Sobha Ltd Q2 2025 Earnings Call Transcript

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

Question: Parikshit Kandpal - HDFC Securities Limited - Analyst : Hi, sir. My first question is on the presales for the first half. So I just wanted to understand what went wrong. I mean, we had good launches. We had launches in GIFT City, we had launches in Gurgaon, we had the Crystal Meadows launch and these were like sizable launches in excess of close I think -- if I add up the total value, it would be close to about INR8,000, INR9,000 crore, but the contribution coming in from these launches has been disappointing. So what are you doing -- so what went wrong? And how are you correcting it? And I understand these are high-value launches, but in the second half in order to meet your guidance of INR8,500 crore, so what steps has been taken? And what is the launch pipeline in the second half?

Question: Parikshit Kandpal - HDFC Securities Limited - Analyst : So on the guidance part, we'll continue to maintain INR8,500 crore for the year?

Question: Parikshit Kandpal - HDFC Securities Limited - Analyst : Okay. So we've been hearing off late that there has been issue in approvals in Bangalore and other peers of yours have also alluded to that, and there has been issues and delays. So in light of that, how are we placed? So what is the launch pipeline in this quarter have we applied for -- for which we have already applied RERA? So what is the visibility for November and December in terms of launches?

Question: Parikshit Kandpal - HDFC Securities Limited - Analyst : Jagadish, what are the launches? I mean, 5.5 million is the balance for the H2. So this quarter, you said 1.1 million one launch where you have got RERA approval. So what is the other launch in this quarter?

Question: Parikshit Kandpal - HDFC Securities Limited - Analyst : And what is the -- I mean, million square feet of area, so 5.5 million which you expect to launch, what is the split in Q3 and Q4?

Question: Parikshit Kandpal - HDFC Securities Limited - Analyst : Okay. So if all these approvals come in, so 3 million plus 1.1 million plus 0.7 million, so approximately 4.8 million should be -- we should be able to launch in this quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 15, 2024 / 10:30AM, SOBH.NS - Q2 2025 Sobha Ltd Earnings Call

Question: Parikshit Kandpal - HDFC Securities Limited - Analyst : And in Q4?

Question: Parikshit Kandpal - HDFC Securities Limited - Analyst : And Pune one -- Pune also will come in Q4?

Question: Parikshit Kandpal - HDFC Securities Limited - Analyst : Pune. Pune project will also come in Q4, the Pune or the Noida, I mean any chance of these two projects coming in, in the fourth quarter?

Question: Parikshit Kandpal - HDFC Securities Limited - Analyst : Okay. Just one last question on the land bank. You have now disclosed the land banks and total 48 million square feet of area and this 1,878 acres of land bank. So when you say that it's under consolidation, monetization, self-use, so how much of this do you think can be, out of 1,878, brought in as an end product, and how much do you think you cannot develop and you will have to sell in the market? And what is the book value of this land?

Question: Parikshit Kandpal - HDFC Securities Limited - Analyst : Sir, my question was how much of this is developable? I mean, do you think -- there are two portions to it. One is that which you cannot develop. I mean you don't want to develop because they are very, very far away from a development point of view. You will not get that 10,000 minimum realization. So how much of that you will apportion to that? And how much do you think can be brought back to that table which you have shown of 48 million square feet?

Question: Parikshit Kandpal - HDFC Securities Limited - Analyst : The Hoskote land was about 500 acres or -- because my understanding is, it's close to about 500 acres.

Question: Parvez Qazi - Nuvama Wealth Management Limited - Analyst : Hi, good afternoon thank you for taking my question. So I have two questions. First is, and we keep hearing about your potential entry in Mumbai by doing a luxury project. So I wanted to get your views on our diversification beyond the existing cities, especially in, let's say, Mumbai and Noida. That's the first question. Second is with regards to the future business development. Now after the rights issue, obviously, we have substantial firepower. So while our land-related CapEx has already increased this year, but do we have certain targets in mind as to by when we would like to utilize most of the rights issue proceeds?

Question: Parvez Qazi - Nuvama Wealth Management Limited - Analyst : Sure. And lastly, when we look at FY26 launches, did I get the number correct, you were talking about a 10 million square feet potential launches in FY26?

Question: Biplab Debbarma - Antique Stockbroking Limited - Analyst : Good afternoon, everyone. So my first question is on the Gurugram project. So we are still seeing Gurugram -- seeing slow absorption. So to compensate for that -- because you have a lot of land parcels in Gurugram. Do you intend to do more launches in Gurugram in, say, in Q4? Because approval is also not an issue, absorption is happening quite fast. And so just wondering whether is there possibility of new launches in Gurugram.

Question: Biplab Debbarma - Antique Stockbroking Limited - Analyst : Okay. So no new launches in this financial year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 15, 2024 / 10:30AM, SOBH.NS - Q2 2025 Sobha Ltd Earnings Call

Question: Biplab Debbarma - Antique Stockbroking Limited - Analyst : Okay. And sir, just to understand, so in that -- thanks for giving us the table on land bank, so just trying to understand the terminology of this land bank. So basically, you are saying in addition to the forthcoming projects of 19.2 million square feet, you have forthcoming projects' land and subsequent projects' land and there is 1,878 acres of land bank. So these are the additional land. So this 228-plus 207-plus 1,878. Is that correct, sir? I'm just trying to understand what does this mean. What is the meaning of forthcoming projects' land and subsequent projects' land and 1,878 acres of land under various stages of consolidation? And amongst this land parcel, how much is Hoskote?

