Operator: Ladies and gentlemen, good day, and welcome to DLF Limited Q2 FY27 Earnings Conference Call. We have with us today on the call Mr. Ashok Tyagi, Managing Director, DLF Limited; Mr. Aakash Ohri, Managing Director and Chief Business Officer; and Mr. Badal Bagri, Group CFO, DLF Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference and meeting is being recorded. I now hand the conference over to Mr. Badal Bagri. Thank you, and over to you, sir.
Badal Bagri: Good afternoon, everyone, and thank you for joining us today. We are pleased to report yet another strong performance reflecting the underlying quality of our assets, disciplined execution, our brand strength, and prudent capital allocation across a well-diversified mix of development and annuity business. Strong cash generation and robust balance sheet continues to position us well for sustained growth in future. I will briefly talk about the operating and financial highlights. New sales booking for the quarter stood at INR 3,800 crores approximately. We launched Aureva, the luxury retirement housing address, which received an extremely strong response with a complete sell-out. We continue to see absolutely strong demand for our super luxurious project, Dahlias, in the current quarter as well. Overall collections stood at INR 2,780 crores in the current quarter, resulting in operating cash flow of approximately INR 1,858 crores.
Badal Bagri: Net cash position stood at approximately INR 15,100 crores, despite a very strong dividend payout in the current quarter of close to INR 1,980 crores. Our rental portfolio stood at 50 million square feet. The portfolio has now achieved its ever highest occupancy levels, 96% in terms of area and 97% by value. This continues to be amongst the highest in the industry. The rental business maintained strong momentum, delivering healthy top-line growth and hiking growth in profitability. Moving on to financial numbers. Overall consolidated revenue stood at INR 2,298 crores. This includes a one-time gain of INR 738 crores, which is accounted for as other income, which is due to valuation of one of the investments which we have made in one of our JV companies, as per accounting standards. EBITDA stood at INR 1,060 crores, resulting in a net profit of over INR 1,300 crores.
Badal Bagri: The gross margin potential of our development business continues to stand at approximately INR 40,000 crores, with a potential of cash generation of over INR 42,500 crores. For DCCDL, our consolidated revenues stood at INR 2,014 crores. EBITDA at INR 1,537 crores, resulting a net profit of over INR 750 crores for the current quarter, reflecting a year-over-year growth of 17%. With this, I would like to hand over back to all of you for Q&A.
Operator: Thank you very much. We will now begin the question and answer session. Participants connected through the audio call may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Participants connected through the webcast may click on Ask a Question tab. Accept the prompt connect via Zoom, post which you may click on Raise Hand icon to ask your question. The operator will announce your name to proceed with your question. Kindly accept the prompt, unmute your audio, turn on your video while asking your question. Please note, participants are requested to announce your company name before proceeding with your question. We will wait for a moment while the question queue assembles. First question is from the line of Puneet.
Operator: Kindly accept the prompt, unmute your audio and proceed with your question.
[Analyst] (HSBC): Yeah.
Operator: Kindly announce your company name before proceeding with your question, sir.
[Analyst] (HSBC): Sure. This is Puneet from HSBC. Congratulations on good launch of Aureva. My first question is, are you happy with the time it took to launch and sell? Because typically you guys sell out much faster. This time it got extended into a couple of days into October. Any thoughts on that?
Aakash Ohri: A couple of days into October? I think the entire sale concluded by 30 September.
Badal Bagri: No, Puneet. The sales concluded. See, what we do is that, we take the first initial booking, and that's a substantial amount, as you know, that's INR 50 lakh. Everything concluded before 30 September. The paperwork and all that obviously sometimes takes time. But even the forms and KYCs and everything. We report once the money is in the account.
[Analyst] (HSBC): Okay.
Badal Bagri: The forms and KYCs are done. We don't report otherwise.
[Analyst] (HSBC): Understood. That's very clear.
Badal Bagri: I think out of 1985 total potential, close to INR 1,900 crores was reported in the current quarter.
[Analyst] (HSBC): Okay.
Badal Bagri: There were just six units or so which kind of spilled over, which has got subsequently recorded in the system. We report what is reported in our financial system.
