GODREJPROPNSEQ2 FY'23November 12, 2022

Godrej Properties Limited

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Key numbers — 40 extracted
INR4,929 crore
emained strong. I'm happy to report that company has reported its highest ever first half sales of INR4,929 crore, with the sale of 4,710 homes comprising an area of 5.54 million square feet. This represents a y
5.54 million
ighest ever first half sales of INR4,929 crore, with the sale of 4,710 homes comprising an area of 5.54 million square feet. This represents a year-on-year value growth of 60% and year-on-year volume growth of
60%
mes comprising an area of 5.54 million square feet. This represents a year-on-year value growth of 60% and year-on-year volume growth of 26%. During the second quarter, sales stood at INR2,409 crore
26%
square feet. This represents a year-on-year value growth of 60% and year-on-year volume growth of 26%. During the second quarter, sales stood at INR2,409 crore with the sale of 2,410 homes with an a
INR2,409 crore
e growth of 60% and year-on-year volume growth of 26%. During the second quarter, sales stood at INR2,409 crore with the sale of 2,410 homes with an area of 2.71 million square feet, which is slightly below th
2.71 million
ing the second quarter, sales stood at INR2,409 crore with the sale of 2,410 homes with an area of 2.71 million square feet, which is slightly below the corresponding quarter of the previous financial year. We
INR10,000 crore
al year. We believe this sets us up well for the year ahead and to achieve our guidance of around INR10,000 crore. We expect that the second half will be exceptionally strong given the excellent launches that we
10 million
in the second half of the financial year and expect deliveries this year to be well in excess of 10 million square feet. Due to limited projects in Q2, our revenue was moderate at INR327 crore, a year-on-ye
INR327 crore
l in excess of 10 million square feet. Due to limited projects in Q2, our revenue was moderate at INR327 crore, a year-on-year growth of 13%. Our adjusted EBITDA declined by 8% to INR98 crore, while net profi
13%
Due to limited projects in Q2, our revenue was moderate at INR327 crore, a year-on-year growth of 13%. Our adjusted EBITDA declined by 8% to INR98 crore, while net profit grew by 54% to INR55 crore.
8%
enue was moderate at INR327 crore, a year-on-year growth of 13%. Our adjusted EBITDA declined by 8% to INR98 crore, while net profit grew by 54% to INR55 crore. Net operating cash flow for the quart
INR98 crore
was moderate at INR327 crore, a year-on-year growth of 13%. Our adjusted EBITDA declined by 8% to INR98 crore, while net profit grew by 54% to INR55 crore. Net operating cash flow for the quarter was robust
Guidance — 20 items
Pirojsha Godrej
opening
“There will be an opportunity for you to ask questions after the presentation concludes.”
Pirojsha Godrej
opening
“We believe this sets us up well for the year ahead and to achieve our guidance of around INR10,000 crore.”
Pirojsha Godrej
opening
“We expect that the second half will be exceptionally strong given the excellent launches that we have planned and that we will exceed our INR10,000 crore booking value guidance for the year.”
Pirojsha Godrej
opening
“On the operations front, while project completions were muted in this quarter, we remain on track to deliver a large number of projects in the second half of the financial year and expect deliveries this year to be well in excess of 10 million square feet.”
Pirojsha Godrej
opening
“And the new project at Indiranagar extension in Bengaluru with an estimated sales potential of approximately INR750 crore.”
Pirojsha Godrej
opening
“Our business development pipeline is the strongest it has ever been, and we are confident of meeting our previous guidance of INR15,000 crore or more of future booking for projects added within the year.”
Pirojsha Godrej
opening
“In the annexure of investor presentation, we have added details, including accounting methods, cumulative area launch, area sold, booking value achieved, collections received and area delivered for each project.”
Parikshit Kandpal
qa
“So just wanted to understand out of this, how much will be the MMR because that has been the weakest link in our business development pipeline.”
Parikshit Kandpal
qa
“And also if you can touch upon any developments on the Vikhroli if we can open up any new area during this year or next year in the Vikhroli land parcel?”
Pirojsha Godrej
qa
“Vikhroli, any additions would not be included in this number, but we do expect a new phase launch in Vikhroli next year of about 1 million square feet.”
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Risks & concerns — 6 flagged
Have you seen any impact of the rising interest rates on, say, the lower or mid-income segment as compared to others?
