Speaker #1: Thank you, and over to you, sir.
Speaker #2: Thank you, Sr. Kunali. Good afternoon, everyone, and thank you for joining us on Godrej Properties Q2, FY27 results call. We have with us Mr. Pirojha Godrej, Chairperson; Mr. Gaurav Khandel, Managing Director and CEO; and Mr. Rajendra Khetawat, CFO of the company.
Speaker #2: Before we begin this call, I would like to point out that some statements made in today's call may be forward-looking in nature. The forward-looking statements are based on expectations and may involve risk.
Speaker #2: The outcomes may differ materially from those suggested by such statements and are a disclaimer to this effect, have been included in the results presentation.
Speaker #2: I would now like to invite Pirojha to make his opening remarks. Over to you.
Speaker #3: Good afternoon, everyone. Thanks for joining us for Godrej Properties' second quarter financial year 2027 conference call. I'll begin by discussing the highlights for the quarter, and we then look forward to taking your questions and suggestions.
Speaker #3: Godrej Properties achieved a booking value of Rs. 8,008 crore in the second quarter from the sale of 3,658 units, with a total area of 6.2 million square feet, and a booking value of Rs.
Speaker #3: 16,659 crore in the first half from the sale of 7,396 units, with a total area of 12.3 million square feet. The bookings for the quarter were 6% and 7% lower year-on-year and quarter-on-quarter, respectively, while for the first half bookings grew by 7%.
Speaker #3: While the headline bookings numbers for the quarter look muted, Q2 was a very strong operating quarter with subsequent sales growth of 83% year-on-year to Rs.
Speaker #3: 5,054 crore; three projects, namely Godrej Trilogy in Mumbai, Godrej Banansara in Bengaluru, and Godrej Samaresh in Gurugram, contributed more than Rs. 500 crore each to subsequent sales.
Speaker #3: Godrej Brooklyn Avenue, our project in Hyderabad, launched toward the end of the first quarter, also contributed more than Rs. 500 crore to bookings. We only launched one-third of our expected annual launch pipeline in the first half of the financial year, and we're still able to deliver 43% of our annual bookings guidance.
Speaker #3: Highlighting the continued strength of underlying demand in the sector. Our launch pipeline has never been stronger, and with launches picking up substantially from this month onward, we remain confident of surpassing our full-year guidance across all key operating metrics.
Speaker #3: Projects like Bandra, Sector 63A in Gurugram, Thane Unibex, our projects in Dekroli, hopefully our project in Ashok Bihar, Noida DMIC, Neopolis, Kharadi to Mahanungir to Vastrapur, as well as new phases of several projects are in the pipeline, and we therefore expect the second half of this financial year to be our best-ever period for both launches and sales.
Speaker #3: The company's sales were well diversified geographically, with key contributions from major residential markets, NCR this quarter did just under 2,000 crore, Mumbai did about 1,900 crore, Bangalore we did just under 1,600 crore, about 1,000 crore in Pune, 700-odd crore in Hyderabad, and another 800 crore in other cities during the quarter.
Speaker #3: This is the seventh consecutive quarter in which Godrej Properties has delivered more than Rs. 7,000 crore of booking value, and the thirteenth consecutive quarter in which the company has delivered more than Rs.
Speaker #3: 5,000 crore of booking value. Godrej Properties also reached its highest-ever second quarter and first half collections, with collections growing by 31% in the quarter to Rs.
Speaker #3: 5,318 crore and by 25% in the first half to Rs. 9,666 crore. Benefiting from the strong collections, operating cash flow in the second quarter grew by nearly 300% quarter-on-quarter, and by 33% year-on-year to Rs.
Speaker #3: 1,584 crore, with that we get to a half-yearly cash flow of Rs. 1,983 crore. Construction and related outflow increased by 31% year-on-year in the second quarter and by 42% for the first half of the year.
Speaker #3: We are especially focused on generating strong cash flows and expect Rs. 15,000 crore of cash collections and Rs. 7,000 crore of operating cash flow in the second half of the financial year.
Speaker #3: This will allow us to both invest for continued growth while also being free cash flow positive for this period. FY28, as we've been indicating, is an important year for the company, where the exceptional growth of the past two years becomes apparent in the reported financials under project completion accounting.
Speaker #3: We expect to deliver both positive free cash flow and a 20% reported ROE in financial year 28. During the last quarter, we added one new project with an estimated saleable area of approximately Rs.
