Ladies and gentlemen, good day, and welcome to Q1 FY24 earnings conference call of Macrotech Developers Limited, hosted by Antique Stock Broking. 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. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Biplab Debbarma from Antique Stock Broking. Thank you, and over to you. Thank you, Yashasvi. Good afternoon, everyone. Welcome to the Q1 FY 2024 earnings follow-up Macrotech Developers Limited, hosted by Antique Stock Broking. Today, we have with us the management of the company, represented by Mr. Abhishek Lodha, Managing Director and CEO, Mr. Sushil Kumar Patwari, CFO, Mr. Prateek Bhattacharya, CEO, Western Suburbs and Thane, and Mr. Anant Kumar, Head IR. Without further ado, let me hand over the call to Mr. Lodha. Over to you, sir. Good afternoon, everyone. Thank you for joining us on this earnings call. I hope all of you are doing well and keeping safe in these heavy rains that we've been having for the last few weeks. To start off, I think, it's important to get context of where India is looking in terms of its overall visibility on economic growth and job creation, and then speak a little bit more in detail about how the company is taking advantage of the conditions on the ground, which continue to remain strong in terms of demand as well as availability of land for our growth. L&T, India's largest infrastructure company, recently called for India's decadal moment, highlighting the massive transformational journey of our country. This is well supported by prudent government policy and a capable central bank, both of which have combined it to shield the country from global volatility. Not for long have we seen upgrades in India's GDP growth rates by global multilateral agencies, and we continually see strong momentum in economic activity. India, in all probability, has seen the peak of interest rates, and the hike, and the Fed might have also seen its last hike yesterday, which further lends stability to monetary policy and may even provide tailwinds to our interest, to our sector over the next two quarters. Two events, one in progress and one over the next one year, however, warrant attention. As we all know, weather patterns have been erratic, and India is no different. Mumbai has seen a fourth night of continuous rains, and July recorded an all-time high amount of rainfall. The spatial distribution of rains is poor, and while the government will do everything it can to manage its impact, food prices can certainly disrupt economics of nation for the short term. We also have a number of state elections and the all-important central elections over the next 12 months, and both of these events are bound to have a massive impact on the economy and the sentiment of the country and the people at large. Notwithstanding these factors, the real estate sector continues to be in strong momentum as demand for high-quality housing continues to remain very strong. Due credit to all stakeholders of the sector, who have transformed India's real estate sector into a big and more importantly, stable driver of India's economic growth plan. As much as I read and understand about China, the property sector seems to be an Achilles heel for their economy. While in direct contrast, we can hope for the real estate sector to play a big role, probably the biggest, sectoral role, to drive GDP growth in India over the next 10-15 years. Coming to the company, we have continued to witness very strong momentum, in the markets that we operate in, and the fact that one of India's largest real estate companies has returned to India is a, has returned to Mumbai, is a testimony of the strong demand environment that exists in Mumbai, which contributes almost 40% of the total sales in the top seven Indian cities. As a company, we continue to remain confident of sustaining 20% growth in our residential pre-sales, which will be driven by the rising contribution of the real estate sector to India's GDP. This, in turn, is driven by the creation of new households capable of homeownership, a function of, of the young demographic profile and rising incomes. It is also due credit to our industry to be able to provide quality products without raising prices extraordinarily, which erode affordability to the home buyer. For us, as a company, there is always a little bit of toggle between growth, i.e., business development, and reducing our debt, and it is a function of the enormity of opportunities that we are seeing and capitalizing on without going overboard. Our new project addition is well ahead of our expectations, too, and the pipeline continues to remain very strong. All the same, we will keep our debt under control through the year and stick to our guidance of debt below 0.5 times equity and below 1 times of operating cash, whichever of the two is lower, by the end of this fiscal year. There is also not much we need to read into the fall in reported numbers on revenues and profits, as it is completely dependent on the OCs received in this quarter, and which is why the change in accounting policy that we are embarking on, which Sushil will get into detail later in the call. On the residential side, we continue to remain optimistic on the market that we operate in, and the business in Bangalore is also beginning to steadily take shape, with a launch expected in the next quarter. This launch has been delayed. We were expecting to have this launch in the current quarter, but be as it may, we are getting to there slowly but surely. The two large townships that we have in our portfolio are also an area of optimism, driven by improving infrastructure and continued product innovation. Finally, we are also gradually building our annuity portfolio in all three parts, i.e., warehousing and industrial, facilities management, and a selective portfolio of offices and retail in order to ensure that we can have the steady annuity income with, with high returns ROEs to complement the scale-up of our development business. A word on adopting our new move from the project completion-based revenue recognition to percentage completion basis. While it might create some transition challenges, we will be able to demonstrate a true picture of our performance and P&L, like the pro forma P&L we have been sharing, and in the next couple of years, this should stabilize. Sushil will explain this in detail. We are