Karan Khanna: Thank you, Iqra. Good evening, everybody. On behalf of Ambit Capital, I would like to welcome you all to the Q2 and H1 FY27 earnings conference call of Aditya Birla Real Estate. From the management team, we have with us today Mr. R.K. Dalmia, Managing Director, Aditya Birla Real Estate, Mr. K.T. Jithendran, MD and CEO, Birla Estates, and Mr. Keyur Shah, CFO, Aditya Birla Real Estate. I will now hand over the call to the management team for the opening remarks, post which we will have the forum open for Q&A. Thank you, and over to you, gentlemen.
R.K. Dalmia: Thank you, Karan. I am R.K. Dalmia. A very good evening to you all. India's economy maintained strong momentum in Q2 FY27, supported by resilient domestic demand and investment activity. Q1 FY27 GDP growth stood at 7.8%, ahead of the RBI's earlier estimates, with healthy PMI readings and GST collections. Reflecting this resilience, the RBI revised its FY27 GDP growth forecast upward to 7.1%. The external environment continued to face headwinds from geopolitical tension, elevated energy prices, and tighter financial conditions. Headline CPI inflation rose to 4.45% in July to 5.4% in September. Nevertheless, the domestic growth demand remains supportive of the real estate sector. MMR remains the largest residential market, with sales of approximately INR 59,500 crore, up 11% YoY. Pune and Bengaluru also maintained healthy momentum, with absorption growing 3% YoY, and prices increased 3% in Pune and 8% in Bengaluru.
R.K. Dalmia: Together, MMR, Bengaluru, Pune, and NCR accounted for around 65% of pan-India sales by value. The commercial office segment remained strong, with Q2 FY27 leasing of approximately 21 million square feet, up 6% YoY, taking nine-month leasing to a record 66.4 million square feet. GCCs remained the key demand driver, accounting for around 41% of leasing, alongside robust demand for Grade A and green-certified assets. Against this backdrop, we delivered a strong H1 FY27 performance. The total income increased 309% YoY to INR 355 crore, including INR 268 crore in Q2, up 755% YoY. Collection increased 39% YoY to INR 1,465 crore in H1 FY27, with Q2 collections of INR 57.52 crore, up 47% YoY. We also crossed the landmark milestone of INR 10,000 crore in cumulative collection across our project.
R.K. Dalmia: Our profitability, Birla Tisya recognized EBITDA of INR 181 crore at a 28% EBITDA margin, while Birla Navya contributed INR 39 crore at 35% EBITDA margin. Our financial position also strengthened, with CARE improving BEPL credit outlook from AA stable to AA positive. Q2 FY27 booking value stood at INR 298 crore, with Birla Taranya and Birla Niyaara in MMR being the largest contributors, supported by sustenance sales across our key markets. Our business development in October 2026, we announced JDA of 5.6 acres prime residential land parcel in Hinjewadi Phase 1, Pune, with GDV potential of approximately INR 1,650 crore, further strengthening our Pune portfolio and future development pipeline. At our flagship Worli development, we have chosen to redesign Tower C to unlock its full potential.
R.K. Dalmia: The revised plan had approximately INR 1,900 crores of net GDV and expected to be highly accretive of profitability, while the resultant deferment of the launch to the next financial year may impact current pre-sales. This reflects our disciplined focus on long-term shareholder value over near-term launch timeline. We continue to strengthen our redevelopment portfolio and are in active discussion to close additional opportunities across high-demand MMR micro markets. This remains an important avenue of growth, supported by trusted partnership and disciplined capital allocation. ESG remains integral of our operation. In 2026 GRESB assessment, Birla scored 95.9 out of 100 and a five-star rating for standing investments and 100 out of 100 for development. We were recognized as a global sector leader in both benchmarks and ranked first in Asia for management score.
R.K. Dalmia: Looking ahead, we remain focused on disciplined growth and consistent execution, supported by strong balance sheet and a robust opportunity pipeline. Our priorities are to expand selectively across key markets, deliver high-quality development, strengthen our portfolio through business development and redevelopment, and create sustainable long-term value for all stakeholders. Thank you. We will now open the floor for Q&A.
Operator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Jainam Shah from Equirus Securities. Please go ahead.
Jainam Shah: Hello, am I audible?
Operator: Yes, sir.
Jainam Shah: Yes. Hi, sir. My question would be firstly on the pre-sales. We did around INR 300 crore of pre-sales. What could be the cancellation during this particular quarter across the projects, and what would be our gross pre-sales for the particular quarter?
KT Jithendran: I think we are really talking about net sales only. We do not track the gross. I think, suffice to say that the focus is clearly on net sales. The net sales has been about INR 300 crore, INR 298 crore. Given our current inventory, I think it is a steady performance. Once the launches start kicking in, I think we will really accelerate on this.