Speaker #3: 1.1 million square feet and expected booking value of about Rs. 6,000 crore. With this, GPL has added four projects with an estimated saleable area of about Rs.
Speaker #3: 9 million square feet and an expected booking value of about Rs. 15,500 crore in the first half of the financial year, which has gotten us to about Rs.
Speaker #3: 78% of our full-year guidance. GPL's delivered projects aggregating 2.5 million square feet in the quarter and we remain on track for 13.5 million square feet of delivery in the full year.
Speaker #3: For the quarter, our total income grew by 38% to Rs. 2,575 crore, EBITDA declined by 72% to Rs. 171 crore, and net profit declined by 62% to Rs.
Speaker #3: 154 crore. For the first half, total income grew by 13% to Rs. 3,912 crore, EBITDA declined by 53% to Rs. 717 crore, and net profit declined by 50% to Rs.
Speaker #3: 504 crore. This was largely due again to the back-ended nature of deliveries this year, and we expect to see positive momentum particularly in Q4, and then we've already indicated the expectations on the P&L for FY28.
Speaker #3: We remain extremely excited about the opportunity ahead and will seek to continue to gain market share through outstanding design, timely delivery, and high-quality development.
Speaker #3: On that note, I conclude my remarks. Thank you all for joining us on the call. We'd now be happy to take any questions, comments, or suggestions you may have.
Speaker #2: Thank you, sir. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and then 1 on the touchstone telephone.
Speaker #2: If you wish to remove yourself from the question queue, you may press star and then 2. Participants are requested to use handsets while asking a question.
Speaker #2: Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all the participants: you may press star and 1 to ask a question.
Speaker #2: We have the first question from the line of Puneet from HSBC. Please go ahead.
Speaker #4: Yeah, thank you so much, and congratulations for a well-rounded performance here. On sales and cash flows, my first question is if you can also give some sense on what is the attributable share of sales for you running now into Q2 and also for first half.
Speaker #3: 85%.
Speaker #4: 85% in Q2.
Speaker #3: 90%.
Speaker #4: And 94% in. 90%.
Speaker #3: 99%. For H1.
Speaker #4: 90%.
Speaker #3: 90% for H1.
Speaker #4: 90% for H1. Okay. And how should one think about your launches for second half? More Q3 or more Q4-oriented?
Speaker #3: Thanks for the question. I think it is, you know, a very exciting opportunity for both the quarters because, you know, on one hand, we have Bandra Bay, which is a very critical and important launch for Mumbai.
Speaker #3: And we have Godrej Verano, which is a Golf Extension Road, which was planned initially for quarter two, has slipped into quarter three. So these will contribute very significantly to quarter three.
Speaker #3: But then again, you know, we've got a cumulative launch pipeline, 32,000 crores for H2. So reasonably very confident that both Q3 and Q4 is going to be very exciting.
Speaker #3: Let's see how many of these launches we can pull in within the quarter three so that, you know, we can break the pattern and also have a very exceptional quarter three, which currently looks is very possible.
Speaker #3: But yeah, I mean, we continue to look forward even quarter four. So both the quarters will be hopefully be good positive surprises.
Speaker #4: And how do you feel about approvals and construction progress, given that NCR might also get into that for some time? And recently, we also hearing issues on air quality in Mumbai as well.
Speaker #4: Can they put a standard in what you can launch and construct during Q3?
Speaker #3: I think from a launch perspective, there's never been any restrictions in even in the worst of times in NCR. So that sort of always been mitigated.
Speaker #3: Of course, if you do a MOSA, as we call it, you know, marketing office, sample apartment experience center, those can get prohibited. But fortunately, we had already planned for them and those are fully ready.
Speaker #3: So they have no impact from NGT perspective of any band. Construction-wise, yes, these are challenges that we go through, but we do factor in, you know, historically adverse range of time and estimates and accordingly plan the construction schedule.
Speaker #3: So if it is within the ranges of what we see historically, I think it's something we've already planned for. So let's say there's no additive challenge beyond what we already factored in.
Speaker #4: And Puneet, just to add to that, I think from an approvals perspective, we think from a Q3 launch perspective, we've already got approvals for what should be a blockbuster quarter.
Speaker #4: So there are some projects that has Gaurav mentioned we hope to add to this to further make it a superlative quarter. But I think we have a large number of approvals already in place.
Speaker #4: And do expect Q3 to be a very big sales quarter.
Speaker #1: That's good to hear. And lastly, on business development, while you're clearly trending ahead of what you've been guiding, how are you seeing the competitive intensity for land and availability of land?