Question: Biplab Debbarma - Antique Stockbroking Limited - Analyst : This provides excellent clarity. Just trying to understand, this 1,878 acres, this is under your control. Yes, you may monetize it, you may use it self use for some manufacturing or you may acquire a few more land parcel to consolidate this 1,878 acres, but it is under your control, right?

Question: Biplab Debbarma - Antique Stockbroking Limited - Analyst : Okay, okay. And my final question is on the Contract & Manufacturing. You mentioned about the poor margin. What kind of margin we have made in first half of FY25? And going forward, what should be the expected margin in this segment, sir?

Question: Biplab Debbarma - Antique Stockbroking Limited - Analyst : Yes, Contract & Manufacture, not Real Estate. Basically non-Real Estate part, what is the margin that you have been -- you have done in the first half of FY25? And what would be the new normal in terms of EBITDA margin?

Question: Biplab Debbarma - Antique Stockbroking Limited - Analyst : And this would be the new normal, sir? Or do you see improvement to 10% or 11%, 12% going forward? Or there's uncertainty like kind of thing?

Question: Ankit Gupta - Bamboo Capital - Analyst : Thanks for the opportunity. So my question was on the overall demand on the luxury real estate side. Are we seeing some slowdown there over the past few months?

Question: Ankit Gupta - Bamboo Capital - Analyst : Sure, I'll do that. So my question was on the overall market for the luxury real estate. Are we seeing some signs of slowdown over the past few months in the sales for, let's say, houses above INR3 crore, INR4 crore for us as well as in the overall industry?

Question: Ankit Gupta - Bamboo Capital - Analyst : Because I was coming to this point referring to some indications of slowdown in sales of luxury items like cars as well over the past few months. So that was the point I was making, like are we also -- have we also seen some, let's say, reduction in demand or the growth that which was there over the past few quarters has seen a bit of a reduction.

Question: Aayush Saboo - Choice Equity Broking Private Limited - Analyst : Can you please guidance on the net debt figure that you expect to realize in the next one year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 15, 2024 / 10:30AM, SOBH.NS - Q2 2025 Sobha Ltd Earnings Call

Question: Aayush Saboo - Choice Equity Broking Private Limited - Analyst : Yes, net debt.

Question: Aayush Saboo - Choice Equity Broking Private Limited - Analyst : Could you just guide over the -- what kind of range you see the net debt sitting at the next one to two years?

Question: Aayush Saboo - Choice Equity Broking Private Limited - Analyst : Pardon, INR1,600 crore, right? That is the gross that you're guiding?

Question: Aayush Saboo - Choice Equity Broking Private Limited - Analyst : Yes. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 15, 2024 / 10:30AM, SOBH.NS - Q2 2025 Sobha Ltd Earnings Call

Question: Parikshit Kandpal - HDFC Securities Limited - Analyst : Yes, sir. So you touched upon that you'll be calling the rights second tranche in December, next month, right?

Question: Parikshit Kandpal - HDFC Securities Limited - Analyst : But sir, if the current price is almost INR100 lower than the rights price, so you think that -- last time the promoters came and filled up for the unsubscribed portion. So they will continue to do the same thing, right, as per the rights offer document?

Question: Parikshit Kandpal - HDFC Securities Limited - Analyst : I was saying that as per the offer document, the unsubscribed portion of the rights will be taken up by the promoter. And since the current market price is lower than the rights price, do you think that we will continue with the same direction, right? If there's some unsubscribed portion, the promoters will fill in?

Question: Parikshit Kandpal - HDFC Securities Limited - Analyst : No, no. So my question was that if the current price is lower, the market -- other investors can buy from the market. So if in case they don't subscribe to the rights issue, will their portion of the rights renunciation will be taken up by the promoters, that was I was asking.

Question: Parikshit Kandpal - HDFC Securities Limited - Analyst : Okay. That is what I wanted to ask. Second question was, sir, on the land again, I could not get the answer last time. So out of this 1,800 acres-odd, which you have shown, so how much is the total Hoskote land and how much is the Hosur land in this?

Question: Parikshit Kandpal - HDFC Securities Limited - Analyst : Both of these -- so out of 1,800, INR450 crore, so these are developable, right? I mean, these can -- a finished product can be done by you on these two land parcels over the next say 7, eight years?

Question: Parikshit Kandpal - HDFC Securities Limited - Analyst : Okay. And just this 1,878 acres. So if Yogesh can tell what will be the book value of this land, sir, this 1,878 acres?

Question: Biplab Debbarma - Antique Stockbroking Limited - Analyst : Thank you for the follow-up opportunity. So sir, you have made foray in Greater Noida and most probably in MMR, Mumbai region too, you will be entering soon. So I'm just trying to understand what would be your strategy. Like how do you want to play in this new markets, especially MMR, because MMR is a bit difficult market and -- just trying to understand how you want to play. Like which market -- micro market you would target? Or what kind of redevelopment, land purchase, JDA, what kind of you are targeting? And then premium, luxury, what segment you are targeting? So -- because you have -- would have something in mind, you might -- I'm certain you have done a lot of research before making foray into MMR and Greater Noida. So just trying to understand your strategy. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 15, 2024 / 10:30AM, SOBH.NS - Q2 2025 Sobha Ltd Earnings Call

Question: Biplab Debbarma - Antique Stockbroking Limited - Analyst : Okay. Great. Sir, I have two more clarifications I needed. You mentioned EBITDA margin long term and medium term overall EBITDA margin to be 20%-plus. Is it for the entire company? Or it is just for the real estate embedded EBITDA that you mentioned, 20%?

Question: Biplab Debbarma - Antique Stockbroking Limited - Analyst : Okay. And real estate would be -- what would be real estate segment EBITDA margin that you believe would be achievable in the medium to long term?