Jainam Shah: Got it, sir. One more thing, sir. Just wanted to understand one thing, which is like our collection is largely in line with our construction. Like, we have all the collection linked with the construction. Is this understanding correct?
KT Jithendran: Yeah, yeah. Largely.
Jainam Shah: Okay.
KT Jithendran: Yeah, collections are very strong.
Jainam Shah: Got it, sir. Sir, what could be a, let's say, largely embedded EBITDA margin that we generally see at the project level? Any broader number that you can suggest for the same?
KT Jithendran: Broader EBITDA margins you are talking about?
Jainam Shah: At the project level.
Keyur Shah: Yeah, our EBITDA for every project is ranging from 25% to 30%, yeah, is broadly our EBITDA margin.
Jainam Shah: Got it. Sir, just two more things onto this. If you see our cash flow that you started giving over last two quarters, in that particular thing, when we see our collection versus our construction cost as well as other project-related outflow and corporate cost, if we combine everything, then we are not making any major margin if you exclude the leasing inflow as well as our construction and collection has been largely in the similar line. Then how this collection and construction-related outflow differs from the margin that we provide? Also, on slide number 27, the cash flow that we are giving about the remaining estimated project cost, that also suggests that for all the launch project, our margin post-launch is somewhat of around 35 odd percentage, which exclude the land, stamp duty, and approval cost.
Jainam Shah: Just wanted to check on these 2 parts for the 25% odd EBITDA margin number at the project level.
Keyur Shah: See, the cash flow which we have given, this is what we have collected and less what are the construction spend and other spends we have got. We also charge off all the sales, marketing, and all expenses are charged off to the P&L, including for projects which are yet to be launched. All the expenses which are overheads are charged off to the P&L. Only the direct liaison or operations-related expenses are inventorized. In a way, it is not like-to-like. The collections are only for the launch projects, but the expenses which are incurred are for the entire portfolio. That is the way one needs to look at it.
Keyur Shah: Now, coming to slide number 27, where you talk about the future potential, we have excluded all the costs, or we have included all the costs we need to incur on the launched projects, including the unsold inventory, and thereafter the surplus cash flow potential has been determined.
Jainam Shah: Yeah, this INR 12,963 crore amount, which is remaining estimated cost of the project, this includes the admin and overheads and the corporate cost into it, or it will be excluding those?
Keyur Shah: No, it includes all the costs. It includes the entire cost.
KT Jithendran: Approval, mainly approval cost, everything.
Keyur Shah: All the costs related to the projects which have been launched.
Jainam Shah: Okay. Just one thing, sir. If you see, total sales that we have done for all the launch projects combined is somewhat of INR 24,500 odd crore. Our collection is almost around INR 900 odd crore, which suggests that around, you can say, 35% odd collection has been done, where 65% collection is pending across the portfolio. If I apply this similar to the construction cost as well, like 35% construction cost would have incurred all the cost, and balance 65% would have been left out. Then our construction cost for, let's say, estimated project cost would be around INR 2,000 crore odd number versus INR 3,000 crore of total launched inventory, which also suggests we are making some 35% odd margin. This is all the cost which we are going to incur going forward.
Jainam Shah: Anything that I am missing because this also gives me the 35% odd number over here.
Keyur Shah: Jainam, let us take this offline. I mean, we have the other participants also waiting in queue. As I mentioned, the INR 12,000 which we have considered for the estimated project cost includes all the projects, all the entire project costs of the launched inventory and not necessarily of the sold inventory. We will take the balance questions offline.
Jainam Shah: Sure. Thank you so much.
Operator: Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your question to 2 per participant. The next question is from the line of Harsh Pathak from Motilal Oswal Financial Services Limited. Please go ahead.
Harsh Pathak: Yeah. Hi, KT and team. Good evening. My first question is on
KT Jithendran: Hi, Harsh.
Harsh Pathak: Hi. My first question is on the Niyaara project. We have received some additional area. What has led to this new area flowing through, and what is the consideration paid? Because even if I see the PPT, it says a net GDV addition of INR 1,900 crores. But if I take the difference of GDV between the Q1 and Q2 presentation, it indicates that the GDV addition is close to INR 3,000 crores. So where am I missing?
KT Jithendran: Essentially, Harsh, what we have done is that, Niyaara first plot and the second plot that we acquired later from the Wadias, we have been able to amalgamate both of them. We have been able to use some of those FSI from the other plot. We have been able to load it onto the current Tower C. So actually, we are bringing forward what we otherwise would have launched at a later date, and we are now creating and optimizing this product Tower C, and therefore we are increasing the GDV of Tower C by INR 3,000 crores. So partly of that is coming from the adjacent plot, which we have now been able to amalgamate. Therefore, now this being a very vantage location, we are redesigning the product to a better configuration and optimizing it.
