Godrej Properties Ltd Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kunal Tayal - Bank of America - Analyst : Pirojsha, my first question is on your margins/profitability. I know last quarter, you gave your imputed margins for fiscal '24, which showed quite a bit of an upward move. I wanted to check, given what you've seen in Q1 and the way pricing has been behaving more recently, would you expect us to anchor our FY25 and '26 expectations around FY24 levels? Would you suggest an upward bias to that?

Question: Kunal Tayal - Bank of America - Analyst : Understood. Okay. My second question is that from an area perspective, we are actually doing a pretty big number now on a quarterly basis in terms of sales. So I wanted to check if there's any tinkering you think you would need to do on the delivery side, just to make sure that project completions, et cetera, would keep up pace over the next 2 or 3 years?

Question: Kunal Tayal - Bank of America - Analyst : Got it. And then my final question is your progress in NCR and Bangalore has been there for everyone to see. Specifically on Mumbai and Pune, I think the presentation shows that by and large, you sort of converted 10% of your launch pipeline to actual launches in Q1. How are you sort of thinking about your ability to push through rest of the stuff in the pipe? Also noting that Maharashtra could have elections towards the end of Q2, start of Q3.

Question: Puneet Gulati - HSBC - Analyst : Congratulations on great numbers once again. My first question is just continuation of what Kunal has asked. Do you see any risk of delays in approvals in Pune and Mumbai given the upcoming elections?

Question: Puneet Gulati - HSBC - Analyst : Okay. And secondly, if you can talk a bit about the projects which we've been waiting for a while, Ashok Vihar, Worli, what is the progress there?

Question: Puneet Gulati - HSBC - Analyst : And does it -- has it impacted your underlying IRRs given that there is a delay on the other side, there could possibly have been an appreciation on the property price as well? How do you think about the IRR change if this were to get delayed to next year?

Question: Puneet Gulati - HSBC - Analyst : That's helpful. And lastly, if you can talk a bit about your experience in Hyderabad market, you named it out as the fifth city. And also, if you think there could be potential to enter into Tier 2 cities as well given that property prices there has matured? And do you see a progress a developer-led model there versus a self-build especially with Tier 2 cities?

Question: Praveen Choudhary - Morgan Stanley - Analyst : Obviously, congratulations on such a good result, especially the pre-sales. I have two questions. First one is on gearing. Your gearing level is 71%. What's the plan, whether we want to take it down with equity offering or we think that the cash flow and collection will take care of it itself? And the second question is and I could be wrong here, but it seemed that your other income number was very high for this quarter. May I check other than interest income, what drove that number because the margin is high for the reported number, not the pre-sales number? And just to clarify, did you say that first quarter embedded margin was higher than FY24 or similar to FY24?

Question: Abhinav Sinha - Jefferies India - Analyst : Congrats to the team on the strong numbers for the quarter. So a few questions. So firstly, on the pace of operational cash flow and project delivery. Are we expecting these numbers to largely sustain at the current levels or we can still see some on and off quarters?

Question: Abhinav Sinha - Jefferies India - Analyst : Great. And Pirojsha, since you are mentioning that, what are the focus areas for bidding near term? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2024 / 11:00AM, GODR.NS - Q1 2025 Godrej Properties Ltd Earnings Call

Question: Abhinav Sinha - Jefferies India - Analyst : Sir, lastly, and I would also like to hear from Gaurav perhaps on this. So in Gurgaon market, we have come across some bit of wobble from market participants in terms of demand. You guys have a large launch there, which is ongoing. So just wanted to hear your thoughts and how that market is positioned. Can we still see price and volumes to sustain at high levels?

Question: Pritesh Sheth - Oswal Financial Services - Analyst : So just taking forward the previous question, right, from demand environment perspective, with the kind of response that you're getting, I just wanted to understand what's exactly working for you guys. Is it just the product and the right ticket size you are bringing in those certain markets? Or it's equally strong for across the segment in terms of demand? So just if you can elaborate on the kind of demand that you are seeing.

Question: Pritesh Sheth - Oswal Financial Services - Analyst : Sure. And just a follow-up on that, so kind of price growth that a couple of your markets have seen, especially NCR and to an extent, Bangalore as well, right? Will those price increase combining our certain ticket size getting too pricy in terms of affordability? Or if you have a good product to back that, there is enough demand for those higher ticket sizes as well?