happy to share further information with analysts in the days to come, to understand how this transition will help provide much stronger clarity and visibility on the underlying business performance. Speaking a little bit more about the demand conditions on the ground. As we have been stating for some years, we are probably in the third year of a 15-year cycle. Our enablers of demand are measured by customer walk-ins and conversion rates, both of which remain robust. For the quarter, our walk-ins have remained at around 30,000, in spite of the fact that this is a seasonally weak quarter, with very limited new launches. Our conversion ratio continues to remain above 8% in this quarter, too. In terms of pricing, we have seen price growth of about 1% on a YTD basis for the quarter, which is line, in, which is in line with our goal of delivering price growth at about 6%-7% for the year, which will ensure that we have a situation where pricing growth is below wage growth for the median home buyer, and therefore, affordability keeps getting better. This, of course, is on the back of price growth of about 7%-8% that we had last year. Further, on the construction cost side, inflation has continued to moderate. In line with our expectation, commodity costs have continued to trend down overall. We have now seen that the annualized inflation from March 2021 to June 2023, has actually gone down to an annualized rate of about 5% or even slightly lower. In fact, the nature of construction cost inflation in India is one of the key differentiating factors of the Indian housing story versus other economies. More than a third of the construction cost is labor cost, which is not prone to high levels of inflation because of the availability of surplus farm labor, and the big difference in wages between the at the farm versus at the construction site. Additionally, this ample and hardworking labor force is available to the entire supply chain of companies which supply to our sector. Thus, the only inflation that the construction cost witnesses is of commodity inflation. Given how global economies are shaping up and the excess capacity in the construction sector, as well as the focus globally on inflation being brought down, barring any geopolitical issues, we believe that the construction cost inflation will remain quite contained in the years, in the quarters to come. Coming to interest rates, you can clearly see the shift in trajectory. The RBI did not raise policy rates in the previous two policy meetings. With inflation now starting to be within the target range of the RBI and other central banks now approaching the end of their rate cycle, it is likely that this pause will remain for an extended period of time, and we can start seeing some reduction in rates in the next few, in the next 3 to 5 quarters. This stance from the RBI, coupled with the intense competition amongst the lenders, means that there is ample availability of mortgages, as well as, these mortgages are available at competitive rates. Coming to some of the operational highlights of the quarter, we achieved our best ever pre-sales, quarterly pre-sales, in Q1 of about INR 3,353 crore, which is a 17% year-on-year growth. within this, our core residential business, i.e., excluding the sale of land to third parties, grew at a much stronger pace of almost 30%. What is happening is that we have been able to achieve this growth while there were no significant launches at any new locations in this quarter. With launches planned at multiple new locations, including in Bangalore, which I mentioned earlier, from year on, we are fairly confident about achieving the sales guidance that we have given at the start of the fiscal. Our pre-sales are coming from 30 operating projects, showcasing the granular and diversified nature of our pre-sales. Typically, each project is providing about INR 100 crore of pre-sales every quarter, and this kind of diversification, we believe is unique in Indian real estate and gives a lot more resilience to our sales and business. The embedded EBITDA margin for the quarter stands at about 30% of our pre-sales. This level of embedded EBITDA margin was achieved with nearly 35% of the pre-sales being contributed by the JDA projects. Over the long, slightly longer horizon, as we benefit from price increases, we should continue to deliver 30% EBITDA margin for current fiscal. We then expect EBITDA margins will start rising from fiscal 2026 onwards. Of course, it's optimized mix of JDAs, which we are now approaching our target goal of 40% of our is coming from JDAs and 60% from online, that our ROEs are on an upward trajectory, and we expect to be approaching our goal of 20% ROE by the end of the current fiscal and in the next year. On the basis of the embedded EBITDA of 30% for the pre-sales of Q1 FY24, our PAT for the quarter would- should be well over INR 580 crore, implying a PAT margin of approximately 17% for the sales done this quarter. We remain confident of delivering the pre-sales guidance of INR 14,500 crore, with an embedded EBITDA of about INR 4,300 crore and a pro forma PAT of about INR 2,600 crore. This, we believe, is a true reflection of our business and its profitability, and, as I mentioned earlier, puts us on track to achieving an ROE of close to 20%. Our collections for the quarter were at about INR 2,400 crore. This should be seen in the context of our, the fact that our collections usually lag our pre-sales on a cyclical basis by 3-4 quarters, and we expect collections to grow in the coming few months. Therefore, by with the with a with a more moderate level of quarterly business development addition, we expect meaningful reduction in debt in the second half of the year, and bringing our debt levels between to the guidance that we have specified once again, we, we think 0.5 times of debt or 1x of operating cash flow, whichever is lower. In terms of business development, we added 5 new projects of approximately 7 million sq ft, with a GDV of INR 12,000 crore across various micro markets. These include projects in the western suburbs of Mumbai, as well as a new micro market of Alibag, as well as in Bangalore. Offering, we being able to enter the super prime location of Alibag, means that we now have a large presence in what is the equivalent of the Hamptons, for Mumbai. This market is not only attractive and has great