KT Jithendran: And with that, we are pretty confident that we will be able to attain much better value, which is resulting in a net increase of GDV by INR 1,900 crore.
Harsh Pathak: Understood. So in our entire Worli land parcel, we should see that the entire GDV goes up by INR 1,900 crore.
KT Jithendran: Yeah. Net GDV goes up by INR 1,900 crore, but for Tower C, the GDV goes up by INR 3,000 crore.
Harsh Pathak: Understood. And when can we now expect the launch happening in FY28, and which are the-
KT Jithendran: Yeah, we are trying to do it as quickly as possible. With this redesign, I think we should be ready to come into the market by Q2 of next year.
Harsh Pathak: Q2 of next, understood. Which are the other projects that we are planning from the pipeline for FY28? Also wanted to check when are we launching this Khar project in the current year?
KT Jithendran: Yeah, Khar should be coming sometime in January-February, in the coming year. We have Vashi, which we have finalized as a new launch, new phases of Taranya, new phases of Punya. We have also now finalized a new project in Pune, in Hinjewadi. So that also, hopefully by Q4 of next year, we should be able to launch.
Harsh Pathak: Understood. Just wanted to check on this Hinjewadi project. What is our share in this project, and what consideration have we paid towards this?
KT Jithendran: So, yeah, it has been a pretty attractive deal for us. The top line is about INR 1,650 crores. It is a rev share of 75% to us and 25% to the partner, and the upfront is about INR 50 crores.
Harsh Pathak: Understood, INR 50 crores. Okay. In Niyaara, have we paid some consideration to load the additional FSI?
KT Jithendran: No, no. It is just a reconfiguration of the FSI.
Harsh Pathak: Understood. Okay. My last question is on the NCR projects. For both Birla Arika and Pravaah, we have seen some cancellations happening. So, Arika, this quarter also, we have seen some INR 114 crores of cancellations. Both the quarters put together, it is INR 120 crores. Even in Birla Pravaah, we have seen some INR 7 crores of cancellations. So, wanted to check, what is happening at these projects, and how do you see the NCR sales panning out? Even we have Birla Navya project to be launched this year in H2. So, how do you see the demand in NCR per se?
KT Jithendran: Yeah. Birla Pravaah, as you know, we had sold out the entire inventory of about INR 1,850 crores. There have been 3 cancellations, which all of them has been rebooked at higher prices. Birla Arika, if you know that, the first phase, we have sold about INR 3,000 crores, and in the second phase, we sold another about INR 1,700, INR 1,800 crores. Together, we have done about INR 4,700 crores or so, which is basically 323 apartments plus 151 apartments, about 475 apartments. So, we had about 11 cancellations. That is okay. I mean, that happens. There are some of the people who do not pay, we terminate. Some of them, they cancel. So, this has been a 50/50 situation in our case.
KT Jithendran: The good news is that about 6 of these apartments we have resold at least about INR 2,000 per square feet higher price. So, that is the outcome.
KT Jithendran: When the entire portfolio gets sold, sometimes these kind of, a few projects, a few flats get canceled. Sometimes they do not pay up, we also terminate. But I can assure you that all these are getting resold at much higher prices. The market of NCR continues to be very resilient and very strong, and we are very positive and optimistic about it, and we are looking for many more projects to launch in this market.
Harsh Pathak: Understood. Thanks a lot, KT, for taking my questions. Thanks.
KT Jithendran: Thank you, Harsh.
Operator: Thank you. The next question is from the line of Biplab Debbarma from Emkay Global. Please go ahead.
Biplab Debbarma: Good evening, everyone. My first question is on the, you have removed Niyaara from the launch pipeline of this financial year. We have limited inventory to sell, and even if we sell well, there is a high chance of our pre-sales number falling short of last year's pre-sales number. Looks like we will be doing some INR 6,000 crore to INR 7,000 crore this year. Is my assumption correct? Do you see, or you see our this year's pre-sales doing like last year's pre-sales?
KT Jithendran: Biplab, this is exactly what I tell you when I refrain from giving guidance. At a short-term guidance, it is very difficult because there are so many ways it could go aside. That is why I am more happy giving a long-term guidance, because in the quest of meeting the guidances, I do not want to kind of compromise the value that clearly we can add. Sometimes it comes up, these opportunities which come from time to time. We will continue to add more value to our investors, stockholders, to the project, et cetera, and continue to optimize and improve the GDV and the value. Yeah, I mean, it is not INR 8,000 crore for sure for this year. But as I mentioned, we will refrain from giving a clear guidance. Rather I would be happy giving you a long-term guidance.
Biplab Debbarma: That is okay, sir. Second question is, we have done a revenue recognition in Tisya and some in NCR project. But what is the expected revenue recognition for the remainder of this financial year, and what kind of revenue recognition can we expect next financial year in FY28?