Speaker #1: Is it improving? Becoming challenging? Any color there?
Speaker #4: Yeah, I think, you know, there's obviously always some amount of competitive intensity, but I think they continue to be good opportunities. So I think we're reasonably confident now, Puneet, as a company, that we're able to source the right sorts of opportunities.
Speaker #4: We've seen if you look at the last 10 years, we've been able to almost every year get the kind of PD we need to ensure sustained growth.
Speaker #4: So we don't see any great challenge to that. Nothing very noteworthy to say on the competitive intensity side. I think they continue to be competition, but we continue to find opportunities that meet our thresholds.
Speaker #4: Again, we're very clear that we're happy. We feel the portfolio is pretty robust, quite strong. If we don't do PD, you know, a few quarters, we don't think it's a big deal.
Speaker #4: So we're only going to do PD if our threshold return metrics, which are sort of a 20% IRR, a 15% bookings to net profit margin, are met.
Speaker #4: But we're getting quite a few such opportunities.
Speaker #1: Okay. And lastly, if I may, you did the settlement with Oris during the quarter. Are there any more projects which will head towards this kind of resolution?
Speaker #1: And any update on the summit project which had this some issue on construction?
Speaker #3: So Puneet, you know, Oris was a, you know, case where, you know, the partner has invoked arbitration. So like I said, there will be certain JVs which we will be exiting, like in quarter two, apart from Oris, we exited one more JV in Malunge.
Speaker #3: So there will be, there are some more few JVs, you know, five, six JVs still left, you know. So those will see the exit, you know, not necessarily getting into a dispute and exit, but definitely by naturally project coming to an end, you know, this will see an exit, you know.
Speaker #3: So more and more we will be moving towards our own portfolio than, you know, exiting the JV thing.
Speaker #1: Understood. That's very clear. Thank you so much.
Speaker #4: Thanks, Puneet.
Speaker #2: Thank you. We will take the next question from the line of Abhinav Sinha from Jefferies. Please go ahead.
Speaker #5: Hi. This is good to see the strong cash collections that we have now. So for the remainder of the year, do you think the same construction run rate is, you know, enough or you would like to increase it further?
Speaker #3: Thanks, Abhinav. Abhinav, we've had a quite a stellar start on the construction at a higher base. In H1, we could pull off 42% Y on Y growth on construction and construction-related cash flows, which is almost like, well, 92 crores.
Speaker #3: And looking at, you know, the kind of accelerated momentum, I would say that the H2 looks equally promising. The only caveat here is that, of course, in NCR, during the NGT band, is the only part of the portfolio which could not see it to its full potential.
Speaker #3: But excluding that, I think we would definitely be able to push on more speed of construction across the entire portfolio.
Speaker #5: Okay. Sir, also, you have guided for 2H2BFCF positive. Alongside, if I 28, you know, with the guidance is maintained. So looking at BD spends, are we estimating any increase there or they should be more or less in line with what it was last year?
Speaker #3: So Abhinav, it will frankly, like Pirosha was mentioning, sometime back on how we exactly looking at the opportunities that the, you know, funnel across markets are presenting, right?
Speaker #3: So it is a, you know, we've always maintained more like an opportunist strategy in the current market where we see the replacement of new inventory is able to fetch us better returns we feel that the inventory is going to be very fast moving.
Speaker #3: And we don't see any risk of cannibalization is where we're entering those sort of acquisitions. So it is quite plausible that if we don't see exciting opportunities, we would not see too much of action.
Speaker #3: But if we do see, like in past, we won't hesitate to double down. I think a very good case in point is look at the very recent quarter two.
Speaker #3: You know, while we have a fantastic deal pipeline, you know, we were not very happy with the kind of, you know, certain deal parameters were happening for certain deals.
Speaker #3: And we pushed back very hard. So if those will come into exactly the kind of sweet spot we would want, we would definitely wrap those transactions.
Speaker #3: But we won't hesitate to have a virtually one or two deals or no deal also in a quarter. So I think it's very opportunistic strategy from what we see.
Speaker #3: But yeah, I mean, even in very aggressive scenarios, that deal simulated internally, we have a very high likely probability of being FCF positive in Q4.
Speaker #3: Again, depending on, unless we see something very, very crazy and brilliant there. But yeah, I mean, there's a high probability of being FCF positive.
Speaker #3: But again, this is something not be obsessively targeting. Next year is almost like a sure shot because you would have noticed we've also given very specific guidance in a way for next year's operating cash flow.
