Sobha Ltd Q1 2025 Earnings Call Transcript

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

Question: Puneet Gulati - HSBC Securities & Capital Markets (India) Private Ltd. - Analyst : Congrats on great numbers. My first question is with respect to the comments at least that you made that given that you have high-ticket price launches, the sales would be moderate. How should one think about bookings in the light of these comments? Should one think that last year the run rate would be where we would in that business, or you expect a pickup there?

Question: Puneet Gulati - HSBC Securities & Capital Markets (India) Private Ltd. - Analyst : Understood. That's influence. Similarly, your comment on revenue recognition, which you said will come in a little lag manner, given that you're guiding for almost 5 million square feet of constriction, can one redeem it will be more towards third and fourth quarter?

Question: Puneet Gulati - HSBC Securities & Capital Markets (India) Private Ltd. - Analyst : Okay. That's helpful. And one question on the accounting side. When I looked at your balance sheet, the inventory reported has gone up by almost INR1,200 crores. But on the other side, if I look at the spends, online payment, and construction costs, et cetera, that's less than INR1,200 crores. So how is that adding up?

Question: Puneet Gulati - HSBC Securities & Capital Markets (India) Private Ltd. - Analyst : Okay. Understood. That's helpful. And lastly, if you can also talk about the bump in realizations that we are seeing on the GIFT City, Hyderabad. Is it more the nature of product or is it that the realizations in those cities have gone up too much for them?

Question: Puneet Gulati - HSBC Securities & Capital Markets (India) Private Ltd. - Analyst : So the project size has not changed, just the realization, which used to be INR1,800 a square feet has gone up to INR20,300, so that's how one should to? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 09, 2024 / 12:00PM, SOBH.NS - Q1 2025 Sobha Ltd Earnings Call

Question: Dhruvesh Sanghvi - Prospero Tree Financial Services LLP - Analyst : Yes. Congrats on the great quarter. (inaudible) So just to understand, so by share versus JD share, so if you see the cash flow last year, we paid approximately INR1,000 crores to JD partners. But then we see in the 1 million square feet size, I mean, it doesn't look like there is any meaningful JD partner share. How do you reconcile this? Like will this come down materially in the future because 95% or maybe 98% of our sales are probably our own and versus the JD area. How should I read this?

Question: Dhruvesh Sanghvi - Prospero Tree Financial Services LLP - Analyst : Okay. So I mean there is a meaningful JD number there, that is what you are saying. Okay. The second piece is, when we see the gross debt, it does remain nearly INR2,000 crores for last five quarters, and we are in a very healthy shape. So is this like we are preparing for the so-called new cities of Mumbai and Noida. And once that is complete, we have to pay some big numbers out there? Or the prepayment laws don't allow you to pay early out of the existing debt? How does this number is to be seen?

Question: Dhruvesh Sanghvi - Prospero Tree Financial Services LLP - Analyst : Very much thanks. And lastly, if I can squeeze one. In general, I'm referring to the magazine articles, which generally talk about the slightly longer-term vision of India by the [menans]. And there, Mumbai looked to be a predominant number, but the quoted time period was looking very low in terms of in three, five years, we will be here or there. If you can just throw some light on what practically we can achieve in Mumbai, considering that your first project may start from 1.5 or 2 years hence, as you indicated at the start. So some timelines in terms of when will Mumbai presales really start in a proper way?

Question: Parvez Qazi - Nuvama Wealth Management Limited - Analyst : And what would be the GDV of these 9 million square feet launches and (inaudible)?

Question: Parvez Qazi - Nuvama Wealth Management Limited - Analyst : Sure. And second, I mean, we have obviously stepped up our land-related CapEx. This quarter, in terms lead project, they had started going up last year as well. So moving ahead now, do we have a target in mind regarding what is the quantum of all these (inaudible) million square feet or GDV terms that we are targeting for adding? I think some new reports say that we have won a couple of auctions in Greater Noida, also JD in Gurgaon. So just wanted to get your views. What is our let's say target on the land development side. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 09, 2024 / 12:00PM, SOBH.NS - Q1 2025 Sobha Ltd Earnings Call

Question: Biplab Debbarma - Antique Stock Broking, Ltd. - Analyst : So sir, my first question is on EBITDA margin, reported EBITDA margin. That has been low for a while. So sir, what do you -- what would be the projected margin for FY25 and '26 based on the revenue recognition that is estimated? And by when do you think we can gross EBITDA margin (inaudible)?

Question: Biplab Debbarma - Antique Stock Broking, Ltd. - Analyst : Okay. Agreed. A second question is on your venturing into new geographies, Mumbai and Noida. And welcome to Mumbai, sir. And just wanting to know, this project, so what kind of -- these are JD projects? And I mean from the million square feet, what would be the exposed side in Mumbai in mind?

Question: Biplab Debbarma - Antique Stock Broking, Ltd. - Analyst : Yes, sir. Yes, sir. You're audible.

Question: Pritesh Sheth - Motilal Oswal Securities Ltd. - Analyst : Firstly, just a clarification, whether Sobha Altis has any contribution for the quarter, most of the sales that happen will come in Q2?

Question: Pritesh Sheth - Motilal Oswal Securities Ltd. - Analyst : Got it. And in a second on your product strategy. Since you agreed to the fact that all these premium projects with higher ticket size will have a moderate kind of sales, so firstly, trying to understand why these premium projects, whether the location demands that or the land cost that we have paid or the terms that we have agreed with JD partners need to have a premium project in that location so as to own a good margins, so just short comment on that. And if you can just quantify the balance, 6 million square feet in this year, or the 19 million square feet that we have in the forthcoming pipeline. What was the mix of net income versus premium projects?