desirability, but also is out of any Tier One supply. We believe will, over time, become not only a second home destination, but also a first home destination because of its improving connectivity, as well as its very, very prestigious connotations. We have also informed that Lodha has been declared as the winning bidder for the marquee beach-facing land parcel situated at Juhu in western suburbs, in which is owned by V Hotels Limited. We intend to do a very marquee residential development at this location once the scheme is approved by the concerned authority. This will be again the planting of the Lodha flag in the important Juhu micro market and become another -- we hope will become another landmark development for the brand. As, as noted earlier, we remain confident given the strong start of exceeding the business development guidance that we've given for the year. Our net debt increased by about INR 190 crore to INR 7,264 crore, primarily on account of the front-loaded business development investments. This margin increases on a significantly enlarged base of sales and business development, and as mentioned earlier, we remain on track to achieve our guidance. We are also pleased to note the continuing improvement in our balance sheet has led to further credit rating upgrades by ICRA to A+ positive and India Ratings to A+ stable. Our average cost of funds has declined in spite of the increasing interest rate environment, so by about 15 basis points in this quarter, down to about 9.65% now. On the ESG front, it is heartening to note that Lodha's efforts in sustainability are being increasingly recognized by various global benchmarks. After receiving exceptional scores from S&P Global, GRESB, and Morningstar Sustainalytics during previous quarters, Lodha has now been included in the FTSE4Good Index in the latest review in June 2023. We have recently published our second integrated report, and some of the recent achievements and highlights of the report include 90% renewable energy share in construction activity and standing assets. We are on track to advance our net zero emission goal on Scope 1 and Scope 2 from 2027 to the end of the current year, 2020, to 2024. We are committed to achieving, we have also committed to achieving carbon neutrality in Scope 3 by 2050, with a short-term target of achieving at least 50% reduction by 2030. We have, in this context, submitted the science-based targets for verification to SBTi. We secured green certification for almost 20 million square feet in fiscal 2023. In terms of our social focus, our goal of building a stronger nation is being serviced well through the launch of the Lodha Genius Program in partnership with Ashoka University, and our Lodha Umati program for empowering women continues to gather momentum. In conclusion, let me reiterate our view that sustained job creation on the back of rising economic progress of the country will create more than 100 million home ownership capable households over the next 10 years, whereas supply is expected to be less than 10 million households. This indeed can be India's decade, and housing will play a pivotal role in India's transition to a mid-income country. We remain excited about the future opportunities, and we remain committed to taking to capitalizing on these opportunities in a disciplined manner. We are thankful to the investor community who have started recognizing the merits of Macrotech as a company which is providing stable, consistent, and predictable growth in a sector which is a necessity. With this, we believe that the company is well-poised to continue to deliver on our guidance and commitments and create value for all concerned. I will pause now. Now investor CEO for our Western Suburbs and Thane markets, Prateek Bhattacharya, to share his perspective on those micro markets. Over to you, Prateek. Thank you. Good afternoon, everyone. The western suburbs of Mumbai are well known for their lifestyle attractiveness and the presence of bustling hubs of business. For instance, media and entertainment, we know it as the base for Bollywood. Finance, we know about the Bandra Kurla complex that houses India's largest stock exchange by market cap, now NSE, as well as the Diamond Bourse. It's also a very big hub for aviation. It houses the city's airport and a lot of MRO industries. It's also a place which has a lot of IT, ITES, you know, you know, and many other forms of businesses. In general, it's quite a bustling and cosmopolitan part of the city. From a residential real estate perspective, it actually hosts all segments of consumers. Western suburbs, you know, the primary market size is estimated to be between INR 25,000 crore-INR 30,000 crore annually. It offers a full spectrum of possibilities. It houses everything from sea-touching villas and super luxury condos, you know, in places like Bandra and Juhu, to mass housing projects in Mira Road and everything in between. Talking about our growth, our market share in western suburbs, it has grown from being less than 1% 3 years ago, to about 5%-6% now. We maintain our long-term goal to keep growing it towards our natural market share of around 20%. If we look at western suburbs, a little bit more deeply, you know, there are 10 plus distinct micro market clusters within it, and we are pursuing kind of a supermart strategy so that we can have a presence in, in, in most of these, and in a way that we have a array of non-competing projects in every two to four kilometers radius. Given, given our goals, our business development process is quite active. You just heard about it from our managing director just a little bit earlier. In addition to one new launch that is planned in the upcoming festive season, we have a very active pipeline of projects that we are evaluating in all the micro market clusters within western suburbs. We are planning the business development, you know, in a way that every project that we that we bring on board, it allows us to do, you know, an annualized pre-sales run rate of approximately INR 500 crore basis the current prevailing, you know, price PSF levels. From an execution standpoint, what we are doing is we are deploying into western suburbs, the full toolkit of our experience from Thane. That's another market that I oversee, where we have built and consistently maintained a very high value share despite a high competitive