— Pirojsha Godrej
On the demand front, have you seen any impact of rising mortgage rates on the affordable and mid-income component or the lower ticket size component of your sales so far?
— Pirojsha Godrej
I think we've had now enough time, we think, to see the impact of inflation and slightly higher prices as well as this increase in mortgage rate, demand looks to be holding up very well.
— Pirojsha Godrej
So as of now, there is no concern on demand taper anyway.
— Pirojsha Godrej
But certainly, in our own sales, we have not witnessed any source of concern as of now.
— Gaurav Pandey
But yes, I think there is a little bit of cost pressure for projects where sales have happened, but construction delivery is due this year.
— Manoj Dua
Q&A — 3 exchanges
Q
Congratulations on a decent quarter. So my first question is on the business development pipeline. So historically, we have seen that the great years have been like 2 years back, we used to do about INR15,000 crore to INR16,000 crore. So this year, you seem to be confident of achieving it. So just wanted to understand out of this, how much will be the MMR because that has been the weakest link in our business development pipeline. And also if you can touch upon any developments on the Vikhroli if we can open up any new area during this year or next year in the Vikhroli land parcel?
Pirojsha Godrej
Thanks for the question. Yes, I think, as I said, the pipeline, we are confident of getting to that INR15,000 crore number. I think a decent portion of that should come from Mumbai. We have I think fairly strong visibility of INR5,000 crore of booking value being locked in Mumbai, subject to deals closing as expected. And we're actually quite hopeful that we might be able to even exceed this INR15,000 crore number meaningfully. Vikhroli, any additions would not be included in this number, but we do expect a new phase launch in Vikhroli next year of about 1 million square feet. Yes, I could und
Q
Okay. So pleasure connecting with you, sir, I just had a question regarding Vikhroli land and the DM portfolio. What kind of gross margins are we looking for the DM portfolio? That was my first question, sir. Secondly was, this quarter we seem to have recognized some tax benefit of INR50 crore, INR60 crore. And I wanted to know how can we project this forecast going forward? That would be very helpful sir. Yes. On the Vikhroli land, I think the current arrangement is a 10% DMP. Against that, we would have a couple of percent of marketing and sales costs. So the rest would be the margin, of cou
Rajendra Khetawat
On the tax benefit part, that was a DTA which got created. So you cannot predict it, it depends how your tax planning happens. So this year, the prelaunch, so we could trigger the DTA. Hence, there is a tax positive, which has come into the earnings. Okay. Another follow-up question. Regarding the Carmichael Road project, I mean, it is going to be a very high-margin project, I understand, and we own it completely, almost 100%. So are we looking at a more transition to high value, high-margin projects or we are sticking to the mid-income range, which we have extended in Bangalore and Pune? What
Q
Pirojsha, if you're looking to deliver 10 million square feet in the next about 4, 5 months, is there something to worry about in terms of costs spiking up?
Pirojsha Godrej
I think there, of course, have been cost escalations. So I think we discussed a little bit on the last call. I think clearly overall what we would have hoped at the start of the year. I think the projects that were up for OC this year will have a negative cost impact due to the kind of escalation that happened there for some escalation et cetera. But I think it certainly went beyond that. For projects that have been launched recently, these costs have been more than passed on. And as Gaurav mentioned, I think some of this inflation tapering off will also significantly benefit projects up for O
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Speaking time
Pirojsha Godrej
20
Gaurav Pandey
6
Moderator
4
Puneet Gulati
4
Parikshit Kandpal
2
Rajendra Khetawat
2
Abhinav Sinha
2
Manoj Dua
2
Ankit Patel
2
Abhimanyu Kasliwal
1
Opening remarks
Pirojsha Godrej
Ladies and gentlemen, good day, and welcome to the Earnings Conference Call of Godrej Properties Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call please signal an operator by pressing ‘*’ and then ‘0’ on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mit Shah of CDR India. Thank you, and over to you, Mr. Shah. Thank you. Good evening, everyone, and thank you for joining us on Godrej Properties Q2 FY'23 Earnings Conference Call. We have with us Mr. Pirojsha Godrej, Executive Chairman; Mr. Mohit Malhotra, Managing Director and CEO; Mr. Gaurav Pandey, Managing Director and CEO Designate; and Mr. Rajendra Khetawat, CFO of the company. Before we begin, I'd like to point out that certain statements made in today's call may be forward-looking in nature and a d
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