Aakash Ohri: That is because of some NRI money. As I said, we only account for monies which have come in. Verbal confirmations, written confirmations, even the codes that came in, the SWIFT code, sometimes, the tallying takes time because the bank holidays and all were there, weekend.
[Analyst] (HSBC): Right. Yeah.
Aakash Ohri: That is how. I think we are a bit too precise in what we are doing.
[Analyst] (HSBC): Understood.
Aakash Ohri: Otherwise, technically, everything was done before 30 September.
[Analyst] (HSBC): Understood.
Badal Bagri: Booking amount, Puneet, was INR 50 lakhs.
[Analyst] (HSBC): INR 50 lakhs.
Aakash Ohri: INR 50 lakhs.
[Analyst] (HSBC): Yeah, that's very clear. Secondly, on Dahlias, you talked about taking the price increases. Are you already seeing those price increases or should we still expect them post the launch of Experience Centre?
Aakash Ohri: No. If you see this time's report, Dahlias has been seeing a price increase. In fact, it's already gone up by almost about 10% even this time. Post the Experience Centre, once the show and tell begins, it's going to be there. The total super luxury, including the Camellias, we did raw sales about 19 this quarter. Dahlias has shown a very strong thing. In fact, this time the North sales have happened, which you may have seen per unit about INR 123, INR 124, INR 125 crores per unit. That's the 10,000 square feet ones.
[Analyst] (HSBC): Okay.
Aakash Ohri: The one penthouse that we reported for about INR 271. This time there were more North sales than there were South. Plus obviously, Dahlias is the price algorithm, makes sure that there is an increase with every sale. It is not linked to velocity, or it's not linked to the number of sales. It's a progressive kind of a statement.
[Analyst] (HSBC): Got it. North commands better value, you said, versus south?
Aakash Ohri: Yeah. There is a INR 20 to 25 crore price difference between north and south.
[Analyst] (HSBC): Okay. When should we expect launch of Experience Centre?
Aakash Ohri: Experience Centre should be now. We are on the last leg actually, unless GRAP or anything else stalls it, but I think we are just now getting everything together. We hope if everything goes well, it will be by December.
[Analyst] (HSBC): Meaningful pickup into Q4 then?
Aakash Ohri: No, Q3 also. See, now we have demonstrated it enough, Puneet, if you see. If you see the kind of, now we are almost, what, about nearing about 200 or sales.
[Analyst] (HSBC): Sure. 274 units have been sold so far.
Aakash Ohri: Yeah.
[Analyst] (HSBC): Yeah.
Aakash Ohri: 276 also, two more.
[Analyst] (HSBC): Yeah
Aakash Ohri: have been sold, plus 2. So that is why I am saying nearly, almost nearing 280. Also, if you see, there has been a consistent sale as far as Dahlias is concerned. If you have been tracking it for 1 and a half years, if you have seen it.
[Analyst] (HSBC): Yeah.
Aakash Ohri: So there is a reasonable amount of, now, I feel, trust which is established. Price points, most importantly, it was the price point that had to be established and understood by people, which is now a given.
[Analyst] (HSBC): Yeah.
Aakash Ohri: I am happy to also tell you that most recently, in the south also, we have done about INR 100 crore. We just clocked INR 100 crore per apartment, which is also the new landmark. So basically what is happening is that has become the new norm.
[Analyst] (HSBC): Yeah.
Aakash Ohri: That is how it is going on.
[Analyst] (HSBC): Understood. That's very clear. Secondly, on the commissioning. No major commissioning expected in FY27, and 2028 should be Aralias? Or any change in completion plans?
Badal Bagri: Yeah, that's true, Puneet. As we have said that our inflection point is 2027/2028 from Aralias, and thereafter, there are series of projects will start getting completed. From 2027 or 2028 onwards, Aralias onwards, you'll see a series of projects getting completed.
Aakash Ohri: Because then, Puneet, we get into that virtuous cycle over the next three years after that of Aralias, the three Priyanas, Dahlias itself. I think then, really in that sense, this shadow of the earlier post-Camellias and pre-Aralias, that shadow, I think we are hopefully in the last four quarters of that, you will see.
[Analyst] (HSBC): Got it. On the commercial side, DCCDL, what should we expect commissioning in 2028 and 2029?