intensity and, you know, at least for the last 2 decades now. In Thane, we have delivered three world-class townships, and our Kolshet Road project is a very good example of how we've created a thriving community of nearly 10,000 families in less than a decade. It's a place where residents stay in all kinds of segments of homes that span luxury to mass housing. They enjoy a vibrant high street retail, and they can walk to work in an office district with both large format and small size offices. Talking about the organization structure, we have a completely decentralized, decentralized organization for western suburbs and Thane. Between these, we have about 1,000-plus associates who are working in various areas like sales, design, construction, and property management. Let me stop here and hand it over. Hi, thanks, thanks, Prateek, for giving this, you know, phenomenal clarity around the potential that lies ahead of, of all of us in when it comes to the micro market of Thane and western suburbs. I mean, less to say, this phenomenal market and potentially a lot many more goals and milestones to achieve for all of us. Coming to just giving some bit of, you know, clarity around how potentially you should be seeing our revenue going forward, considering the fact that we are going to have our revenue recognition happening in tandem, both under the POCM, which is percentage of completion method, as well as the PCM, that is the project completion method. The way it will work, obviously, this has gone through the various accounting literatures and a whole lot of deliberation with auditors and their confirmation, is that. ... Whatever contracts that we entered from 1st of April this year onwards, those are the contracts which will qualify for all of our projects to be, you know, revenue, where the revenue would, can be recognized or would be recognized under the POCM method. All the contracts that was entered up till 31st March will continue to be, continue to be following the old method of revenue recognition, which is PCM, the Project Completion Method. Needless to say, all of these becomes then pro rata basis the area. That, in that sense, that brings a simplicity to the whole of the dynamics, that the area pro rata is what decides, you know, the revenue recognition and thereby the corresponding back-to-back cost attached to it. I think, broadly as it is, the whole crux is that this is how potentially the whole dilemma that was there for all of us in terms of understanding the company's performance. You know, while the performance, underlying operating performance, was being, you know, as you know, this year, potentially, as the guided number itself speaks, INR 14,500 odd crores, and our last year, financial- audited financial performance was showing the revenue recognition more in the handle of somewhere around INR 10,000 crore below. This is where, you know, this dilemma that everybody was facing, and so is our board, was also continuously facing this dilemma that your financial performance doesn't depict the operational performance. Which is where the necessity to visit, revisit, and kind of drill down, think through, you know, various, deliberate with various stalwart and come to a conclusion. We hope with this equation, as the projects that were there up till March 2023 gets consummated, which obviously, as you know, typical gestation period for the projects is anywhere between 3 to 4 years. As they all get completed, potentially, by FY 2026, where, you know, we would start seeing, kind of entirety of our revenue coming under the POCM method. Till then, we will be living with both the method of revenue recognition. What it will do thereby is that the gap between our operating performance in terms of the pre-sales versus the revenue that is getting recognized, or was getting recognized, will continue to now get, the gap will continue to see, narrowing characteristics quarter after quarter and potentially year after year. Come FY 2026, we feel reasonably confident that as the projects, old projects will get completed, so that means we would be broadly start tracking the, our operating, performance in terms of our financial performance, too. That is it from my side. I think perhaps, you know, we'll be more than happy to take as many questions or as many clarification that you would need, you know, to understand potentially how some of these will work. Not that it has any rocket science, but nonetheless, if any questions, feel free. We, we will be, you know, able to give you enough clarity and sense, be it on this call or maybe separately, we can discuss, along with my, our colleagues, Anand and Chintan, you know, and give you the clarity. With that, yeah, perhaps, we can get into the Q&A, and would be pleased to be, you know, answer, all of your queries that potentially you would have to understand the company and the business far better. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star 1 on their touch-tone phone. If you wish to remove yourself from the question queue, you may press star 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. We have a first question from the line of Kunal Tayal from Bank of America. Please go ahead. Okay, thank you. Sushil, I'll, you know, pose my first question on the accounting bit. As you transition over to this new one, has it required any changes to either your collection philosophy or contracting or any other kind of structuring in either the sales agreement or any other parts of the business? No, from a hardcore substantive standpoint, business remain as is, no difference. Obviously, you know, and perhaps, Kunal, may not be worthwhile to get into the technicalities of it, but, just for understanding from a businesses standpoint, be it cashflow, be it, sales, be it construction, everything remains as it is. Got that. Abhishek, on pricing, you know, appreciate the philosophy of keeping it below the wage levels. Just wondering if, you know, as India sooner than later gets into a rate cut cycle, would the philosophy then be updated to look at the wage increase as well as the reduction in ownership costs from, from a reducing rate cycle as well, or you wanna focus squarely on the wage growth part of it? Hi, that's a, you know, important and pertinent point that you bring in. We believe that the rate cycles tend to be, you know, I would say, A, unpredictable, and