Question: Pritesh Sheth - Motilal Oswal Securities Ltd. - Analyst : Okay. I mean, any breakups can give in terms of whether it will largely tilted towards net income or it's balanced between both the categories?

Question: Pritesh Sheth - Motilal Oswal Securities Ltd. - Analyst : All right. Thanks. That's brilliant. Cool. Second question on the rights issue that we have had. Just wanted to check, how much did our promoter initially contributed to rights, which are not unsubscribed by the existing investors? And if you can quantify that number, I mean, over and above their current holding, how much they would have been offput in that transition?

Question: Abhinav Sinha - Jefferies India Private Limited - Analyst : Jagadish, a quick question on rights issue itself. So when are we expecting the remainder of the money to be drawn in?

Question: Abhinav Sinha - Jefferies India Private Limited - Analyst : Right. But hopefully, this year, all of it can come? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 09, 2024 / 12:00PM, SOBH.NS - Q1 2025 Sobha Ltd Earnings Call

Question: Abhinav Sinha - Jefferies India Private Limited - Analyst : Sure. Actually, I had a few questions on the NCR market. So firstly, Gurgaon, we have heard that there had been some slowdown, et cetera, so just wanted to have a broader take from you also on the overall market. And secondly, again, the remaining area that you have in Gurgaon now to be launched, what is the timeline for those launches as well?

Question: Abhinav Sinha - Jefferies India Private Limited - Analyst : Okay. Sir, please, how much of inventory do you have in Bangalore now and in the next one or two quarters? Are we looking at some big ticket launch there?

Question: Abhinav Sinha - Jefferies India Private Limited - Analyst : No, but in the next one or two quarters? Because sales seems to have sort of slowed there now.

Question: Abhinav Sinha - Jefferies India Private Limited - Analyst : Okay. And finally, is it possible to comment on the Greater Noida land auction, where you seem to have won something?

Question: Pavas Pethia - Aditya Birla Sun Life Mutual Fund - Analyst : I just want to understand, what is the land bank post these forthcoming projects of this 19 million square feet? If you could give some color, be in specific color on the land bank we have?

Question: Pavas Pethia - Aditya Birla Sun Life Mutual Fund - Analyst : So this 25 million, 30 million square feet was that we don't have any additional land bank or?

Question: Pavas Pethia - Aditya Birla Sun Life Mutual Fund - Analyst : Okay, sir, but some color about which are the two regions where this is kind of more, I guess Bangalore heavy, whether it's -- what else there --

Question: Pavas Pethia - Aditya Birla Sun Life Mutual Fund - Analyst : Sure. Sir, the reason for not putting it across, is it not contiguous land or is it some regulatory issue?

Question: Himanshu Upadhyay - BugleRock Capital Pte. Ltd. - Analyst : My question was on Bombay. Are we -- what type of projects we are looking at capital allocation, you are thinking? And how are you thinking about differentiation in this particular market versus other players. And some of those broader payouts, you can help us in the market for how you are thinking, but approaching the market.

Question: Himanshu Upadhyay - BugleRock Capital Pte. Ltd. - Analyst : And you said that there are a lot of land parcels where we need to consolidate. So that rights issue, what capital you have raised? Do you think a substantial chunk can go for consolidation of those land banks and bringing it down to the market? Or you think -- what is the small opportunity on this?

Question: Parikshit Kandpal - HDFC Securities Ltd. - Analyst : (inaudible) So our first question is on the Gurgaon. There was some announcement in media that you have discussed on prior calls of JD. So what is this land parcel, in fact, effectively?

Question: Parikshit Kandpal - HDFC Securities Ltd. - Analyst : And how big is this opportunity in terms of million square feet and GDV and whether it is a part of the presentation?

Question: Parikshit Kandpal - HDFC Securities Ltd. - Analyst : And approximately the ratio will be about 17,000 18,000 feet or more than that?

Question: Parikshit Kandpal - HDFC Securities Ltd. - Analyst : And is this a part of the presentation or is it like it will get added maybe in Q2?

Question: Parikshit Kandpal - HDFC Securities Ltd. - Analyst : Okay. So the second question is on the Hoskote land, so now [cottage] has launched a project and it has done significantly. It's like a phenomenon in terms of sales. So when you speak about the 20 million square feet through additional guidelines, so how much, first of all, is the Hoskote potential? Because what I understand is it was the 500 to 600 acres of land, potentially with 50 million square feet of sellable area. So how much, if at all, is included in that 20 million? And when do you think you can bring it to the market? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 09, 2024 / 12:00PM, SOBH.NS - Q1 2025 Sobha Ltd Earnings Call

Question: Parikshit Kandpal - HDFC Securities Ltd. - Analyst : Is it a part of that 18 million square feet, which you have, like, factored in? Or is it part of 20 million which you said is the pipeline beyond that area?

Question: Parikshit Kandpal - HDFC Securities Ltd. - Analyst : (technical difficulty)

Question: Puneet Gulati - HSBC Securities & Capital Markets (India) Private Ltd. - Analyst : By a percentage, first of all, on your land bank in which you discussed. So there is Hoskote, which you talked about. There is also -- if you can talk a bit -- and there was another 34-odd acres in Kochi. Any progress there? And any thoughts of disclosing this new presentation at some point of time?

Question: Puneet Gulati - HSBC Securities & Capital Markets (India) Private Ltd. - Analyst : Okay. That's great. And just on your finance costs, if I look at your finance cost on the P&L basis, that has fallen Q-on-Q despite gross debt rising. But when I also look at the cost of borrowing that you report, that has gone up on a quarter on quarter, despite the fact that your balance sheet has actually become much superior. If you can comment a bit on what's driving all this.