Aakash Ohri: DCCDL, we continue to keep on working on the balance office towers of Downtown Gurugram, the Mall of India, Gurugram, and the Downtown Chennai. Correct me, Naveen, I think by and large, by FY30,
[Company Representative] (DLF Limited): Everything will be done. Yes.
[Analyst] (HSBC): But in 2028, Block 7 of Downtown was supposed to come in, 2.3. That is on track?
Aakash Ohri: Block 7 should come in next year.
[Company Representative] (DLF Limited): Yes.
Aakash Ohri: Goa should come in by December.
[Company Representative] (DLF Limited): By December.
[Company Representative] (DLF Limited): Yeah.
[Company Representative] (DLF Limited): Chennai by calendar next.
Aakash Ohri: Yeah.
[Analyst] (HSBC): Sorry, which one? Goa?
Aakash Ohri: Goa-
[Analyst] (HSBC): Oh, okay.
Aakash Ohri: Downtown Chennai, Building 7 should all happen in the next. And Goa this fiscal, and the balance two next fiscal.
[Analyst] (HSBC): Okay. Chennai Block 3 should come in.
Aakash Ohri: Yes.
[Analyst] (HSBC): 3.6 million. Next year should be big year even from those completions, so 2.3 plus 3.6 within DCCDL.
Aakash Ohri: Blocks 4 and 5 of Downtown Chennai.
[Analyst] (HSBC): That is how much in total?
[Company Representative] (DLF Limited): 3.6 million square feet.
[Analyst] (HSBC): 3.6. Okay. That is very clear. Thank you so much, and all the best.
Badal Bagri: Just to get one additional point, Puneet, and this will be for all others. This also depends on the mix and the kind of sale which we did. On a saleable, on an average, we were much ahead of INR 100,000 realization per square feet in this quarter. So that price increase has been realizing, and it has come a long way from the time when we had launched it.
[Analyst] (HSBC): Understood. Got it. Thank you so much.
Operator: Thank you. Participants on the audio bridge may press star and 1 to ask a question. Participants connected on the webcast may click on Ask a Question tab, accept the prompt, connect via Zoom, and click on Raise a Button icon to ask your question. Next question is from the line of Abhinav Sinha from Jefferies India. Please go ahead.
Abhinav Sinha: Hi. Good to see the results this time. My question is firstly on the rental component. We have seen in DLF rentals climb up to about INR 120 crores this quarter. What is the exit run rate that we should expect?
Badal Bagri: Exit run rate, I would say with full potential, it should be close to INR 175 crore to INR 180 crore this year.
Abhinav Sinha: Quarter.
Badal Bagri: Quarterly.
Abhinav Sinha: Quarter.
Badal Bagri: Quarterly. So on an annualized basis, close to INR 750 crore annually.
Abhinav Sinha: Okay. Ex of Atrium.
Badal Bagri: Ex of Atrium, yes. I am talking of only DLF, Abhinav Sinha, just the DLF portfolio.
Abhinav Sinha: Yeah. Just the DLF portfolio. Second question is on cash flows. Construction expenditure seems to be running a little bit lower in H1 of the year, and we are also hearing about the Delhi government putting in a lot of impositions on construction in the months ahead. What's the outlook on the cash flow, run rate, inflows that you will get on the installment from customers and broadly completion timeline?
Ashok Tyagi: So, look, honestly, on the completion timeline, broadly, give or take a quarter, we don't right now foresee any challenges. This is true, Arti, that last quarter and possibly this quarter could see a slight blip in construction outflows, primarily on 2 things. A, of course, is the fact that we are now entering the phase of chronic labor migration back for Chhath Puja and everything else that happens during this quarter. B, is that honestly, the GRAP guidelines printed in the papers pertain to Delhi. Delhi government has announced them. Typically, in Gurugram, we have seen almost 30 to 40 days of GRAP happens once those guidelines come into play, those specific thresholds they have. Let's see. Currently, of course, air quality continues to be okay, but we are entering the challenging AQI season.