B, there is a cyclicality to them. Whereas home price growth, you know, they function best for the market when they are going, you know, in a uniform direction of moving up, ideally at a gradual pace. If one starts baking in the interest rate cycles into the equation, then I think, the level of cyclicality in pricing would be higher. Therefore, while we will examine this further, our, yeah, our general view is to stick to the wage linkage rather than have too much linkage to the interest rates dynamic. Understood. Thank you. ... Thank you. A reminder to participants to press star and one to ask a question. We have our next question from the line of Pritesh Sheth from Motilal Oswal. Please go ahead. Yeah, hi. Thanks for taking my question. Firstly, is on, you know, the, your, market-wide sales that you disclose. If I see, your existing markets, South Central Mumbai, Thane, Eastern Extended Suburbs, have remained at a similar range since, you know, quite some time, maybe in, last four, five quarters, and so has been the industry trend as well in terms of, you know, the absorption of unit, that is there. While your large part of growth has come from the newer markets and, you are doing exceedingly well on that. When should we start seeing growth in, existing markets or industry in general? What would be the trigger point, since now, obviously, interest rates has also, also peaked out? What should be the trigger point that you think can, you know, will lead to growth for the industry that you have been talking about? Yeah, that's my first question. If I understand the question correctly, you're probably asking us to break down how we look at our sales growth mix. We look at our sales growth mix in three parts. We look at price growth coming in at 6%-7%. We look at volume growth in existing projects contributing about 3%-4%. We look at new projects, whether in... These new projects could be in any market. They could be a completely new market, or it could be new projects in an existing market, but it's a new project, contributing about 10%. Overall, our, you know, you know, you can compare that to a supermarket business, where you have existing store sales of about 10%, like I said, 6%-7% price, 3%-4% volume, and new store openings, contributing an additional 10%. That's how we look at our 20% growth. In terms of there being any trigger point per se about when, you know, existing markets start contributing to sales, we believe that there has been good growth in all our markets. Nick, I think just if I was to take our extended Eastern suburbs market, we've grown from INR 16 billion to INR 22 billion last year. We are, you know, first quarter did about INR 6 billion, which again puts us on trajectory, given that it's each Q1 and Q2 tend to be weaker parts of the year. We are quite confident about delivering, you know, upwards of INR 25 billion between in our extended Eastern suburbs in this quarter itself. Sorry, for this fiscal. We, we don't really see that, the growth is only coming from new projects or new locations, but it is coming from a mix of, price growth and modest volume growth at existing projects, as well as, contributions from, from new locations. Got it. even when new projects come up in the existing markets, we will see further growth in that markets as well? Got you. Yes. Yeah. Okay. Got it. The second question on the land investments that we had in this quarter, around INR 800 crore. If you can help me reconcile, how much was that for the projects that you have signed this quarter, and how much of that was for projects which we had earlier? I just wanted to understand what's the quantum of investment that was needed for this INR 12,000 crore of acquisition this quarter? In terms of that, that investment, you know, generally, we've done a deep reconciliation, and we are finding that the level of investment in our JDAs is running at about 5% of the GDV, which is at the lower end of the range that we spoke on a lot earlier of the investment levels being between 5%-10% of the GDV. This quarter's spend includes about INR 700 crore, just under INR 700 crore of spend on new projects. Some of those include, are part of this INR 12,000 crore, but there are also projects where, particularly, we have made investment of about in terms of future projects, where the signing process is still being completed, and that's not included in our INR 12,000 crore. If to your question, I think if you would look at, you know, that 5%-10% range that we guide as a total peak investment on joint development projects, that would be the right number to look at. In terms of this quarter's mix, just under INR 700 crore has gone towards new projects, which is the INR 12,000 crore that we mentioned, but also investment in some projects which will be announced in the upcoming quarter, including the We Hotels investment. Sure. That's, that's very helpful. None of the projects that we acquired this quarter was outright land, right? I mean, Alibag, INR 10,000 crore is all JDA, that I understand. Rest of the 2, because the Bangalore also, I assume it will be JDA, but Western Suburbs is outright or have been a JDA? We've, this quarter's acquisitions have largely been JDA. I think, we continue to remain focused on growing significantly through the JDA model. There will be, you know, outright investments from time to time, but largely focused on JDAs. Sure, got it. Just one last, if I may, on Alibag. You know, big project, INR 10,000 crore revenue potential, 6 million sq ft, you know, sellable potential. What are our plans and, you know, what is the monetization timeline that we are targeting, for that, considering it's a large project and, yeah? So I would like to correct that it's our project. It's a large land parcel comprising of multiple projects. We will be developing, you know, the project in for various different segments with different product mix in that location. Therefore, you know, we will be having different multiple projects in that large land parcel which we've been able to acquire, which is an irreplaceable land parcel, in our view, given the land scarcity in that location. In terms of, we expect to launch that as we typically do for any new project in about 3-4 quarters from from its acquisition. We probably look at a launch sometime in early to mid of the next fiscal. In terms of, you know, as I mentioned, we are looking at targeting both the second home and the first home market, and then things which are ancillary to that, which will come with some amount of retail and so on. We expect this to be a long-term contributor of sales to the business and provides, I would say, critical, you know, addition in terms of a new market. Also gives us more entry into the second home market, which other than Lodha Belmondo, we don't have exposure to right now, and allows us to have long, have access to an audience which is keen to get high-quality product, which is currently missing from a brand, a graded brand in that location. Sure. Got it. That's it from my side. All the best. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to answer queries from all participants, please restrict your questions to two at a time. You may join back the queue for follow-up questions. We'll take our next question from the line of Mohit Agrawal from IIFL. Please go ahead. Yeah, thanks. My first question is on the Bangalore market. You've been now there for a few quarters. If you could share your experience, how is it different from the Mumbai market, especially on business development, considering you are in a ramp-up phase? If there are any challenges that you're facing, in terms of execution or business development. As we've stated and articulated in the past, whenever we enter a new city, we spend the first few years being in what we call pilot phase. During this period, our focus is building up organization capability and delivering projects, which we believe is the best way of standing and creating a brand. In Bangalore, this is exactly where we are. We are in pilot phase. We acquired our first project last year, which we'll be launching in the, in the upcoming quarter. We've just acquired our second project, which we also expect to launch in the current fiscal. We expect in this pilot phase, which will last till the middle of the decade, i.e., up to FY 2025-2026, that we will focus only on a handful of projects. It's not that we are going to go into Bangalore and suddenly make a huge investment or try to do, you know, 10 projects. It's going to be a handful of projects, 3-5 projects. Focus on delivery, and only then ramp up once we've delivered our first project. In terms of our experience on the ground so far in Bangalore, we have been positively surprised on the pricing growth that we have seen over the next 12 months, and which would help us get profitability, which is higher than our initial expectations. We've also, as we had expected, are learning the curve when it comes to the ground realities of operating there, looking at the construction ecosystem, understanding the approvals process, and have. That has been, you know, all things which have been along expected lines, taking the time that, they deserve to be taking. We have been able to build a strong team, attract talent from a number of the good companies operating in the Bangalore market. I think that's been a good upside to us, that we have now started getting access to a well, a well-trained talent pool, in Bangalore, which will, in our opinion, give us good sustainability of the business in the years to come. Okay. Understood. My second question is for Sushil. On the POCM revenue recognition, when does the revenue recognition start? Is it, does it start immediately as the construction commences or the project is launched, or will you wait for, you know, a 25% kind of a threshold, which was there earlier as per the CA Institute guidance? No, you are right. Obviously, it doesn't start right away. It will have few thresholds, not just construction, but there will be few thresholds that will be met, which includes an agreement need to be in place, the collections would have started, the construction, you know, some bit of a construction threshold has been met. It will be a combination of few, and once that is being satisfied, that is where it will kick in. Which is why, perhaps, as you would see, why we have, we have taken it for all the contracts starting first April, but it has not contributed anything significantly in this quarter. It will only perhaps start showing the result starting from the second quarter. Okay, just to understand this better, is there a number? Will that include the land cost as well, or this is purely like a percentage of the constructions costing? No, the threshold that will be there, the gatekeeper equation that will play for a project or for a sale to qualify, will be a construction cost-oriented. Obviously, as I said, the other parameters, including collections and all. Okay, understood. Those were my questions. Thanks. Thank you. We have our next question from the line of Abhinav Sinha from Jefferies. Please go ahead. We've lost his connection. I'll move on to the next question from the line of Puneet Gulati from HSBC. Please go ahead. Yeah, thanks for the opportunity. Can you talk about how different would your profitability from a city like Bangalore versus what you do in Mumbai? Hi. We expect both in Bangalore as in, as well as in Pune, for our margins to be about 200 basis points lower, compared to like-to-like segments, in Mumbai. Mumbai, profitability, on a PBT basis, is likely to be about 200 basis points higher than Bangalore or Pune. if we are doing 30% from Mumbai, then 28%, that's the only gap you see, despite different- Yeah. realization. I, I was expecting more on a PAT basis, but yeah, you can approximate it at a similar level for EBITDA also. Okay. So despite different realization, not much of a difference, in some sense? No, I don't think that it's. You know, I think it's important to understand our mix in Mumbai. Our average sales price in Mumbai is about INR 10,500 sq ft on saleable, or approximately INR 16,000 on carpet area. It's not that we are having realizations which are dramatically higher in Mumbai. We have a wide presence in Mumbai. We sell homes which are, you know, selling at INR 6,000 a sq ft on saleable. Of course, we have homes selling at much higher prices, too. We are a company which has had good exposure in operating, in the mid-income segment, and therefore, I think, you know, the ability to operate profitability in Bangalore or Pune is very different for us because we know how to operate at these cost price points, both from a consumer perspective as well as from a construction and