Godrej Properties Ltd Q4 2025 Earnings Call Transcript

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

Question: Parikshit Kandpal - HDFC Securities - Analyst : So my first question is on the guidance, which looks to be a little bit guarded. I mean you did mention on FY24 guidance, there's 20% growth, but on actual numbers, the growth looks a little guarded. So is it more like you were guiding conservatively and look toward perform to the 20% number? Or is it like because of the current market condition, you think that 11% growth is what we can achieve?

Question: Parikshit Kandpal - HDFC Securities - Analyst : My second question is on (inaudible) We achieved with NCR crossing [10,000 and almost 8,000] in MMR. So do you think that even in this year, when you have guided for sales, so these two markets can grow? Or do you think now they are maybe at optimal levels and there's no further room to grow from here on? And also in line with that, what kind of business development have you planned out for these two markets because these two are the major contributors this year on the presales. So what can -- and what are the buffer plans from other markets which can help us navigate and grow at 10% for this year?

Question: Parikshit Kandpal - HDFC Securities - Analyst : Okay. And just the last question on next profitability on the reported basis. So given the delivery guidance we have given, do you think the mix is now moving towards more profitable projects and more recent projects? And next year, we'll see a significant turnaround in our resi margins reported in the P&L. And any thoughts on moving to POC and best accounting?

Question: Puneet Gulati - HSBC - Analyst : My first question is to start with the pre-sales guidance, which is 10% growth. Do you think this would this time be driven more by volume or there's still room for value to grow on these levels, for realization to grow? Unidentified Company Representative If you actually see FY25 as a base, we grew 31% from a booking value perspective. And from a volume perspective, we grew to 29 -- sorry, 25.7 million square feet at 29%. So largely, we feel that the trend will more or less continue. Actually finally depends on the underlying projects, what KPR are we launching. So it's not necessarily always premiumization or (inaudible) Also is about -- we launched more of Golf Coast (inaudible) big jump in the blended APR, right? And I see versus when you see more of protein development, you tend to see. But ballpark, if you ask, we should be able to see a similar trend on both volume and price growth. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 11:00AM, GODR.NS - Q4 2025 Godrej Properties Ltd Earnings Call

Question: Puneet Gulati - HSBC - Analyst : And secondly, if you can also comment on how your construction cost is going to trend from current levels, collections you've given a guidance. Should one think of construction costs rising at a similar level? Or does it need to increase substantially given that a lot more work needs to be done now? Unidentified Company Representative I would say if I were to give you a sense of what we are seeing cost inflation in the last, say, two to three years. I think this has been a very stable period of time, where most of the cost inflation in business has been controlled, yes since some markets Aluminum costs have increased, but steel prices also dropped, the market (inaudible) Flattish to drop, I think most likely, the cost in distance will be -- Sorry -- am i audible?

Question: Puneet Gulati - HSBC - Analyst : But from your --

Question: Puneet Gulati - HSBC - Analyst : From your spend perspective, is it likely to increase materially or similar levels as last year?

Question: Puneet Gulati - HSBC - Analyst : Understood. That's helpful. And lastly, on the business development side, I know it's quite difficult to give guidance, and you've given a INR20,000 crore guidance, which looks pretty low compared to what your aspirational sales would be. Any thoughts on how I should think about it?

Question: Rahul Jain - Elara Capital - Analyst : First one is on the INR40,000 crore of launches -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 11:00AM, GODR.NS - Q4 2025 Godrej Properties Ltd Earnings Call

Question: Rahul Jain - Elara Capital - Analyst : So my costs on the INR40,000 crore of launches. Does this include Ashok Vihar and the Bandra project. If you can update on both the projects, please?

Question: Rahul Jain - Elara Capital - Analyst : Got it, sir. And on the Bandra project?