Ashok Tyagi: So maybe this Q3 may still have some challenges on the construction outflow, but I do believe that fundamentally, the contractors are in place, their labor arrangements are in place, and I think this quarter also, we should see a decent progress. Post-GRAP, definitely, I think this challenge should disappear. Again, something which, if I may say so, is a concern, but I don't think it's a crisis by any stretch.
Abhinav Sinha: Okay, thanks for that. I'll just carry for just one last question. On dividend, I know company has stepped up the payout. Do you think you can migrate to, say, a quarterly or, say, a half-yearly dividend in another couple of years, given that we've got very strong and consistent cash flows now?
Ashok Tyagi: Look, this I will hold my horses because I myself don't know the answer. What we are doing is that we are clearly establishing a more predictable dividend pipeline from DCCDL to DLF on a regular basis. But DLF dividends continue to be annual. We'll see in the future, but right now, I think our guidance continues to be an annual dividend.
Abhinav Sinha: Great. Thanks and all the best.
Ashok Tyagi: Thank you.
Operator: Thank you. Next question is from the line of Pritesh Sheth. Kindly accept the prompt, announce your company name, and proceed with your question.
Pritesh Sheth: Yeah. Hi, Pritesh here from Axis Capital. First, just bookkeeping one. I see two different inventory number reported in our presentation. In slide 12, we have mentioned balance surplus from unsold inventory to be INR 15,000 crore and on slide 14, we have mentioned at INR 11,000 crore. So how should I look at these two numbers?
Ashok Tyagi: Pritesh, the value of inventory is INR 15,000 crore. The margin of that inventory is INR 11,000 crore. If you look at page 14, it is written INR 10,825 is the balance margin yet to be recognized. So INR 11,000 is the margin of the value of inventory.
Pritesh Sheth: Oh, sorry. Yeah, my bad to understand that. Thanks for that clarification. Second is on the land trend that we have been doing since last two quarters, I recollect last quarter was a big Noida payment that we made. This quarter also, we have made around INR 350 crore of land payment. So any
Ashok Tyagi: Yeah
Pritesh Sheth: opportunities that we are looking at and some details on that. Yeah.
Ashok Tyagi: Pritesh, if you recall about 2 years back, we had done a transaction through acquisition of bonds of 28.5 odd acres of land from IREO. The 19.5 acres had been conveyed to us about, I think, 18 months back. There was a 7.06 acre parcel, which had some encumbrances needed to be removed. Those were done this quarter, and so the complete payment of that was made in this quarter. We also entered into a collaboration for a fresh 7.48 acres of land, again, which is contiguous to this 28 acres. Eventually it will be a 36-acre land parcel contiguous in Sector 61 that we will have. Some small payment was also made for that. This again is coming through a bank delinquency rule in that sense. The proceeds of this will be paid out to the lenders of that company.
Pritesh Sheth: Interesting. The project potential has enhanced now after this additional survey.
Ashok Tyagi: Has enhanced, and hopefully by Q4, we should be able to conclude this entire transaction.
Pritesh Sheth: Getting up for launch next year?
Ashok Tyagi: Land is there, launch we will do.
Pritesh Sheth: Sure.
Ashok Tyagi: That's okay.
Pritesh Sheth: Okay. Just for next two quarters, we know how the series of launches would be, like Mumbai Q3 and Magnolias 2 Q4. Is the timeline correct?
Ashok Tyagi: Pritesh, before I hand over to Aakash, we have set up a reasonably transparent guidance on our medium-term launches. Frankly, now it's all driven by the approval processes, in that sense. Be it Mumbai, be it Gurugram. Clearly those two projects that you mentioned about are definitely on the anvil, but I would defer to Aakash.
Aakash Ohri: Yeah. No, I think the same. We are gearing up for both this Mumbai launch for Q3, then of course, there is a Gurugram one, then the Delhi continues, and some other, whatever residual inventory continues. That is what it is.
Pritesh Sheth: Got it. Just one last. With this Delhi master plan getting approved, I know it is still early stages, but any opportunity apart from the existing land that we have between Midtown and Chanakyapuri, anything else gets unlocked from this approval?
Aakash Ohri: We have no other land parcels really, apart from Midtown and Chanakyapuri. Let us see how this policy plays out, then we will think. But it is still early days yet. Thank you.
Pritesh Sheth: Sir, that is it from my side. All the best. Thank you.