land cost perspective. Understood. Thank you. This is very useful. Secondly, can you also talk a bit about, you know, getting back into annuity business versus development business? Because again, those two businesses have different return expectations. As a developer, how do you, you know, marry into a, a development business as well as focusing on pure, so-called low-margin annuity business? I think it's a great question. I think the objective that we have is to have growing but reasonably high ROE annuity income stream. We are targeting on a blended basis a mid to high teens ROE level on our investments on the annuity business, which is not far from the, you know, 20% that we are overall seeking for the business. We are quite mindful of the fact that while we build an annuity portfolio, it should not be ROE dilutive. We are using three different strategies which help us achieve this objective. One is our facilities management business, which is an adjunct to our development business. Being very low CapEx, the ROE levels in this business are quite high. Margins are at about 10%. The second strategy we've taken is in the warehousing and industrial business, what we call digital infrastructure, where we have a one-third equity stake as an LP in the platform, but we are also managing the platform, and therefore, earning fee income from our the overall platform. At the asset level, we make ROEs, which are in the sort of mid-teens, but with... We are able to add about 200 to 300 basis points to that ROE, on account of the fee income that we make from the platform, and therefore, we get to kind of somewhere in the higher teens on that. Lastly, on the office and retail, we are very, very selective here. We will typically build and lease, these assets and then sell them, because we believe at that point in time, the ROEs move to a trajectory which is not, which are not commensurate with our overall goals on ROE. However, there are select locations where the price growth or rental growth is expected to be much higher than what the market is underwriting currently, either on account of the quality of the product or the location being very difficult to bring new supply into. Those are the only assets that on the office or retail side that we intend to retain. we will we expect to have about net income of about INR 500 crore from our annuity portfolio by fiscal 2026, and grow that to about INR 1,500 crore by fiscal 2031. In doing so, ensuring that we maintain mid-teen ROEs, on the annuity part, of our investments. Would the understanding be right when you said, you know, lease and sell versus, own it? You might actually own those locations which are weakly priced now, but you expect pricing appreciation, but you might be selling the marquee assets which are already fairly priced. Is that how one should read it? I think, I would put it in a slightly different way. We would, we would sell an asset when we believe that the pricing, growth ahead is reflected in the exit values which are available today. We are not, you know, we are not driven to hold onto any asset forever, on the office and retail side, let me put it that way. We are, we are happy to hold it for a longer period of time, which could be, A, as you mentioned, potentially locations which are re-rating. It could also be, you know, a highly rated location where, the, the rental resets, in the subsequent cycle are likely to be much higher than what the market typically underwrites. Typically, these assets are underwritten on a 4%-5% price growth. If we expect higher price growth that, than that on the rental side, we might hold on to even a marquee asset for some time. Understood. This is very, very clear. Thank you so much. Lastly, if I may for, what is the specific change in the contract that you have done that has allowed you to move from, you know, PCM to POCM method? ... Two things have to be, sorry, Sushil, I'll just add, and then Sushil will, of course, add to that. I think two things have to be taken into account. One, that the empirical evidence suggests that the, once the agreement is entered into, there is almost no cancellation after that. I think that is itself the core of the shift from India methodology. In addition to that, we have made some specific changes allowing the enforcement of specific performance on these agreements, which allows us to transition as per the India's guidance. These, this change has been made in the last quarter, only. Sushil will further add to that. I think broadly, Abhishek, you covered the, some of the important parameters. Nonetheless, there are, few more that has happened, but the, the crux perhaps, lies around the enforceability, and which is what Abhishek covered. Yes, a number of changes, but, some of the important one, in any case, Abhishek highlighted. But there was still something which couldn't let you, you know, change your earlier PCM into POCM, right? That is something specific which has been added now. Yes, if the contract is the status quo, then obviously we could not have. The contract that has already been entered, I know. Obviously, we perhaps would have the possibility if we can get those contracts amended, which is another era. Maybe we can look at it or we can think over it. Right. As is situation, the old contract, yes, we could not have. Understood. That's it. Thank you so much. All the best. Thank you. We have our next question from the line of Abhinav Sinha from Jefferies. Please go ahead. Thanks. Hi, thanks for taking my question. Sush, Sushil, sir, just following up. In Bangalore, will we follow POCM, or that's under a separate radar and can't be done? No, no, no. In Bangalore too, we'll be following the same POCM. Okay. technically, this can be done across India, right? We hope so. This is the by now, the kind of PhD perhaps we have achieved, you know, analyzing, reading, lot many literatures, consulting, discussing with lot many stalwarts, be it in the field of accounting, be it in the field of, you know, legal fraternity. We think, prima facie, yes, perhaps it is what you said is right. Thank you. Abhishek, quick 2 questions for you. One on the Centaur acquisition. What are the next steps we should, we should watch out for here? Does the substantial sort of outgo which happens here, is it factored in the guidance of gearing for the year? Uh, yeah. Abhinav, hi. Uh, uh, yes, uh, the, in