Keyur Shah: So, Biplab, most of the revenue has already been recognized. So very few apartments, the revenue is yet to be recognized. So the forthcoming revenue recognition is not going to be substantial.
Biplab Debbarma: In this financial year?
Keyur Shah: Yes.
Biplab Debbarma: What about next year?
Keyur Shah: Next year we will have other projects. But current year, we have fully considered whatever we have in our portfolio.
KT Jithendran: Biplab, I also wanted to add and tell you that, we have been able to recognize this revenue about 4 months ahead of schedule. We were supposed to do it last week, but we have delivered this project about 4, 5 months ahead of the RERA timeline and what we committed to our customers. Project has come out very well with an NPS score of 95%. We are very happy it has come out and customers are very delighted, and this talks a lot about our execution focus and capability, and this will continue to happen in all our projects.
Biplab Debbarma: There is no doubt about your execution. Okay, sir. That is great news. Sir, one final question is on the business development. We have done, correct me if I am wrong, 2 deals this year, GDV of INR 4,200 crore around. Are we on track to do that kind of business development?
KT Jithendran: Yeah. If you look at the last few months, of course, as you very rightly mentioned, we did the INR 2,600 crore of Vashi, INR 1,600 crore from Hinjewadi. In March, we did about INR 1,600 crore again from the Khar project. We also added about INR 1,900 crore of extra value from Niyaara Tower C. Overall, you look at it, we have added worth about INR 8,000 crore in the last few months. If you look particularly at this year, including Niyaara, we have added about INR 6,200 crore of new projects, so it increased the GDV. In a 6 months' time, as I mentioned, we are guided for about INR 10,000, so we have already achieved INR 6,000 crore in a way.
KT Jithendran: But I am pretty confident that we should be able to cross the INR 10,000 crore guideline that we had mentioned at the beginning of the year.
Biplab Debbarma: Thank you, sir. And all the best, sir.
KT Jithendran: Thank you.
Operator: Thank you. The next question is from the line of Akash Gupta from Nomura. Please go ahead.
Akash Gupta: Hi. Am I audible?
Operator: Yes, sir.
KT Jithendran: Yes, Akash.
Akash Gupta: Hi, sir. My question is on the sustenance sales. I mean, we have INR 19 billion of inventory in Worli. We have INR 10 billion of inventory in Thane. INR 3 billion of sustenance sales on a quarterly basis, it is lower than our expectations. Just wanted to understand your thoughts as to how the offtake is going on. Is it like, in your projects, is it in line with your expectations? That is my first question.
KT Jithendran: Yeah. Akash, if you look at our inventory, overall 78% is already sold. What is left is only 22%. If you look at Niyaara, et cetera, I mean, I would say we have done well because we have sold 6 apartments in Niyaara in this period, in combined of Tower A and C, B together. We do not have much inventory left. This number varies from project to project. We cannot generalize it. We have also done reasonably well in Taranya, as you mentioned, because we did about INR 250 crores of sales in Taranya in these 2 quarters. I think considering the kind of strong momentum we have been able to attain during the launches and whatever the balance inventory left, we are doing in a pretty steady state.
KT Jithendran: If you know, in Taranya, we did more than INR 1,000 crores, which is one of the highest-selling launch projects in Thane at the launch stage. Bulk of that momentum was snatched during the launch itself. Now whatever is the balance left, it will go at a steady pace. I think it is quite fine. There may be one or 2 projects like Birla Mrida, which is not firing. We need to now bring more power into pushing that across different markets to get momentum there and also bring balance to the overall portfolio of sales. If you look at the key projects, you look at Taranya has done well, Punya has done reasonably. Pune also has done about INR 92 crores and from whatever inventory balance we had. All of them, I think, is reasonably firing.
KT Jithendran: Barring a couple of projects where we have to do some focus. I suppose there has been some negative sales also, which was again because of the very, very strong sales in the past. There were no inventory left, so that correction will happen over the course of time.
Akash Gupta: Understood. Sir, my second question is on the share price. The share has corrected from INR 3,000 levels to roughly INR 1,000 right now. There is definitely a mismatch between how investors are thinking about your stock and how we are thinking about our strategy. Even FY27 pre-sales, I think from INR 80 billion is now going down to roughly INR 50 billion to INR 60 billion because Niyaara, which was expected to launch this year, has now been moved. I just wanted to understand how we are thinking about our long-term pre-sales guidance, because I think we were expecting roughly INR 15,000 crores in FY28. Now we are taking it probably to FY29. There is definitely a mismatch. I just wanted for you to address the question. How should investors think about the company?
KT Jithendran: I think the investors should very clearly see this as a long-term investment, not a short-term, linear sort of a sale company. We are continuously working for improving the long-term value of our investors. We stand firm to our commitment of reaching pre-sales of INR 15,000 crores by FY29. We are also, as you know, continuously adding projects, new projects. We have increased our GDV value by almost INR 7,000 crores or INR 8,000 crores in the last few months. We are also trying to extricate more value of the current portfolio, the way you saw Tower C. Now, its GDV is going up by almost INR 3,000 crores. We are bringing in what would have happened in Niyaara 2 forward by putting it more into Tower C.