Aakash Ohri: Thank you.
Operator: Thank you. Next question is from the line of Parvez. Kindly accept the prompt, announce your company name, and proceed with your question.
[Analyst] (Nuvama): Hi, good afternoon. This is Parvez from Nuvama. So one question from my side. You had earlier given the exit rental guidance for the rental assets in DevCo. It would be great if we could get the same for DCCDL also.
Aakash Ohri: The exit rental for DCCDL would be close to INR 6,800 crore, Parvez.
[Analyst] (Nuvama): Sure. When do we expect the Mall of India, Gurugram to get completed? Will this be FY29 or FY30?
Aakash Ohri: FY30.
[Analyst] (Nuvama): Sure. Thanks and all the best.
Aakash Ohri: Thank you.
Operator: Thank you very much. Participants, you may press star and one to ask a question. Next question is from the line of Satvinder Bedi. Kindly accept the prompt, announce your company name, and proceed with your question. Satvinder Bedi, may I request that you accept the prompt, unmute, and proceed with your question. Satvinder, if you can hear us. Due to no response, we move on to the next participant. Next question is from the line of Samarth Khandelwal. Kindly accept the prompt, announce your company name, and proceed with your question.
Samarth Khandelwal: Am I audible?
Operator: Yes.
Aakash Ohri: Yes.
Samarth Khandelwal: Good afternoon, sir, and thank you for this opportunity. I am Samarth, ICICI Securities. My name is Samarth Khandelwal. My question is regarding the project Hamilton. Have you decided what kind of offering that will be, and when can we expect it to be launched?
Aakash Ohri: That is not the name of the project. We are yet to name it. It is in the same vicinity. But it is going to be a luxury plus product, and we aim to launch it in Q4. It is in the heart of DLF City, so please expect a very, I would say, it is going to be a luxury product, and it is going to be one of its kind. It is going to be at par with our recent luxury launches. So it is in DLF phase 4, and we are scheduling a launch sometime in Q4.
Samarth Khandelwal: Okay. That is wonderful to hear. Thank you.
Aakash Ohri: Thank you.
Operator: Thank you very much. Next question is from the line of Akash Gupta. Kindly announce your full name and your company name and proceed with your question.
Akash Gupta: Yeah. Hi. Thank you for taking my question. This is Akash Gupta from Nomura. Congrats on a good booking performance also. My question was on the DCCDL rental portfolio. I just wanted to get clarity on how are we looking at the new volumes that are coming in on the DCCDL side between FY28 to FY30. I just a little confused at when is block 3 for Chennai coming, when is block 4, 5 for Chennai coming, and when is block 5, 6, 7, 8 for Gurugram coming? I just wanted to get an annual visibility.
[Company Representative] (DLF Limited): Under Chennai, 1, 2, 3 are already operational. Block 4 and 5 is what is under construction, which is together 3.6 million square feet, which will become operational by calendar next year. Coming on to the downtown Gurugram, which is 5, 6, 7, 8, and the MOIG, the completion is targeted towards the end of FY28 and FY29. Most of the blocks will become operational between FY29 and FY30.
Akash Gupta: Understood. The Mall of India, Gurugram is also staggered up for FY30?
Aakash Ohri: FY30.
[Company Representative] (DLF Limited): FY30.
Akash Gupta: Understood. Okay. That was my question. Thank you so much.
Operator: Thank you. Next question is from the line of Satvinder Bedi. Kindly accept the prompt, unmute your audio, announce your company name, and proceed with your question. Satvinder Bedi, we are unable to hear you. Due to no response, we move on to the next participant. Next question is from Shrenika Jain. Kindly accept the prompt, announce your company name, and proceed with your question.
Shrenika Jain: Hi. My question is regarding the revenue. The company name is JP Morgan. The question is regarding the revenue for the first 2 quarters is still below the market expectations, though launches are very good, marketing expenses, other expenses have shot up very highly. But the market expectations are still very high, and the revenue is still not meeting up the expectations. When can we see revenues which used to come in the earlier 7, 8 quarters before?
Badal Bagri: Hi, Shrenika.
Ashok Tyagi: Revenue into the launch or accounting?
