Ladies and gentlemen, good day, and welcome to Sunteck Realty's Earnings Conference Call for Q2 and H1 FY 2024. We have with us today Mr. Kamal Khetan, the Chairman and Managing Director of the company, Mr. Prashant Chaubey, the Chief Financial Officer, and Mr. Abhishek Shukla, the Vice President of Strategy and Investor Relations. Please note, this call will be for 30 minutes, and for the duration of the conference call, all participant lines will be in the listen-only mode. This conference is being recorded, and the transcripts for the same may be put up on the website of the company. After the management's discussion, there will be an opportunity for you to ask questions. There is a Q&A session, and we request to restrict questions to two per participant. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone telephone. Before I hand the conference over to the management, I would like to remind you that certain statements made during the course of this call may not be based on historical information or facts, and may be forward-looking statements, including those related to business statements, plans, and strategies of the company, its future financial condition, and growth prospects. These forward-looking statements are based on the expectations and projections and may involve the number of risks, uncertainties, and other factors that could cause actual results, opportunities, and growth potential to differ materially from those suggested by such statements. I would now like to turn the conference over to Mr. Khetan, the Chairman and Managing Director of the company. Thank you, and over to you, sir. A very good afternoon to everyone for joining us today, and thank you for taking the time to participate in our company's earnings conference call for the second quarter and first half of the financial year 2024. On the operational performance front, we have recorded a strong pre-sales of INR 782 crore in the first half of financial year 2024. Similarly, our customer collections have crossed INR 500 crores during the same time period. This strong cash flow has allowed us to further reduce our negligible net debt to INR 259 crores. With this, our net debt to equity ratio stands strong at 0.09x. With respect to revenue recognition in the financial statement, as per Ind AS, the Indian Accounting Standards, the company follows the project completion method and not the percentage completion method of accounting. Hence, to understand the financials of the company better, it is suggested that one should look at earnings numbers on yearly basis rather than quarter-on-quarter basis. In financial year 2024, our project Sunteck MaxXWorld is getting completed. Due to this, a significant revenue of INR 750-850 crores shall be recognized by the end of financial year 2024. Similarly, in FY 2025, we are completing Sunteck City, fourth Avenue in ODC, Goregaon West. This will lead to a revenue recognition of INR 950-1,050 crores by the end of financial year FY 2025. With regards to project launches, we are happy to share that we have received all the approvals for the first phase of Kalyan project and are gearing to launch the same before Diwali. Post Kalyan launch, Sunteck will have six large projects as growth engines. We are looking forward also to start our seventh project off Nepean Sea Road as a new growth engine before the end of financial year, in the financial year FY 2025. Over and above this, in financial year 2024, we have completed one commercial project, Sunteck BKC51, which is fully leased out for 29 years, and now we are nearing completion of the second commercial project, Sunteck Icon at BKC Junction, which will also be completed in financial year 2024. These two rented assets will fetch an average return of 30% on the invested capital. I'm happy to share that we have tied up with International Finance Corporation, IFC, a member of World Bank Group, to create a joint platform with a total equity investment of INR 750 crore. This platform will focus on building high quality, large-scale green housing projects, targeting the mid, mid-income demographic. This equity partnership is a testament to our strong systems and processes, scalable business model, and focus on environmental sustainability. Talking about sustainability, we are also pleased to share that Sunteck Realty has received five-star rating and has been ranked third in Asia Pacific Diversified Office and Residential Peer Comparison by Global Real Estate Sustainability Benchmark, that's GRESB. We have a strong conviction in our business model, and we look forward to a bright future as we continue to expand our horizons in a financially prudent way. ... I will now hand over the call to Prashant Chaubey, our CFO, for our information on earnings performance of H1 FY24. Over to you, Prashant. Thank you, sir. Good afternoon, everyone, and welcome to the earnings call for the second quarter and first half of financial year 2024. The financial and operational numbers have already been published on the stock exchanges. I believe all of you must have gone through the same. Let me give you some of the brief highlights of the financial performance. Our pre-sales stood at INR 395 crore and collections stood at INR 214 crore for the quarter ended, for the second quarter ended FY 2024. I'm also happy to share that our pre-sales and collections CAGR since FY 2021 has increased in tandem to 25% and 27% respectively. Our operating cash flow surplus has also surpassed INR 1,000 crore in the last three and a half years. For the second quarter—for the first half ended FY 2024, as the company follows project completion method of accounting, our revenue reported was INR 95 crore with a Core EBITDA margin of 43%. With this, we can now open the forum for questions from the participants. Thank you very much. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. In order to ensure that the management is able to answer queries from all participants, kindly restrict your questions to two at a time. You may join back the queue for follow-up questions. 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 our first question from the line of Sarang Gupta from Briarwood Chase Management LLC. Please go ahead. Congratulations on the strong quarter. I wanted to touch in on the deal with IFC because, you know, it's good to see a vote of confidence on the company and corporate governance from such a well-reputed institution. Can you just give us more background on this deal? Like, how long have you been working on this or talking to IFC, what type of due diligence they did, and, you know, why they chose Sunteck? Thanks, Sarang, for the question. We have been obviously working on this deal for almost more than one and a half years. It's almost two years, I would say. IFC being very prudent in their due diligence, they have done all the due diligence, looking financial, technical, and economic, all the due diligence. In fact, they visited multiple times to Mumbai from the U.S. and they met each and every person in the senior management team, I would say. To that extent, I think they visited each and every construction site also and seen the quality and safety measures taken while doing the in-house construction. I could say that they were really, really, very, very much impressed. That's how... Now, talking to the transaction with IFC in an equity transaction, this is an equity transaction, pure equity transaction. This platform will focus on building high quality, large-scale green housing projects, targeting the middle income demographics. This platform will invest in new project acquisition, as we do not require any capital investment in our any existing projects. This highlights, in fact, once again, I'll say, the strong brand recognition, sound financial and strong systems and processes, enhanced construction capabilities of Sunteck. We expect definitely this platform to be substantially GDV accretive for Sunteck. Thanks, Sarang. Mr. Gupta, does that answer your question? Yeah, that's helpful. Yeah, that's helpful. And then just, you know, you mentioned GDV accretive, like, you know, how big could this platform be? And kind of what time horizon are you looking at, you know, deploying this and then harvesting the returns from this platform? So the size of the platform, initially, what we have decided is INR 750 crores, and we want to, obviously, this can add to another INR 8,000 crores-INR 10,000 crores of GDV accretion, and over a period of, let's say, two-three years, what we are looking at. That's helpful. Thank you. Yeah. Thanks, Sarang. Thanks. Thank you. We have our next question from the line of Puneet Gulati from HSBC. Please go ahead. Yeah, thank you so much and, and congrats on good numbers. Just continuing on this, IFC deal, like, once again, can you lay out the broad boundaries that IFC has laid out in terms of what is the ticket size that you would be allowed to build in, in terms of, you know, new units? Because I, I presume it is more affordable housing. And second, what all geographies would you be able to operate in? So, yeah, Puneet, so one thing I want to clear, it's not only affordable, affordable, because- Okay. We can go, in the launch itself, we can go a minimum ticket size of INR 1.5 crores... so which is like mid-income focused. Yeah, yeah. And it is more of a sustainable project. So if you see, we are in every project, whether it is IFC is a partner or not, so we are taking too much care and attention about ESG, and that's obviously also has impressed them to invest in Sunteck platform, this joint platform. So we are focused on the projects to be environment sustainable, as well as obviously we are looking at mid-income segment, more of deploying this money. Right. Obviously, the ticket size should be close to INR 1.5 crores. Okay. So that's a decent ticket size. And in terms of ESG, are there some specific costs that you would have to incur, or initiatives you would have to do on the ESG front, to meet the investment criteria? So we are already doing that. That's what I told in my opening remarks, that we are ranked third in the Asia-Pacific, and we do. That's a minuscule cost. I feel it's more of an effort, but we don't mind spending that cost. We don't want to save that cost to compromise ESG. Understood. That's, that's very helpful. Thank you so much. Secondly, if