Question: Rahul Jain - Elara Capital - Analyst : Got it, sir. So second one is on how are you seeing the conversion rates in FY25 relative to FY24? If you can give us the year-on-year comparison that is made on, especially to the markets as well. Unidentified Company Representative You're talking about conversion rates as a walk into conversion, you're saying? I mean, how the customer is --

Question: Rahul Jain - Elara Capital - Analyst : Got it, sir. And one last one. I think lately in the market, we are seeing a lot of buildup of vision coming into play in terms of new launches. If you can just share what is your share of (inaudible) In the percentage of total sales? Unidentified Company Representative Well, see, we don't tend to push much of subvention other than, say, negative units as that would have great views and the likes of it. And if they hover in typical low single digits at any point of time. And usually, we tend to push wherever the last stage of completion of project is coming. So it looks more like optical subvention, but say 1.5 year or 2 years, you were going to see OC and you just want to sell the units which have a negative view, say, placing the railway track or the C category inventory as we call it.

Question: Pritesh Sheth - Axis Capital - Analyst : First, a very strong performance in Q4 quarter and overall for the year. So see, I think while industry has been flattish to marginal decline in terms of volumes, we have clocked 29% volume growth. What do you think is driving customer taking homes to buy these new homes from you? Anything stress you want to highlight? Because I mean, do you think market has got tough and it needs some additional sales push to drive these kind of sales. So your thoughts on that. Unidentified Company Representative Thanks, Pritesh. Actually, if I be very candid in honor -- we've been leading for the last at least one-plus year negative. A lot of negative chatter on newspapers and market is slowing down. But you have to be very frank and honest, when we see our launches -- our numbers move up and down mostly on ability to get launched approvals to the time and bring it to the market. Specially quarter one last year, we had very good launches, so the number was very big. Unfortunately, quarter two and quarter three from launches were spilling over. We had reasonably decent quarter. But quarter four, we could get most of our losses still some actually, frankly, slip still we got a sort of a say fantastic INR10,000 crore number, I ended here at a very good number. For us, I think, because you are very diversely spread. And our products are also not in one city or one micro market of a city, we're seeing very strong demand. That being said, your macro question on what is driving demand? I think it's wealth creation and aspiration in India, right? If you just look at some data points, depending on which report you for, give or take, India's GDP is going to get double in the next five to seven years, REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 11:00AM, GODR.NS - Q4 2025 Godrej Properties Ltd Earnings Call we would get into a sort of a, again, IMF, World Bank, which report you referred to, we could grow about $30 trillion, $35 trillion in the next -- by 2047. And the discretionary income is creating a lot of aspiration, right? I think some of the macro factors, of course, impacts your concurrent demand in a particular quarter and the year, but I think the macro environment looks a little bit more positive in the last 3, 4 months than say what it was, say, 12 months back because when the government is pushing a lot of thing for the improvement of the disposable income, like the INR12 lakhs kind of a thing will increase demand for the consumption like sector, which will create a dominant effect by those people seeing secure about the job and therefore buying home, as well as things like monetary policy, a reduction of interest rates. So I think a combination of wealth creation, economic looking good, government bringing some real strong action in the short term, I think, it's amplifying. But I do feel that for customers, one trend I've noticed in the last, say, two to three years gradually changing is consolidation is, again, becoming more dormant, right? So I think with time and maturity and products becoming more selective, customers would want more predictability of their occupancy coming on time and what reputation the builder brings. So I think there is going to be sort of a gradual shift in the next four to six quarters where each quarter, you see a better sort of consolidation story for corporate developers the last year in India.

Question: Pritesh Sheth - Axis Capital - Analyst : Got it. That's helpful. Second is on the micro market or market-wise contribution, which is baked into your guidance. do you think large part of the growth that's going to come next year is going to be Bangalore and Pune driven because they are still at low base. I mean Bangalore, Pune, Hyderabad all these other markets while NCR and MMR remaining kind of flattish? And beyond next year, I think initially, you mentioned about having a double-digit kind of market share. Right now, as your presentation points out, we are a INR7 lacs crore market, then our results should be around INR70,000 crore in future, let's say, if market doesn't grow. Do you think the current of markets are enough to contribute that INR70,000 crore? I mean can you pull off like INR10,000 crore -- INR10,000 crore, INR15,000 crore each from in these large markets? So your thoughts around that.