terms of the scheme, the scheme has been put up for approval to the concerned, uh, uh, authorities. Uh, it will be, uh, finalized, uh, by NCLT. Timeframe of obviously being a judicial process is difficult to comment on, but we expect it to happen, uh, in the next, um, either this quarter or next quarter. Uh, obviously, that's only our estimate. It's not a firm guidance that it will happen in this time period. As I said, it's a judicial authority which has to decide. And yes, we have taken, uh, all investments, uh, that, uh, we have committed to, uh, into account when we have reiterated our guidance on achieving our debt trajectory, uh, uh, of being below point five times equity and, and one, below one X of operating cash flow by the end of this fiscal. Great. Lastly, we-- you've also highlighted several large infra improvements happening near term around Palava and Upper Thane. Now, I understand you don't want to, you know, take aggressive price hikes on the residential side, although, you know, one can argue for that now. On digital infra, can there be like a reset there as the infra improves quite substantially in the near term? I think, probably, you know, I'd like to differentiate between our digital infrastructure initiative, which is a pan-India play on industrial and warehousing in partnership with two global investors of great repute, Bain Capital and Ivanhoe Cambridge, versus our monetization of our surplus or excess land, which is happening in Palava and Upper Thane, where we have large landholdings. In terms of our landholdings in Palava and Upper Thane, I think the infrastructure which is completing over the next 12 months will give a substantial re-rating to the location. Connectivity will dramatically improve. Then as other larger things, including the Mumbai-Nasik leg of the Mumbai-Nagpur super highway and the airport in Navi Mumbai, become operational sometime in the next, I would say, in the 12-24 month timeframe. That will be an even further boost. In terms of land valuations for sale to third parties for any use, it could be for warehousing, it could be for industrial parks, it could be for data centers, we do expect re-rating of these locations. We have also started seeing now that we are getting multiple players getting interested in getting data centers to our Palava location, which has meet all the technical parameters. With land in Navi Mumbai now slowly getting exhausted, Palava is starting to attract that interest. Nothing has been crystallized yet, but when it happens, that will also be another trigger of a further upward rating in the land values, because if you have multiple industries or asset classes wanting the same land, plus the data center land valuations tend to be much higher. Thane, they have bought land at about INR 20 crore an acre. We, we do expect an upward move in the land valuations, I would say sometime in fiscal 2024. Sorry, fiscal 2025. Great, Abhishek, thanks and all the best! Thank you. We have our next question from the line of Parikshit D Kandpal from HDFC Securities. Please go ahead. Hi, Abhishek, congratulations on a great quarter. My question is on this issue of the Mother Earth and the RG on Mother Earth podium level. What's your view on that, and can it derail our launches for the second half? Sorry, your voice is not very clear. Mr. Kandpal, please use your handset. One second. Hello, is it better now? Yes. Hello. This issue of RG on Mother Earth or the podium level, so what is your view there? Because the matter is living in Supreme Court, so can it derail the launch momentum for the second half? How, what approach you are taking there? Hi. Our approach to regulatory matters is always the same, of accepting whatever the regulatory environment is and moving forward. The rulings in case of the land on Mother Earth RG are very clear. In all our, you know, prior launches, as well as the current ones, we are in compliance with that. We do not expect any meaningful impact on our launch strategy or for that matter, our project progress, yeah, on account of this regulatory change. Sir, any of your projects were on the podium level, I mean, which were in the launch pipeline and which may undergo a change or not? No. I think, the reality is that, you know, not that we have any idea of these regulatory changes which they happen, but we in general, given our commitment to environmentally sustainable developments, like to preserve as much of Mother Earth as we can, and, and not have significant, you know, not excavate out the whole site and, keep the Mother Earth for-- which enables the planting of a much longer-lasting variety of plantation. Because of our focus on sustainable development, this has not been an issue for us, because that's already been part of our design and planning requirements for quite some time. Okay. My second question is on the Centaur. This GDV, which you have disclosed, about INR 10,000 crore, does it include the Centaur GDV? What would be the potentially the GDV from Centaur then? No, it does not include the GDV from the potential acquisition of We Hotels. We only account GDV once we sign the definitive documents for an asset. Obviously, as you know, the We Hotels has not yet been, has not yet been, been signed up, so not something that we account for. At this stage, you know, we will only update once the definitive documents have been put into place. We will update on the likely GDV. What I can tell you is that the developments will have about upwards of 7 lakh sq ft of carpet area. Wow! Great. Thank you, sir. Those are my questions. All the best. Thank you. As there are no further questions, I would now like to hand the conference over to management for closing comments. Over to you. Thank you, everyone. In conclusion, I would say that demand conditions remain very strong, as Abhishek mentioned, with a very strong consumer demand, desire to own a home. In our view, this is just a reiteration of our view that this is just the third year of the 15-year long residential cycle that we have just started. There is a long runway of growth that we would see. Please, please feel free to reach out to me on either the operations or financial performance. Thank you, everyone. Thank you. Thank you. On behalf of Antique Stock Broking, that concludes this conference. Thank you for joining us. You may now disconnect your lines.