you can talk a bit about, you know, any price increases that you have taken in any of your projects this quarter? So I would not say any substantial increase in prices across most of the projects. But in certain projects, I won't be able to give you anything specific right now. But at places like Sunteck Sky Park and ODC, we have been able to increase some price rise even in this quarter. Okay. Lastly, if I may, the collections were down Q on Q. Can you help us understand the technicality behind it? Prashant, would you be able to answer this? Hi, Puneet. So Puneet, our receivables from sales booked is in around INR 2,250 crores, which will come as we progress with the construction of our projects. So this time, what you see, the collections is down, is just a, it, it's not a function of anything else. You will see those collections coming through in the coming quarters. Okay. It's just the sales basically got done towards the last part of the quarter. Okay. Is that- Yes. Yes. Understood. That's very important. If I... yeah, I think that's all from us here. Thank you so much. Thank you, Puneet. Thank you. We have our next question from the line of Abhinav Sinha from Jefferies India. Please go ahead. Hey, hi, sir, and congratulations on the IFC deal. Just going back to the initial questions there, you know, you have already talked about how much you can add on GDV. So can you guide us, you know, when does this platform sort of become operational, and where do we see sales, say, in the next three-four years? Yeah. Hi, Abhinav. So I would put it, this question in, I'll answer this in two, three parts. Like, Sunteck is obviously, you know, we have been always well-timed in our capital allocation by doing business development acquisitions, especially. So we feel this is a good time to do acquisitions and business development. So today, if you see, we have a portfolio of seven large projects, which are as good as almost launched, with GDV value of close to INR 30,000 crores. And in next two to three years, I can say, we want to grow irrespective of IFC platform. We are very confident that we want to grow this portfolio from INR 30,000 crores to INR 50,000 crores. While doing so, we are ensuring that we are a balanced packs, balanced portfolio across all the segments, from uber luxury segment to even the aspirational luxury segment. Okay. I think, Abhinav, I have answered, or if you have any other further questions or anything which you want me to answer. No, sir. On just, dwelling a bit on this, I mean, with around INR 300 billion of projects, we are doing around, let's say, INR 20 billion of sales. So you know, that's the target for the current year. So I mean, does this become materially, say, 2x in three years, or we are looking to continue with the 20% CAGR, 15, 20? I mean, that's, that's, what I was looking for. So definitely, definitely we will be adding more projects. From the existing projects, we can definitely look a growth of close to 15%-20%. But from whatever adding projects, that will be additional and if you put, everything together, then obviously we look nearly, double in, close to 3-3.5 years or four years. Three years, we should double. Okay, that's helpful. So secondly, on P&L, you did mention that, you know, we are sort of because of the accounting issue, it's lagging a bit. Now, couple of things here. A, on the two projects that you have outlined for delivery, so is... These sales are already done or we are expecting, you know, for example, ODC to see more sales to deliver this number? And B, what are the margins we are expecting here, broadly? So the numbers which I have mentioned to you in my opening remarks, and it's also on the presentation, which is uploaded. The numbers are from the existing current sales. We are not considering any sales till that time. If that, those sales obviously will come up more sales, then that will take the definitely the revenue number to a higher number or on the upper side of the bracket. So I've given a range which will either surpass the upper range or the lowest. I've given the lowest range also, like INR 750 crores-INR 850 crores for financial year-... 2024, which will come from the MaxXWorld, Sunteck MaxXWorld project, and INR 950 crores-INR 1,050 crores, which will further go up obviously with the additional sales, which is, in the financial year 2025, and that is from our Sunteck City 4th Avenue ODC Goregaon project. And that's about it. What are the margins we are expecting? Oh, margins. So margins, Prashant, please. So, hi, Abhinav, Prashant Chaubey. So if you look in our case study also that we have published with our presentation, you will see that in the, in, in the Sunteck World project, we are having an operating margin of 30%, and, going forward, we are more bullish on that than the margins will only go up. Similarly, for our ODC project, we have given an operating margin of 35%, but Fourth Avenue is operating at a much, much higher, much higher margin, which is close to 40%. So you will, you will see that margins will be very strong going forward for both of these, both of these projects. Great. Thank you, and all the best. Thank