Question: Pritesh Sheth - Oswal Financial Services - Analyst : Sure. That's pretty helpful. Second one, launches, so we had a very strong start for the year. How does Q2 looks in terms of launches? I mean, obviously, it's a little short term, but if you can guide us on that? And Secondly, there were certain projects in terms of the size that was launched in 1Q was definitely probably higher than what you would have initially estimated for. So any revision in terms of your launch guidance that we can expect maybe a quarter or 2 down the line? Or you will still stick to that kind of number?

Question: Mohit Agrawal - IIFL - Analyst : So my question is given that you have such a large scale now, why would collections on a quarterly basis, customer collections continue to remain volatile, especially fourth quarter seeing a sharp jump and then the next quarter, we see normalization? My assumption was that with such large volume of ongoing projects, shouldn't collections be more like a stable number with kind of a more predictable growth and some impact obviously coming in from launches or completions. So just love to have your thoughts there.

Question: Mohit Agrawal - IIFL - Analyst : Okay. Understood. My second question is on business development. Should we now understand that essentially you are looking to add projects to replenish your sales plus a growth element? Or are you still looking to build a pipeline? So in which case, it could be substantially higher than -- while we know your guidance, but it could still be much higher than that if you get opportunity? Or are you just now looking at replenishing your sales and then looking at a growth number on that? So yeah, and in that context, how do we see land spend also stabilizing basically to 10% to 15% of that BD target?

Question: Mohit Agrawal - IIFL - Analyst : Okay. And my last question is, again, on business development. Has the threshold on, let's say, a minimum GDV per project evolved or changed over the last few years considering that you have a much bigger scale now? And in that context, would you be open to looking at, let's say, redevelopment projects in Mumbai, yeah, so your thoughts there?

Question: Parikshit Kandpal - HDFC Securities - Analyst : Congratulations on a great quarter. So my first question is on -- so we have seen the pace of acceleration in the pre-sales has been outperforming.

Question: Parikshit Kandpal - HDFC Securities - Analyst : Yes, I'm using handset only. Is it better now?

Question: Parikshit Kandpal - HDFC Securities - Analyst : Yes. Is it better now? Can you hear me now?

Question: Parikshit Kandpal - HDFC Securities - Analyst : So I'm saying that the pre-sales has been -- there's a huge outperformance, which we have seen in Godrej related to pre-sales. So just wanted to pick your brains in terms of deliveries and execution on the back end. So what kind of measures you have taken on the contractor ecosystem, on deliveries, on execution? So on the entire supply chain, are you seeing any challenges there because now we'll see significant ramp-up in your deliveries in coming years? So what kind of steps you have taken?

Question: Parikshit Kandpal - HDFC Securities - Analyst : Okay. So my second question is on, so when I see your guidance on pre-sales and when I see the mix. So you have added a new geography, and plotted is basically Indore. So I just wanted to get some sense, have you have any clear thoughts on mind on what kind of numbers or what percentage of plotted sales will contribute to your overall pre-sales over more near to midterm? So how big can this be as an opportunity for you?

Question: Parikshit Kandpal - HDFC Securities - Analyst : Okay. Any comments you'd like to make on the project Reserve, any update there with regards to some issues which should come up on approvals and also on the commercial project where we've seen that OC has been revoked. Just any color on that would be helpful.

Question: Parikshit Kandpal - HDFC Securities - Analyst : Okay. And just the last question, Pirojsha. On the capital allocation bit, so I just wanted to understand if you have to take a single location exposure, say a large land parcel comes, so what kind of capital allocation you think you could make? I mean, if say it's INR 1,000 crores or INR 2,000 crores, so what could be a comfortable limit where you would see that you can write a big [cheque]?

Question: Yash Gandhi - Stallion Asset - Analyst : So I just wanted to understand your slightly longer-term view, let's say, 4 to 5 years, I mean, given the strong uptrend we've seen in real estate for the past at least 2 years and all the players in the sector are reporting really good results, do you think that we can sort of grow our bookings by at least like 20% CAGR for the next 4 to 5 years? Or what's your long-term sense on the industry and for your company?