KT Jithendran: So, each of these action of ours are very carefully thought out and planned to improve the value of our shareholders and investors.
KT Jithendran: It is not just pre-sales. Pre-sales is only one part of it. When we do add projects in business development, we are extremely careful how each of these projects are going to add long-term value, how the risk framework turning out, are we taking the right risk, or are we speculating too much? Also in execution, we are razor sharp, we are razor focused. Execution is going in a well-executed plan. We are delivering projects ahead of time with very high IRRs and very high margins. I think all of these goes as a complete package in building the long-term value of our investors.
Akash Gupta: Understood, sir. That was my two questions. Thank you so much.
KT Jithendran: Thank you.
Operator: Thank you. The next question is from the line of Pritesh Sheth from Axis Capital. Please go ahead.
Pritesh Sheth: Yeah, thanks for the opportunity. Just continuing on the sustenance sales part question from the previous participant. Niyaara, we used to sell like 15, 20 apartments or 20, 25 apartments a year. H1, we saw like you have sold six odd units. I know inventory is one side of the story, but is there also some slowdown in terms of sales because of the competition around, or you would purely attribute it to the kind of inventory that we are now left with?
KT Jithendran: Pritesh, see, I had about four cancellations here, and each of these flats got sold. Together, the four flats, we got INR 15 crores of extra revenue. I think the demand is very strong. The brand Birla Niyaara has been built very strong. There is pretty strong demand, positive demand for these projects, both Tower A and Tower B. The only issue is that lack of inventory. It will take its time. I think we have sold bulk of the inventory. We have sold 401 out of 413 in Tower A, 119 out of 148 in Tower B. I really do not see any need for any rush. I think we are looking for value now. We are cash positive, construction is going well, we are well capitalized. It will take its time.
KT Jithendran: Really, there is no need to rush the balance inventory, as the value is continuously going up. We are sitting pretty. There is no cause for any worry as far as Niyaara is concerned. Now with Tower C, we are even adding more value. We see this in a very positive light.
Pritesh Sheth: Sure. Just second question, see, while I think this year, anyways, we have not guided for any pre-sales per se on a yearly basis, but declining in a year does not go well with how investors perceive about our business. In that case, we have one more tower in Birla Arika. Would not have been prudent to prepone some of the launches which you have kept for future to this year, just to ensure that there is a steadiness in terms of the business rather than being jumpy of having a one very great year and then two years of flattish to decline kind of a growth. What is your thought on that?
KT Jithendran: I think we can extricate much higher value by launching Birla Arika at a later date. We want some construction progress to happen in the other launched structures. I think there is huge value to be unlocked in the last tower of Birla Arika. I think we are absolutely confident about that. I do not want to take any knee-jerk reaction and pre-launch it, Birla Arika 2. It was a well-thought-out strategy. Strategy is doing well. I do not think there needs to be any change in that philosophy.
Pritesh Sheth: Sure. That is helpful. Just one final two questions. If you can just provide an update on Vashi launch. Will it happen this year? I know it is not there in the pipeline, but any bleak chance of doing it this year, or most likely it should be next year?
KT Jithendran: That will be next year, not this year.
Pritesh Sheth: Sure. On the business development, we spent some INR 260 odd crore this quarter for land. Was it for new acquisitions, and how should we think about the spend for rest of the two quarters in the year?
Keyur Shah: We have made some payment for the Thane land also.
KT Jithendran: Deferred payment.
Keyur Shah: Yes, it is a deferred payment. We have paid some for the Thane land. Also, we have paid some deposit for the deals. And we also recovered some deposits.
KT Jithendran: Overall, that is the net number which you are seeing in the cash flow.
Pritesh Sheth: Sure. How should we look at the rest of the year in terms of spends for this INR 10,000 crore plus kind of BD that you are guiding?
KT Jithendran: Yeah, we are firmly positive about it. We should be able to meet that guidance.
Pritesh Sheth: Okay, thanks. That is it from my side. All the best.
KT Jithendran: Yeah, thank you.
Operator: Thank you. The next question is from the line of Abhinav Sinha from Jefferies. Please go ahead.
Abhinav Sinha: Hi. Sir, couple of questions. Firstly, on the debt trajectory, and now with the inflows from the paper business sale, what are you thinking about it over the next few years? That is one. Secondly, if you can also include commentary on how the commercial build-out is being planned from here on in the medium term. Thank you.