Speaker #3: So with that kind of a range, next year is almost certain. And yes, there's a good probability of being FCF positive in quarter four.
Speaker #5: Okay. Pirosha, can you comment a bit on how pricing is moving in different markets and what do you see it headed? Thank you.
Speaker #4: Yeah, I think, you know, in what I've called, as I said, the steady phase of the market. So we are seeing prices kind of holding up, maybe Gaurav can talk to the specifics by each city.
Speaker #4: But I said broadly from my perspective, what we're seeing is actually a very strong market that's held up, you know, in my opinion, much better than one would have thought it might given the sentiment-driven nature of real estate, given what we've seen in both stock markets and some of the global macro environment.
Speaker #4: So I think that's been very encouraging to us, you know, in a quarter like this, to have our best ever substance sales, 500 crore plus substance sales in projects across pretty much all markets that we operate in.
Speaker #4: Is, you know, quite, quite encouraging. But maybe Gaurav can take the specific market by market question.
Speaker #3: So Abhinav, if we give a broad color, I think prices are holding up well. You know, of course, very project specific and micro market specific.
Speaker #3: Generally, we've not pushed pricing high in north markets and we've focused more on end user sales. So there's a quality of sale is higher.
Speaker #3: So it's a, it's like a less than 1% price increase in some projects across NCR. South and Mumbai have seen most projects seeing 2% sort of a jump in price.
Speaker #3: And again, half a percent or so investees portfolio. But then there are, you know, some very interesting exceptions. And one of the ones that I'll talk about is Noida in particular.
Speaker #3: We've had a launch in previous quarter of a project by the name of Gurudesh Crown Residences. This was a residential group housing launch. In a project called Gurudesh Golf Links, we internally took a very ambitious target because this was the last parcel of that township of increasing the price.
Speaker #3: To give you some context, there are a lot of villas in that project. The ticket size of the villas and the launch, which is more of apartments, in certain categories of units, kind of were at the same price.
Speaker #3: So you had an option to buy a resale product of villa versus a primary product. But the product differentiation was so strong that we could achieve a very massive price jump.
Speaker #3: And in that specific launch, whatever profit we had internally casted for that cluster two years back has almost tripled because of the price jump.
Speaker #3: And this is like 88% sold out. So it is completely more or less actualized by now. So there are, of course, aberrations to this.
Speaker #3: But broadly, you know, our strategy has been more on quality of sales than just about, you know, optical price maximization strategy. But across markets, different projects have different opportunity sets.
Speaker #5: Great. Thanks and all the best.
Speaker #4: Thanks, Abhinav.
Speaker #3: Thank you.
Speaker #2: Thank you. We will take the next question from the line of Pritesh Sheth from Axis Capital. Please go ahead.
Speaker #5: Yeah, good evening and thanks for the opportunity. Congrats on, you know, a very steady numbers. Firstly, I think on, you know, if I look at the first half, you know, we have done 18,000 crore worth of launches and we have almost sold half of it during that period itself.
Speaker #5: If I look at second half, we are going to launch 32,000 crore. If we assume like same velocity, we would be at 16,000 crore sales from a new launches.
Speaker #5: And anyways, we are doing 8, 10,000 crore from sustenance. So we can do better than what we have guided, but, you know, what would be, you know, our strategy?
Speaker #5: You know, if there is demand of, you know, are we good to, you know, sell whatever the demand is or, you know, looking at the, you know, the growth and the kind of pipeline that we have, we would want to, you know, stop at, you know, certain presales for this year which is pretty much 15, 20% growth target.
Speaker #5: So how would we look at, you know, that strategy? Yes.
Speaker #4: Yeah, well, you know, the math you just did would suggest about 24,000 crore of sales in the second half, which is broadly in line with what we've updated in this presentation of 22 and a half to 25,000 crore as our estimate.
Speaker #4: I don't think, you know, we believe in this sort of trying to just optically show a very, very steady performance. So if there are opportunity to go beyond this, we'd certainly be happy to do that.
Speaker #4: Of course, I think Gaurav and the team done a fantastic job scaling the business already. If we are able to get to the top end of the guidance we indicated for the second half, that would imply a 40% five-year compounded growth in bookings.
Speaker #4: And I think that has been achieved by consistent excellence in sales, but also adding projects at the right times, right division of micro markets.
Speaker #4: So I think that thinking very much continues. But, you know, we don't feel as a company that we're running into any kind of roadblocks to continue growth.