Badal Bagri: Are you talking about accounting revenues or sales?
Shrenika Jain: Accounting revenues.
Badal Bagri: Accounting revenues.
Shrenika Jain: And-
Badal Bagri: Yeah, Shrenika. Shrenika, we follow a completed contract method of accounting, which effectively means when the project is done, is over, is when you receive an OC, then you are able to recognize the revenue in the P&L versus a POCM accounting. The number of projects which get completed and that we are able to offer it to customers is when possibly this gets recognized. This we have highlighted earlier that our inflection point of revenue, which is almost INR 75,000 crores of launched and projects so far. The inflection point you will see in 2027, 2028 and going forward next to four, five years is when this entire revenue is going to get recognized.
Ashok Tyagi: The second thing from an accounting revenue standpoint also that you should understand is that for both Cyber City and Atrium Place, even though we control 67% and should normally be consolidating their revenues and EBITDA into us, because of certain AVM rights that the minority partners have, the auditors believe that consolidation should not be there. If I may say, in a very accounting construct, the entire revenue of Cyber City is about INR 2,000 crores a quarter and Atrium Place is another INR 150, 100 crores a quarter, is not consolidated even though we own the majority control in those entities.
Shrenika Jain: Second question is, what is the key reason for other expenses shooting up in this quarter?
Badal Bagri: Other expenses includes brokerage, marketing, et cetera. As you understand that we continue to take into P&L all the overheads which are being incurred to make and develop the projects of future. I think those are the overheads which we continue to increase. In this particular quarter, there is a marginal increase versus previous quarter, but it is kind of in line or on average, it is in line with what generally we have from an overheads perspective.
Shrenika Jain: What is the forward guidance for other expenses?
Badal Bagri: It will be in similar range. The average of last two quarters should be looked at for forward guidance as well.
Shrenika Jain: How do we look towards forward guidance towards other revenues?
Badal Bagri: These other income are getting recorded the way they are. The first one was Joyus, which was almost four, five quarters back, which was a settlement which was going on in the company, and that is also from a business outcome, a very positive business outcome, which was struck, and that was included as other income. In this particular quarter, you have the fair valuation gain which is due to accounting guidance. Apart from that, on an average, you will have almost INR 150 to INR 200 crores of other income, which is interest income, interest from other subsidiaries, et cetera, which will continue to happen.
Shrenika Jain: Okay. Thank you.
Operator: Thank you very much. Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to Mr. Ashok Tyagi for closing comments.
Ashok Tyagi: Thank you so much. I am sorry for dragging all of you on a Saturday early afternoon into this call, but I think because our meeting was on Friday, this became really unavoidable. As Badal explained, in some sense, till the time that Arbor will be commissioned, sometime next year, this entire thing of the accounting revenue being dependent on the launches made earlier in the post Camellias, but pre-Arbor phase. Those only will be the key drivers of that, plus any miscellaneous asset sale, et cetera, that happen. This is a small passing phase. Fundamentally, the three key drivers of our business, which is strong presales of the identified products, strong cash and margin generation, and a continuously sustained and strong growth of the rental business. We continue to work and hopefully deliver on all the three engines.
Ashok Tyagi: The first quarter was relatively a quiet period from a pre-sales standpoint. Aureva hopefully should have started the entire process, and hopefully in the next 2 quarters, as we mentioned, we should have a couple of more launches, apart from the continuing sales of Dahlias, which of course continues. Our focus continues to be on strong cash management and strong margin generation. The RentCo continues to hopefully grow strong. Atrium has commissioned, I think this is the first year when Atrium will be fully rent generating. Our Summit Plaza got commissioned in this quarter. Midtown Plaza got commissioned. Promenade Goa should get commissioned hopefully around the Christmas, New Year timeframe. So all of these are long-term rent-generating assets which we continue. Our focus continues to be on doing all this with this extremely strong focus on governance and compliance.
Ashok Tyagi: I think with that, I look forward to reconnecting back with you guys hopefully in January. Thank you.
[Company Representative] (DLF Limited): Thank you.
Operator: Thank you very much. On behalf of DLF Limited, that concludes this conference. Thank you all for joining us, and you may now leave the meeting and disconnect your lines. Thank you all.