Keyur Shah: Yeah. Abhinav, in terms of our balance sheet is very, very well capitalized. We have strong cash balances, including mutual funds for funding the acquisition. As K.T. mentioned, we have done almost INR 7,000 crores of GDV addition in the last six to seven months. We are very confident we should be able to do around another INR 3,000 to 5,000 crores of addition. Our target is INR 10,000 to 15,000, so we are on track for that. Broadly, the acquisition cost would range between what we have been doing in the past. It has been around 15% to 17% of the GDV value which we are adding. You can accordingly assume the utilization of the cash in that manner.
KT Jithendran: Abhinav, on the commercial part, I think, now that we, as I mentioned also, about 1.3 million square feet of the new commercial building, we are in the planning stage. We will start commencing construction of that once we get all the approvals. The design is continuing. This is a part of Birla Niyaara, this thing. So, we are starting commercial on that. I think we want to be, given the markets as they are currently, it is very positive. Residential is doing well, and this has gone for a long time. So, I think the probability of reversal keeps increasing. So, I think we want to kind of hedge our bets by increasing the commercial portfolio annual income from INR 150 crores to INR 1,500 crores. The first step is to start our own commercial building, which is now backyard.
KT Jithendran: They are also simultaneously looking for acquisitions in key markets for mixed-use and commercially focused projects.
Abhinav Sinha: Okay. K.T. sir, just putting these two things, are you willing to now run mostly a net cash balance sheet, or we can still see gearing go back to, say, 0.5 or 1x over the medium term?
Keyur Shah: Abhinav, we are not averse to gearing the balance sheet. I mean, today we are net debt zero, so we are open to that. It depends on the acquisition opportunity. But again, to repeat what K.T. mentioned, we will be very careful in what BD we will do, and we will be prudent. We have a strong pipeline, and we feel confident that we will achieve the BD guidance which we have given.
Abhinav Sinha: Okay. Thanks, and all the best.
Operator: Thank you. The next question is from the line of Ram Tawa from Jain Investments. Please go ahead.
Ram Tawa: Yeah. Hi. Thank you. Can you all hear me?
Operator: Yes.
Ram Tawa: Okay. I just joined late, but I am not sure if the question has been already asked or not. Yeah, it seems it has been asked already. I just want this phase 1 Niyaara, the next financial year is the RERA date, right? March 2028.
KT Jithendran: Yeah. That is right.
Ram Tawa: Yeah. Yeah. I just want to understand, assume that there is a INR 3,000 crore top line pertaining to phase 1 Niyaara. How much does it translate into the EBITDA? Because I am very new to this revenue recognition model of this real estate, and I want to understand the revenue recognition part and how much it will translate into the EBITDA next year. I am not sure whether there has been some part of the revenue is already recognized and some part of EBITDA is already taken. Can you just throw some light on that?
Keyur Shah: We have not recognized any EBITDA for Niyaara Tower A. Yes, the RERA date is March 2028. We will start handing over, and as and when the customers take possession, that is how we will be able to recognize the revenue on the project. Some of it will come in March 2028, and some of it will come in March 2029. It depends on how the customers take the possession. Broadly, the margins for Niyaara are 40% and above.
Ram Tawa: Okay. Assume that there is a INR 3,000 crore revenue realization happened pertaining to Niyaara, and 80% possession happened. That will, let us say, translate to INR 2,500. 40% of INR 2,500, around INR 1,000 crore, the books will be, I mean, EBITDA will be there in the books for next year, right?
KT Jithendran: Yeah, something like that. Yeah.
Ram Tawa: Okay. Okay.
KT Jithendran: It will be split. Yeah.
Keyur Shah: As I mentioned, that is an 80% rule, yeah.
Ram Tawa: Sorry? I did not catch you.
Keyur Shah: It will be split between next year and the forthcoming year. That is what I mentioned.
KT Jithendran: Yeah.
Ram Tawa: Okay, but 28 March is the possession date, right? By the time everyone has to, and RERA date, everyone should have taken the possession by 28 March, or there will be spillover happens to the following year as well?
Keyur Shah: No, the project is on schedule. The revenue recognition happens when you hand over the possession to the customer. That's why we are saying that it will be partly in March 2028 and partly in March 2029.
Ram Tawa: Based on the current situation, how much it may have in next financial year and then the subsequent year, what we have sold roughly? I mean, based on your experience.
KT Jithendran: Difficult to predict now, Ram. It depends on how customers take possession, how they pay up quickly. It is all completely they have to make the payments and take possession. We expect all of them to do it, but maybe half of them will do it, we do not know.
Ram Tawa: Understood. From EBITDA to net profit, based on the depreciation or anything, how much percentage it may go up? Any rough estimates, interest or
Keyur Shah: We do not give those estimates. As of now, we are net debt zero, so in that sense, you can estimate it accordingly.
Ram Tawa: Okay. Yeah. Got it.