Speaker #4: We have, of course, scaled significantly. You know, the company sales not that long ago were 8,000 crore annually. We hope to cross 40,000 crore this year.
Speaker #4: But we still, as we've indicated, believe our market share is only about 5% of the industry. We enjoy we think a very strong brand have developed now.
Speaker #4: We think a lot of insights into various markets, built the team. So there's nothing we believe preventing us from continuing to gain market share.
Speaker #4: And also, of course, participating in the sector growth. So that's a long-winded way of saying, you know, if there are opportunities, to go beyond this 15, 20% this year, there's no reason we will hold ourselves back.
Speaker #4: And we're equally optimistic about growth opportunities for future years. And, you know, as even in the first half, seen a good number of interesting and well-located projects being added.
Speaker #5: Sure, sure. And just on market share, I recollect like, you know, we used to say like, you know, aim to achieve 5, 6% kind of market share by FY28, where industry size itself would be 9 to 10 lakh crores.
Speaker #5: You know, so if you want to again grow next year by 15, 20%, you know, 50,000 crore kind of resales, you know, do we think like current pipeline would be sufficient in terms of not only in terms of overall value, but also in terms of the geographic spread that it needs?
Speaker #5: You know, so you know, particularly in second half, we would be largely preparing ourselves for, you know, growth for next year. So what would be your area of focus in terms of project additions?
Speaker #5: You know, in terms of market that you want to particularly target?
Speaker #4: I mean, I think we constantly are evaluating kind of where we are by market, what's the, you know, position is, where we see gaps, where we need to add.
Speaker #4: We've also obviously opened up some new markets like Hyderabad. Maybe Gaurav can add to this, but I'd say some markets that we still open to BD given what we think the pipeline is likely to look like at the end of the year would be places like Bangalore where we've seen extremely strong sales, like Noida, where similarly we've seen extremely strong sales.
Speaker #4: But maybe Gaurav can add to this.
Speaker #3: Good, good. Agree more with what Pritesh has already spelled out. So it's a strategy of, you know, replacing fast-moving inventory with a similar or higher quality of projects.
Speaker #3: So I think Bangalore and Mumbai have been performing consistently well across quarters. So Bangalore ore will be a very high preference to add projects.
Speaker #3: And Bombay, we are going to add a few specific micro markets ranging from South Bombay, Western Suburb, and even Thani we're looking something exciting.
Speaker #3: In North, Noida is a no-brainer for us, but what we are seeing the response of our projects in Gurugram and this financial year has been to be very frank, a little ahead of what I would have hoped for.
Speaker #3: So whether it's Gulf Coast portfolio, which is consistently doing very well, and now with the extension road, which is hitting the ground while long way to go and the launch is yet to be due, but initial signals are extremely positive.
Speaker #3: So if this launch is above our expectations, again, this will be a market you would not mind adding replacement inventory, but very specific micro markets within the city, which is more like extension road SPR.
Speaker #3: So I would say the opportunities are quite massive, Kshitij. And the good thing for us is that because we are Pan-India, we can almost pick and choose where we feel the valuations are sort of really exciting.
Speaker #3: And where the inventory added can be equally or faster moving than that. So this is where we are right now.
Speaker #5: Sure. And at any point you would think like of entering Chennai market, not just from plotted perspective, we have done that, but from group housing perspective, because I mean, now quite a few, I mean, few players from, you know, other listed peers have entered that.
Speaker #5: It can not be a large market, but at least some Pune type market which, you know, can be equally sizable that way. So any strategy on that?
Speaker #4: I think Pritesh is most likely will be the next market we enter from a group housing perspective, but I don't think we're in a burning rush to do that.
Speaker #4: You know, there's a lot of growth opportunity available by focusing on these top five markets. We're also, of course, looking at projects opportunistically in Kolkata and Ahmedabad beyond the top five markets of Mumbai and PR, Bangalore, Pune, and Hyderabad.
Speaker #4: And we believe the focus for these next couple of years should be more on entering more micro markets. We've seen, for example, the big jump in sales possible as we enter new micro markets.
Speaker #4: You know, Bangalore sales was up 2,000 crore for a long time, then shot up to over 8,000 crore last year as we entered more micro markets.
Speaker #4: We didn't have a project in Worli. We added one. We saw 4,000 crore plus of sales in the last year, less than a year in that project.
Speaker #4: We're hoping to see something similar now as we enter the Bandra micro market. So if you look at it, even in just a city like Mumbai, there are many markets that we don't currently have a presence in or will soon be running out of inventory.
