan Sharma

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Opening remarks

Samar Sarda

Thanks Neerav. Welcome again for the results call for Puravankara Limited. Thanks for taking time out. From the management we have Mr. Abhishek Kapoor, ED and CEO of the company, we also have Vishnu Murthy who is heading risk and control and Neeraj Gautam, Executive Vice President of Finance. Can I request Neeraj to start with his initial comments post which we can open the floor for Q&A.

Neeraj Gautam

Thank you so much. Good afternoon everybody. Thank you for joining us at Puravankara Limited's Q1 FY2023 earnings conference call. My name is Neeraj Gautam, I am the Executive Vice President, Finance of Puravankara Limited. The presentation and financial results for the quarter ended June 30, 2022 have been uploaded on the stock exchanges. I presume you have all had a chance to go through the results and presentation uploaded by us. I would like to take you all through the key highlights for the quarter following that my colleagues and I will be happy to answer any questions you may have while listening to feedback and suggestions from you. We believe real estate will continue to witness sustained growth this year and in coming years r in our country. The latest increase in home loan interest rates and global economic environment will have very little impact on housing demand.. We have started the financial year on a very good note, we are delighted to say that the company has achieved

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