Operator: Thank you. Ladies and gentlemen, you are requested to restrict your question to one per participant. The next question is from the line of Bhavin Modi from Anand Rathi Share and Stock Brokers. Please go ahead.
Bhavin Modi: Yeah, thanks for providing me the opportunity. I just wanted to ask two questions. One is, how should we see the mix of composition from Niyaara C? Would it be somewhere the maximum units will be somewhere between the 2,500 to 5,000 square foot, configuration being the sweet spot to that micro market? The second question is more bookkeeping related. The finance cost is being shown as a nil, but I do understand we do have LRD, so we may have incurred some finance cost. Am I missing out on something on that part?
Keyur Shah: Yeah, so the configuration for Tower C is with the additional FSI which we are launching, we are still in the process of finalizing. That would be catering to the customers who some of the higher floors could have larger apartments, and on the lower floors would have single flats, that kind of thing. It will be designed in a way so that you can combine the flats on the higher floors. Speaking about the interest, the interest is mainly inventorized in the consol books, and therefore, there is no charge to the interest in the consol books. Yes, in the standalone books also, there is a interest which is there. What happens is the allocation of the interest depends on its utilization, and significant of proportion is being inventorized. That's why there is no interest charge in the books for Q2.
Bhavin Modi: Got it. Thanks a lot, sir.
Operator: Thank you. The next question is from the line of Aman K, an individual investor. Please go ahead.
[Analyst]: Sir, I just wanted to get a better idea on Birla Anayu and Mrida. Both of these projects, I think, are targeted for March 2029, and we've, I think, sold less than half of the inventory in Anayu, and Mrida is much lesser. Just wanted to understand how the business development is ongoing at these two projects.
KT Jithendran: Aman, Anayu, I think your understanding is not correct because there's only 8 apartments, 5 of them are already sold.
KT Jithendran: Okay.
KT Jithendran: I think that is done very well. There's no question about that. Mrida, yes, that is a project which is plotted development. We just launched in March of this year, where, of course, there has been some kind of slowdown in sales. We are going to catch up there. It's a plotted sales. It's largely investor-driven because it has been impacted by the current global market sentiments, et cetera. We are trying ways to improve the reach, et cetera, create a strong investment product, improve the sales. Since it is plotted, it doesn't take much time. Hopefully, it should come for revenue recognition the next year itself. Having said that, we have sold almost 160 plots. I think we will find a way to push the rest of it also.
[Analyst]: Got it. Sir, as you mentioned that there are a lot of factors that are affecting the demand right now, whether it's in terms of interest rates or global bond rates or just the geopolitical issue. Is it a pressure that's being seen in a particular segment of the market, or is it something that's been across all segments? Is luxury the only one that's insulated as of right now?
KT Jithendran: Yeah, the premium and luxury market continues to grow, strong demand. Geographically also, you look at Bengaluru, Mumbai, Pune, NCR continues to be very resilient, strong market, prices are increasing, absorption is also increasing. So, I think any market above INR 1 crore is still showing very strong potential. The market below that is kind of contracting, showing signs of weaknesses, et cetera. But otherwise, all the markets above INR 1 crore still showing very strong resilience, largely led by launches. Launches are showing great momentum in each of these segments, above INR 1 crore.
[Analyst]: Got it, sir. Just a last question in terms of GDV addition that you guided that the INR 3,000, INR 4,000 that will be targeted till the end of the year, is it going to be primarily MMR?
KT Jithendran: What is INR 3,000? What, sir? INR 3,000?
[Analyst]: Production.
KT Jithendran: Yeah, yeah. It is all over. Not just MMR. It is about NCR, Pune, Mumbai, and MMR, Bengaluru, all of that.
[Analyst]: Okay. 3,000, 4,000 will be-
KT Jithendran: We should have got each of these markets.
[Analyst]: Okay. Got it, sir. Thank you. Thank you, sir.
Operator: Thank you. The next question is from the line of Amit Sanghvi, an individual investor. Please go ahead. Line par bane rahiye. The person you are speaking with has put your call on hold. We will move to our next speaker. The next question is from the line of Jainam Shah. It is a follow-up question. Please go ahead.
Jainam Shah: Yeah, thanks for the opportunity again. Just one thing, like during the last call, we were mentioning that we are going ahead with the approvals for the Niyaara 3, and we will be launching it by mid of Q3. So what exactly you can say a moment wherein we changed the plan to increase the GDV by around INR 2,000 crore? And what kind of even the design changes or something material that has eventually came up to change this altogether? Because we were going ahead with it, and we were about to launch it in Q3. So just if you can give a broader sense on this particular thing.
KT Jithendran: Jainam Shah, I have already spoken about it. We did amalgamation of both the plots, the original Niyaara plot and the one we acquired from the Wadias later. Suddenly we saw there is a good potential to, just because the sheer location of Tower C, we could add more FSI there and bring forward the FSI which we were planning to launch at a later date. So suddenly we saw that scope to design the product because the way the Tower C is oriented was far more advantageous than where the location of the other towers would have been eventually when the plot number we would have got developed. So why not take the advantage of add more value to this? That was precisely the idea of this. And it so came out with design, it has come out wonderfully well.