Speaker #4: And I think the opportunity to maximize that first is a bigger one than perhaps opening up new markets from a group housing perspective. But obviously, Chennai, you know, is an attractive market.
Speaker #4: Tamil Nadu is a state, I think, is doing brilliantly economically. Chennai is real estate market should benefit from that over the medium term. So I think it is a market we see ourselves in eventually, but probably not a key focus.
Speaker #4: For this next couple of years.
Speaker #5: Sure. Yeah, that's thanks for the clarification and, you know, that's it from my side. All the best.
Speaker #4: Thanks.
Speaker #3: Thank you.
Speaker #2: Thank you. A reminder to all the participants, you may press star and one to ask a question. We have the next question from the line of Gaurav Khandelwal from JP Morgan.
Speaker #2: Please go ahead.
Speaker #6: Hi, good evening. Thanks for taking my questions. My first question is on the sustainance sales. So we've done 5,000 odd crores this quarter, which is a very commendable number.
Speaker #6: How are you thinking about the this number continuing over the next few quarters?
Speaker #3: Sure. I would say, you know, you know, to be honest, more honest answer, I think necessity is a mother of all inventions. So when we realize somewhere in the middle of Q2 that, you know, the launches for Gurugram and Bombay are going to move to next quarter, we kind of doubled down our energies on specific project interventional sustenance.
Speaker #3: And this is a muscle very frankly has existed in Goodrich Properties for many years. It's just that you have to optimize for it better.
Speaker #3: When you feel that there's a latent potential to be exercised upon. So I think this is a potential we will continue to do that.
Speaker #3: Now, whether it's going to be exactly 5,000 crores or plus minus is very much dependent on how much bandwidth will go on the opportunities on the launches.
Speaker #3: Because generally, as a rule of thumb, to generate a very high booking value, launches are relatively easier than a sustenance sales because the productivity per RM is very, very high.
Speaker #3: So I would say if the H2 continues the way we're looking at, I would say the launch will outperform sustenance, unlike H1 where sustenance outperformed.
Speaker #3: But sustenance numbers will continue to be very, very exciting. And this is something we would like to continue and build up, not just for quarter two or quarter one or quarter three, but medium term strategy, which is extending towards next financial and year beyond.
Speaker #3: In fact, we've made some restructuring specific teams in sales vertical to sort of pilot in previous quarter, which will sort of get regularized from this quarter.
Speaker #6: Got it. Thanks for that, Gaurav. So that means as a thumb rule, can I take 60 launch for fair mix? On a normalized basis.
Speaker #3: I mean, kind, I mean, this has been the historical trend, right, that we've been at 60, 40 sort of a mix of it. But I think the way probably I would sort of emphasize is that, you know, from an annual guidance perspective, you can almost assume that we would always continue to achieve that.
Speaker #3: And this 60, 40 can be slipped if the launches slip. So like in previous quarter, while the 60, 40 was the way we started the quarter thinking launches will be more than 60%, but as soon as we realize that there's a risk of approvals, thanks to the capabilities we had built, it was 63% and 37%, right?
Speaker #3: So I think largely, you're right, but the 60, 40 could slip faces us securing approvals on time or not. I think I'm more bothered and more focused upon delivering on the guidance and the targets for every quarter certain times launch could lead the quarter and sometimes it could be absolutely fine to let sustenance lead the quarter.
Speaker #3: But yeah, it would be more or less in the 40 to 60 range whether it's a launch or a sustenance.
Speaker #6: Got it. That's very clear. The second question, if I may, so we have about 32,000 odd crores of launches planned for the second half.
Speaker #6: Can I check, would you have some sense on how much RERA approval do we have already? How much are we just about to get the final stamping is done?
Speaker #6: So any sense on that, please?
Speaker #3: I would say for quarter three perspective, because, you know, you would appreciate quarter four launches would be in different stages of design closures and approval drawings.
Speaker #3: But I would say for quarter three, 80% or whatever we needed was secured before even the quarter started. You know, because these were deferred launches.
Speaker #3: And the residual seems to be very much on track and in the next few weeks, immediately after Diwali, we should be able to secure.
Speaker #3: So this quarter, whatever we have planned internally, we should have almost all the approvals in place. And for quarter four, we do have a lot of time and we are targeting internally that similarly, that 80% of quarter four we can secure between the end of November and mid of December.
Speaker #3: And the residual could come by early Jan, mid Jan.