Question: Pritesh Sheth - Axis Capital - Analyst : And just one last. On the cash flow, so we had a surplus cash flow for this quarter despite spending around INR2,700 crore on BD, how do you think the next year would be in terms of the surplus cash flows as well as the net debt? I mean, so are we now going to continue this trajectory and be cash flow positive with the FCF level?

Question: Parvez Qazi - Nuvama Group - Analyst : So two questions from my side. For FY25 as a whole, what percentage of our sales would have come from like available inventory or suction sales and what would have been the contribution from new launch? Unidentified Company Representative Okay. Very frankly, I wouldn't have the number off hand. But yes, mean if you largely look at the calendar, we would have every quarter, give or take about 55% to 70% numbers will be coming out of launches and residual could be a phased launch of system, give or take.

Question: Parvez Qazi - Nuvama Group - Analyst : Secondly, I mean, there has been a very strong growth in collections and OCF, but also has been accompanied by an equally strong growth in our land and approval related outflows from about INR5,300 crore in FY24 is about INR9,000 crore-odd. Now that we are sitting on a very strong inventory, where do we see this trajectory going ahead in terms of land related outflows? Unidentified Company Representative I think if you see most of the launches. So we have in our entire portfolio, we have different sorts of projects, right? So we have some projects, which are townships projects. So in places like Pune and places like (inaudible) Of Mumbai portfolio, we have huge inventory, but again, the idea is to create value in the long-run, we have some inventory even in Ahmedabad for that matter, right? So these are large-scale projects where the endeavor is to create value in the long term. So more like a land banking strategy we had with frankly, very, very low invested capital. And then the second strategy, which is largely about buying land and doing churn very fast and unlocking and creating high PAT margins. where the market opportunities continue to exist. So some REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 11:00AM, GODR.NS - Q4 2025 Godrej Properties Ltd Earnings Call of it is through the acquisition right now. And we would continue to buy land where we feel that our ability to turn them around within 6 to 12 months is very high and are able to improve our overall margin profile exists. So if you look at some examples like in Bombay, we bought something in the Kandivali by the name of Godrej Reserve. And if you see it is a very, very sizable land parcel very sizable investments we did. But in the last two-odd years, first year we sold INR2,700 crore. And last year, we sold INR1,600 crore plus. Similarly, in the market of Bombay, we bought a project and launched in Mahalakshmi, we did about INR1,100 crore just last year. So again, these are coming out of the investment thesis that, yes, these projects can be churned very faster. And these are places where the demand -- organic demand is very high, these are city-centric project, unlike the township project, which is slightly off city centre, where, I think, the idea is to add more projects.

Question: Kunal Tayal - BofA Global Research - Analyst : A couple of questions on your inflated margins. The first one is given that you have [50,000, 55,000] of inventory are from some of the recent projects, is it fair to assume that the visibility on achieving imputed EBIT margins of give or take 26%, 27%, still exist for the next two-odd years? And then just as an extension to that, as you -- and you take the next phase of business development, INR20,000 crore plus, the margin profile that would come alongside that new business development, would it be very different from what you're achieving currently? Unidentified Company Representative I mean the first question is a very quick one. I mean, yes, the endeavor will be to continue maintaining and improving our margin profile. And I think like Pirojsha is mentioning, the reason for having a, frankly, a very conservative business (inaudible) Target is to actually look at these, which at least -- meet this margin profile, if not more, and that to in a way that we feel capital churn can be very fast. So yes, I mean, we expect that this should be a long-term trend that we would like to maintain.

Question: Akash Gupta - Nomura Research - Analyst : My question is on the imputed EBIT margin. For FY25. So despite having higher economic interest on our presales, our imputed EBIT margins have declined from 26.8% to 26.2%. Just wanted to understand why? My second question is that why is there a delay for the Ashok Vihar project and the Bandra project?

Question: Akash Gupta - Nomura Research - Analyst : Understood. And just a follow-up question on the imputed margin. So if I understand the prices at which we are launching our projects versus the prices at which we have underwritten our projects, there is a different time. I mean we are getting benefit of price appreciation. So why isn't that flowing into our edit margins?

Question: Kunal Lakhan - CLSA - Analyst : Just on the -- just a bookkeeping question first, what's the value of the (inaudible) We have on the books? Unidentified Company Representative Around INR53 crore -- INR53,000 crore.