KT Jithendran: We are able to increase the GDV by INR 3,000 crore. INR 3,000 crore is something which is very valuable, and therefore we decided to take this call.
Jainam Shah: Got it, sir. And this commercial would be in line with the Niyaara 3? Like we were, you can say, expected to start it in the Q3 and probably the launch or you can say the rental would have been two years from that particular date. So it would be also, you can say, maybe rolled over by one year or so.
KT Jithendran: Yeah, commercial, we already started planning for it, then the design stage. Once we get all the approvals, we will start construction. It should take about four years for construction, about nine to 10 months for the approvals and another four years for construction.
Jainam Shah: Got it, sir. Yeah, let's go back. Thank you.
Operator: Thank you. The next question is again a follow-up question from Harsh Pathak from Motilal Oswal Financial Services Limited. Please go ahead.
Harsh Pathak: Yeah, hi. Thanks for the follow-up. I wanted to check on two things. One is, what is the construction cost that we are envisaged for the current year? For the annuity assets, K.T., like you mentioned that we are in the planning stage. So when do we expect the CapEx to start, and what is the total CapEx that we think that we will be incurring?
Keyur Shah: Harsh, the construction cost which we are expecting for the entire financial year would be around INR 1,300 crore, is what we are expecting to spend.
KT Jithendran: CapEx, yeah, CapEx, I mean, we start incurring CapEx from this year itself while we start designing and also applying for approvals, getting the premium paid for FSI, et cetera.
Keyur Shah: The total, it is for commercial.
KT Jithendran: Yeah.
Keyur Shah: It is a combination of debt and equity, I mean, which we will have to put around INR 1,500 crore is what we will have to put.
KT Jithendran: Yeah, INR 1,400, 1,500 crores.
Keyur Shah: Yeah.
Harsh Pathak: INR 1,400 crores over a period of next three, four years?
KT Jithendran: Yeah, that is right. Over the next four years.
Harsh Pathak: Okay. Understood. Lastly, on the Pune project, the Hinjewadi project, what are the margins that we have made? What interest that we have underwritten the project?
Keyur Shah: About 30%.
Harsh Pathak: 30, understood. Okay, sure. Thanks a lot for taking my follow-up.
Operator: Thank you. We will take the last question from the line of Sahil Vaidya from Sakman Capital. Please go ahead.
Sahil Vaidya: Yeah, good evening, sir. Previously you mentioned your rentals were going to go from INR 150 crore to INR 1,500 crore. Is it possible, can you give the breakup? Because if you see INR 150 crore is for your operational commercials and INR 800 crore would be coming from the 1.3, so the rest will be coming from that 2.3 million square feet?
KT Jithendran: This 150 itself, over a period of time, I am hoping will go beyond INR 200 crores as rentals keep, the premium for the rental keeps going up. Century Bhavan redevelopment is another thing in the offering that should give us about INR 400 to 500 crores of, INR 400 to 450 crores of additional rent. Also we are constantly looking, even participating in auctions and for the right mixed-use parcels and also focus land parcels in both Mumbai and NCR in prime locations. All of that together, I think we should be able to build a portfolio beyond INR 1,500 crores of annual income.
Sahil Vaidya: Okay. This INR 1,500 crores of rental does not include the 2.3 Worli plot?
KT Jithendran: No. Which Worli plot? 2.3 is which one?
Sahil Vaidya: The 2.3, the 10-acre one, that you acquired from Wadia Group.
KT Jithendran: No, no. That is part of it. No, that is amalgamated, part of that.
Sahil Vaidya: Okay, so that total will be Okay. No, no, I am saying that 1,500 rental will include that 2.3 million square feet also.
KT Jithendran: Yeah, yeah.
Keyur Shah: Now, that is separate. See, what we have estimated for Worli is we have around 1.3 commercial development, and the new plot, which was slide 14, that 2.3 is yet to be launched or decided what we will do. But initially, we will start with 1.3 commercial development. This is on slide number 14.
Sahil Vaidya: Okay.
KT Jithendran: Yeah, as mentioned, yeah, that does not include this 2.3, absolutely. So it is clearly laid out in this chart.
Sahil Vaidya: Yeah. Okay. Thank you.
Operator: Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
R.K. Dalmia: Thank you, everyone, for taking out time and joining us today's call. We are very excited for the times to come, and we remain focused for executing our strategy with discipline, strengthening our portfolio, and delivering sustainable long-term value for our stakeholder. Thank you for your time and support to our business. Thank you so much.
Operator: Thank you. On behalf of Ambit Capital Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