Speaker #6: Got it. Thanks. That's very clear. And I'll finally question, which is more of a housekeeping question is, if we look at the realized EBITDA margin on P&L, so that number, so I suspect that it's a couple of one-offs, one to do with Marlowe.
Speaker #6: Can you explain that better? And I'm sorry if this has already been discussed.
Speaker #4: Sure, sure, sure. So, you know, what happened is, you know, when the this Marlowe project was launched, when it was under a JV model, and in JV model, like I have explained earlier also, to be more tax efficient, we used to take out our share of income in form of development management fees, interest, overhead, you know.
Speaker #4: So those profits were already accounted for in the past. Now, in Q1, this JV got JV partner got exited and this became over 100% owned project.
Speaker #4: And the OC came in Q2. So that's how the line-by-line consolidation happened, whereby bulk of the profits were already accounted for in the past.
Speaker #4: And that's why you see that skewness, whereby the sales and cost of sales are almost equal. Because the bulk of the profits was accounted in the earlier day.
Speaker #4: Similarly, there was another exit of RS on settlement. So that also was settled. So on consolidation, whatever the losses were there, that got picked up into Q2 numbers, you know.
Speaker #4: So those were, you know, kind of an aberration when this will happen whenever you give an exit. And in most of the JV projects where we have already accounted for our share of income through DM, overheads, and other parts.
Speaker #6: Got it. Thanks. So whatever adjustments had to be done for both Marlowe and RS, that's already done in this quarter. There should be no overhead.
Speaker #4: Yeah. So there is a phase in Marlowe which is going to be launched, which is, you know, which has a lot of profit and the economic interest also would be 100%.
Speaker #4: You know, just in Marlowe, this was launched during COVID, whereby the markets were not very supportive, you know, input costs were rising. So obviously the margins were also subdued in that phases, you know.
Speaker #4: But the phase which we are going to launch will have a very good price because the market is appreciated from that time. And then another economic interest also would be 100%.
Speaker #4: So, you know, we will see some good amount of profit as and when those profits get accounted into P&L.
Speaker #6: Got it. Thank you, Rajendra. Thank you so much.
Speaker #3: Thank you.
Speaker #1: Thank you. We will take the next question from the line of Akash Gupta from Nomura. Please go ahead.
Speaker #5: Hi. Thank you for taking my question and congrats on a good performance. So my question is more on the macro side of thing and the health of the real estate market.
Speaker #5: Obviously, Brian today is at 115 a barrel. And also, it's not like the equity markets are working well. So in that context, just wanted to understand is like how much push relatively do we have to do when we are launching a new project or doing a sustained sales versus, maybe two quarters back?
Speaker #5: Has there been any change? Just thoughts on that. So that's my first question.
Speaker #3: Thanks for the question. I mean, you know, let's go back to basics, right? I mean, when there is euphoria, I would say from a consumer lens, investor lens, speculators' interest, anything that looks cheap, anything looks easy to enter is what the market tends to do.
Speaker #3: We've never been in that game. We've been more on product market fit, seeing that what is the problem we are trying to address for a consumer, what's the opportunity and lifestyle needs we are able to address.
Speaker #3: And what are the aspirations for a particular target group of customers for that particular micro market? And I think that has been more or less been our approach.
Speaker #3: And if you see from a earlier of the quality of sales that we do and the quantum of sales we do have been very linear and exponential somewhere, but also very consistent across several quarters.
Speaker #3: And the volatility what used to exist about a couple of years back also is not happening anymore. So I think it's purely about product market fit.
Speaker #3: So if you there's a lot of hard work you need to do in terms of, you know, understanding what consumers need. And we have a very quant and qualitative way of identifying those consumer needs.
Speaker #3: And if that is judiciously done, I think then it is a simple sales playbook process that we've created and we've been championing it for many, many quarters now.
Speaker #3: There are, of course, aberrations. So sometimes let's say you are doing heavy sustenance focus sales like the previous quarter, you will, of course, have to restructure some of your sales team.
Speaker #3: You'll have to sort of galvanize a type of sales performers of that particular, you know, such is a bit about closing skills and sourcing skills alone.
Speaker #3: There is a launch is also a lot about sourcing skills over closing skills alone. So basis some amount of understanding on how productivity works, how different skill sets work, you'd have to take certain interventions at the start or middle of the quarter.
Speaker #3: So I think to that extent, there is some amount of calibration of, you know, the approach. But the larger playbook is very, very consistent to what we've seen.
Speaker #3: And we've spent a lot of capabilities from digital to go to market, to defining the segmentation I think those are sort of modes that we've built over the years.