you, Abhinav. Thanks. Thank you. We have our next question from the line of Pritesh Sheth from Motilal Oswal. Please go ahead. Yeah. Hi, sir, thanks for taking my question. First is on, again, on IFC, just, you know, drilling in that a bit. So profit would be, 50/50, shared, or how is the share, and is there any minimum expectation of equity return, by IFC? Pritesh, yeah. So Kamal, so there is no minimum return expectation. It's a pure equity deal, and they can invest maximum up to 50%, not more than 50%, but we can give them 25%-30%. It has to be mutually agreed. Also, we have a waterfall structure, which definitely gives us a much better return than what obviously IFC takes. So it depends on the IRR, what they make. After a certain IRR, its maximum profit comes to Sunteck, and then only the nominal profit goes to them. Okay, and what's that benchmark IRR, if you can just help us or? I think the detail, Okay. I think we'll be able to share with you, maybe separately. Sure. I don't think I'll be able to do it. Yeah. Okay. Sure, sure. No, no problem. Thank you. And, in terms of, the Kalyan launch, which is upcoming, what is the initial size that we have thought about, in terms of that launch? Is it a smaller launch or, you know, INR 1,500 crores-INR 2,000 crores kind of launch that we are planning? The first phase of Kalyan would consist of four towers, what we are launching. We are not launching the entire first phase. These are four towers, which will have, obviously, a revenue potential, as you rightly said, from INR 1,200 crores-INR 1,400 crores. Right now, what we are planning to launch is what we have got the approval for, two towers, which will have a potential sales of close to INR 600 crores. So we'll go ahead with the two tower launch, or we'll wait for another two towers and launch all together? Obviously not. We will obviously go with the- Okay. - Two towers launch, Pritesh. Two towers. Uh, definitely- Got it. We'll go with the pre two towers launch. Sure. Fair enough. That's helpful. That's it from my side. If I have more, I'll come back with you. All the best. Thanks. Thanks, Pritesh. Thank you. We have our next question from the line of Ashutosh Mittal from Axis Capital. Please go ahead. Thank you, sir. My first question is related to the amount spent on business development in Q2 and H1. How much of this is towards projects not yet announced or not yet launched? One second. What is... Can you repeat your question, please, Ashutosh? My question is related to amounts spent on business development in H1. Of this, how much is towards projects that have not been announced yet or not launched yet? So Pritesh, if you look at slide 26 of our presentation, you will see that we have spent close to INR 64 crores on business development, landowner funding, and JDA costs. Out of this, what is happening is the maximum majority of the amount is for our existing JDA projects, and some of it is for our new projects. Roughly, you can say around INR 10 crores-INR 15 crores is towards new projects, which has not been announced yet, and the balance is all for existing projects. Okay, thank you. My second question is related to how does the demand pipeline in BKC projects look like? Specifically, if you can give it for Island, and how does it look like for Pearl and Island? Thank you. So, we have already... This quarter, we—I think in pre-sales number, you must have seen, we have sold two units, and I think this is obviously compared to last quarter, nothing, and the quarter before that, there was nothing. So we are seeing the traction building up, and we are quite positive that this will continue quarter-on-quarter. So we'll see incremental sales happening every quarter. Thank you. Anything else, Ashutosh? No, thank you, sir. That was it from my end. Thank you. Thank you. We have our next question from the line of Anupama Bhootra from Arihant Capital. Please go ahead. Congratulations for great set of numbers. I just want the update about the Sunteck Sky Park, Mira Road contribution in Q2 sales, if I can get the update. Hi, Anupama. Prashant this side. Hello, hello, Prashant. Yeah. Yeah. So, Anupama, out of INR 395 crores, roughly around- Mm-hmm. INR 98 crores came from Sunteck Sky Park, Mira Road, in the second quarter. Sunteck Sky Park, Anupama, has been the response for that project for Sunteck has been quite encouraging, and we are doing good sales there. Thank you. Okay, okay. Thank you so much. Thanks. Thank you. Thank you, Anupama. Ladies and gentlemen, that was the last question for today. I would like to hand the conference over to the Chairman and Managing Director, Mr. Khetan, for closing comments. Over to you, sir. Thank you all for taking out the time from your busy schedule today. In case if any of your queries have been left unanswered, you can get in touch with me or my team. We look forward for your continued support. Thank you once again for joining us. Thank you, members of the management, and thank you all for taking out the time for Sunteck earnings call. In case, if any of your queries have been left unanswered, you can get in touch with the team. We look forward to your continued support. Thank you.