Question: Kunal Lakhan - CLSA - Analyst : Sure. That's helpful. Secondly, on the cash flow side, if you look at our spend on construction even for the full year, it's about INR5,500 crore for FY25. Considering like we are selling 25 million square feet, this year it's 20 million square feet last year. This spend construction seems a little lower. This should materially ramp up, I assume in that context, how should we look at cash flows, operating cash flows also? Unidentified Company Representative You're absolutely right. I think -- sir, as you would see that many of these launches were fairly high rise building for a lot of time goes in your piling work, excavation work. In places like Hyderabad, you also have to do now something like controlled blast because the train is very rocky. And most of the first 30%, 40% so that the quality of sale is very high expected [30%] is more time line so that the quality of sales very right. But fortunately, with most of the things on the excavation, piling and foundation then. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 11:00AM, GODR.NS - Q4 2025 Godrej Properties Ltd Earnings Call I think the COC figures vision. And the exciting part is that we typically have 20% to 30% (inaudible) Level and about from regulation, you can normally connect 70% up to structure and then the (inaudible) Structure, which is finishing. So the exciting part is we now have a lot of good opportunity to accelerate construction, which will benefit both COC jump, but also will improve our collection trajectory significantly, which is why if you notice on the back of close to 49% growth in collections from INR11,400 crore to [INR70,000 crore-plus] we are now guiding INR21,000 crore kind of a collection figure. Now operating cash flow is very difficult to really put up a number. But I think the long-term average, you can always assume that we are consistently increasing year on year on operating cash flow and becoming a more self-sufficient way. So I see that trend will continue now frankly depends upon our ability to execute all the products we if we do everything well, this could be even higher than this year. And to some degree it would be slightly lower also. But yes, I mean it's all going to be the most likely rising trajectory as from one year to next year.

Question: Manoj Dua - Geometric Capital - Analyst : As you said, you have an aspiration of double-digit margin on a macro markets. And you have already told that in our (inaudible) Real estate in a longer way also. So it is a good pretty dominant to the double-digit money in the macro market. So what more you you would have to do for that? And what better you have to do what you are already doing? Unidentified Company Representative I think we like to in one step at a time. I think, Pirojsha is rightly mentioning that this is a massive opportunity for us to target towards from a long term. But if you just try and see from what happened in three years from INR7,850 crore now. Our market share has more or less moved from [2.5%] or thereabouts to about [4.3%]. So just moving 1 or 2 percentage in a fast-growing market, has a huge massive impact from a booking value. So I think we're actually doing sort of a reverse engineer question for us, which is that what do we do to execute this project extremely well so that the profit that we've already locked in to begin with that gets into accounting, point number one. And point number two, we have four massive big markets there some markets have started performing to a sort of a good potential in INR8,000 crore to INR10,000 crore, like Mumbai and North, how do we grow this internal aspiration start to continue growing by 20%, but at the same time, how can we especially grow markets like South, which has a huge potential and (inaudible) Filing for us. So yes, I mean, which is why how we've given you guidance. So I think the guidance that we give on a sales perspective is something we would like to achieve with the hygiene -- and with that high yield, I think the real challenge and focus will be to speed up execution. And layering that with good BD, good launch pipeline or can we be these in the medium term to long term, each year on year is going to be the aspiration. So I think we are on the right track. We're not really targeting immediately to get into double digit. We're already really number one give or take at least 30% to 40% than our nearest competitor. So it's not a booking value for us. It is more of a margin expansion and execution gain from here on. Growth is a sort of hygiene now for us, yes. I said say growth is more or less hygiene for us now. It's to look at other buckets of performance. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 11:00AM, GODR.NS - Q4 2025 Godrej Properties Ltd Earnings Call

Question: Manoj Dua - Geometric Capital - Analyst : And about past BDA and unsold inventory carries that kind of margin (inaudible) Unidentified Company Representative So depend see, the project that I talked about from FY23, the inventory that making this then the land parcels that we bought are like in (inaudible) , could be in similar range, but in Ahmedabad, it could be slightly lower. Places like Ashok Vihar, this could be significantly higher.