Speaker #3: So for us, frankly, it is business as usual. We don't see any dramatic change in that.
Speaker #5: I see. So are you not seeing any changes in footfalls or conversions given the current macro environment? And do you think that we can still, like in the event that the current macro environment continues for the next six months or so, would we still be in a position to deliver that 10 to 15% pre-sales growth that we envisage for FY28?
Speaker #5: Is that a reasonable expectation to run with?
Speaker #3: Absolutely. I mean, one should never, you know, the basic thumb rule in sales is that we follow is that never take your customer for granted.
Speaker #3: So the rigor has to be consistent. And that being said, there is no reason we can't deliver, let alone 10, 15, even 15, 20% growth is possible provided the launches come on time, the approvals come on time.
Speaker #3: There is a good product market fit. So if you can sort of be very obsessed on that process part, I think the outcome is a sort of a within a range given.
Speaker #3: And I think the best example I would say of anything is the quarter two performance, right? At a time when there has been a lot of narrative on real estate, and some peer performance on what we've been reading in newspapers, if you see what was very exciting for us is that we took the challenge of driving high quality of sales to the most difficult bucket, which is sustenance.
Speaker #3: And that too at an 83% Y on Y growth. This is clearly reflecting that the market is supportive, provided you have the right strategy and you have the right, you know, product mix to deliver on the promise that customers expect from you.
Speaker #3: And if you can do that, growth is a derivative. Of course, certain times you would outdo your own imagination sometimes you will have some amount of variance to your original plans.
Speaker #3: But within a particular range and threshold, this market is presenting a lot of good exciting opportunities.
Speaker #5: Understood. That's the question I had. Thank you so much.
Speaker #3: Thank you.
Speaker #1: Thank you. A reminder to all the participants, you may press star and one to ask a question. We have the next question from the line of Artha from WS Holdings.
Speaker #1: Please go ahead.
Speaker #6: Hello. Am I audible?
Speaker #3: Yeah.
Speaker #1: Yes, you're audible, sir.
Speaker #6: Yeah. So thank you for taking my question. First of all, congratulations, Pirojha sir. Gaurav sir and the leadership team on another strong operational quarter.
Speaker #6: I have been a long investor in properties and following the numbers very closely. So maybe my question, I will put the example before I answer the question.
Speaker #6: My question is around the business strategy. I want to highlight the successful project which we delivered in 2023 and also shown the profitability in 2003 same year.
Speaker #6: To meet our annual target. So this is Godrej Splendor in Whitefield, Bangalore. We booked profit based on the OC receipt. While on ground, the actual physical delivery is not done after 19 months because we want to vertically expand the project to maximize the profit.
Speaker #6: So from an investor lens, this appears to be very successful playbook to maximize our project profitability. My specific questions to Gaurav sir and Pirojha sir is, is this model booking the revenue when we get the OC, but withholding the physical handover for more than almost two years?
Speaker #6: To pursue the vertical expansion, is this our playbook to build the profit and long-term growth? And second question is, what are the other projects where we can similarly implement the strategy for the long-term growth and the profitability of the company?
Speaker #6: And how we will make sure our brand optics does not get hit specifically when the media attention or the owners in the first project start fighting for the rights?
Speaker #6: I would appreciate the management addressing the question in order. Thank you again, Gaurav sir, for the amazing result.
Speaker #2: Thanks for your question. You know, it seems you might be a customer in one of these projects. We'd certainly be happy to look into this case.
Speaker #2: Certainly, we do not believe in creating any gap between occupation certificate and actual delivery. If that has happened in this case, we'll certainly understand why that has happened and get back to you on that.
Speaker #2: I think overall the company is seeing a lot of good momentum in terms of its abilities to drive construction, as indicated by the significant increase in construction costs incurs with the significant reduction in time expected to OC and actual handovers to customers.
Speaker #2: That we are planning. So we look forward to continuing to strengthen that muscle.
Speaker #1: Thank you very much. Ladies and gentlemen, that was the last question for today. And with that concludes the question and answer session. I now have the conference back to the management for the closing comments.
Speaker #1: Thank you and over to you, sir.
Speaker #2: I hope we've been able to answer all your questions. If you have any further questions or would like any additional information, we'd be happy to be of assistance.
Speaker #2: On behalf of the management, thanks once again for taking the time to join us today.
Speaker #1: Thank you, members of the management. On behalf of Godrej Properties, we conclude this conference. Thank you, everyone, for joining with us today. And you may now disconnect your lines.
