Arvind Smartspaces (NSE:ARVSMART) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Arvind SmartSpaces Limited Q1 FY 'twenty seven Earnings Conference Call. As a reminder, all participants' line will be in listen only mode, and there will be an opportunity for you to ask question after the presentation concludes. Please note that this conference is being recorded. I now hand over the conference to Mr. Satish Prakash Mishra, Group Head, Investor Relations. Thank you, and over to you, sir. Thank you, Parikh. Good evening, everyone, and thank you for joining us the quarter one FY 'twenty seven results conference call for Arvind SmartSpaces Limited.

0:52 The financial results for the quarter and related presentations were uploaded to our website as well as on the stock exchanges. Hope you had enough time to go through it. Before we begin, let me introduce the management team. Joining me today on the call is our Chairman, Mr. Kulin Lalbhai Mr. Priyans Kapoor, our Managing Director and CEO We also have Mr. Amit Chamaria, the CFO of the company. Please note that anything said on this call that reflects the outlook towards the future should be construed as a forward looking statement and must be reviewed in conjunction with the risks that the company progresses. I would now like to hand over the call to Mr. Kulin Lalbhai for his opening remarks. Thank you, and over to you, sir.

1:38 Good afternoon everyone and thank you for joining us today. It is a pleasure to welcome you all to the Arvind SmartSpaces earnings conference call for the first quarter of FY twenty twenty seven. We have started the year with a very strong Q1 with presales of INR432 crores, which is a 147% growth year on year. Beyond the great momentum in sales, this quarter also marked the highest quarterly GDV booked in our BD as well as a very healthy growth in our construction rate. This achievement is a strong testament to the foundation we have built and I'm confident that it marks just the opening chapter of a far more ambitious and transformative growth journey ahead for us. Speaking of macro trends, India remains one of the fastest growing major economies supported by strong domestic fundamentals like infrastructure investment, favorable demographics and organization despite the global uncertainty.

2:33 We remain positive on the residential real estate sector driven by rising incomes, better connectivity and evolving customer aspiration with a long term growth opportunity ahead. The industry is also witnessing a shift towards organized developers with customers, landowners and capital providers increasingly favoring players with strong governance, execution and financial discipline, creating a favorable environment for established companies like ours. Our focus remains on building a sustainable disciplined business with long term growth rather than chasing short term gains. We continue to strengthen our people capability, execution capability and governance structure to deliver consistent performance across cycles. Our growth strategy centered on key markets like Gujarat, Bengaluru and MMR, allowing us to build deeper expertise and maintain disciplined capital allocation.

3:25 At the same time, our partnership led model ensures capital efficiency, enabling us to scale whilst preserving balance sheet strength and financial flexibility. Another encouraging development during the quarter was the upgradation of our long term credit rating by India rating to AA- with a stable outlook. We see this as more than a financial milestone. It reflects the disciplined manner in which the business has been built over the years through prudent capital allocation, strong governance and consistent execution. It also enhances our financial flexibility as we continue to pursue future growth opportunity. We believe our focused market strategy, partnership led business model, strong balance sheet and unwavering commitment to governance and execution position us well to continue creating long term value for our stakeholders.

4:16 With that, I would now like to hand it over to Priyansh, who will take you through the operational and financial performance for the quarter in greater detail. Thank you. Thank you, Kulin. Good evening, everyone, and thank you for joining us on this call. The first quarter of FY 'twenty seven has been an encouraging start to the financial year. We delivered a strong operating performance driven by healthy demand across our existing portfolio. Our bookings for the quarter grew by around 147% year on year basis, reflecting the strength of the underlying business model, our current portfolio and continued momentum across our core markets. What is particularly encouraging is the performance achieved entirely through sustained sales. Over the last few years, we have consciously focused on strengthening our sustained sales engine by improving customer engagement, enhancing our sales process and maintaining consistent execution across projects.

5:12 We are now beginning to see meaningful outcomes from these efforts with sustaining sales becoming an increasingly important contributor to our overall business and providing greater predictability to our quarterly performance. Our Aqua City project in Andhabad has been a standout performer this quarter, with booking momentum that reflects both sustained demand and the enduring strength of our brand. This performance further strengthens our leadership position in horizontal development in Andhraward, reaffirming the depth of our market understanding and the trust home buyers continue to place in us. Our launch pipeline remains robust, with a couple of launches expected in the current quarter and a strong lineup of additional launches planned over the balance of the year, providing a solid platform for sustained bookings growth.

6:01 Collections for the quarter have grown by 76% on a year on year basis to INR $3.36 crores. Strong collections and healthy growth in construction spend enabled us to generate net operating cash flows of INR 81 crores during Q1 FY 'twenty seven, further strengthening our financial position and reflecting the resilience of our business model. Looking ahead, our existing project portfolio provides strong cash flow visibility with estimated operating cash flows of over INR 5,119 crores expected to be realized over the next four to five years. Another important highlight during the quarter was the continued momentum on business development front. We added projects with an aggregate gross development value of approximately INR 2,600 crores, which includes one redevelopment project in Goregaon, Mumbai and a horizontal residential development in South Of Ahmedabad.

6:56 Both these views are under joint development model. We continue to evaluate opportunities selectively with a clear emphasis on project quality, capital efficiency and long term value creation. Let me now move to the financial highlights for the quarter. For the first quarter of FY twenty twenty seven, the company reported revenue of INR $3.18 crore compared with INR 102 crore in the corresponding quarter previous year. Adjusted EBITDA stood at INR 150 crore versus INR 25 crore in the previous year. Profit after tax for the quarter has grown to INR 97 crore as against INR 12 crore in the corresponding quarter last year. The significant growth in the financial numbers is majorly driven by the BU received for Phase one of Orchard's project in Bangalore.

7:45 Even as operations continue to scale, our balance sheet continues to be healthy. Net debt to equity has remained at 0.29x, leaving enough headroom to raise fresh debt while maintaining healthy debt equity ratio. Further, as on the end of the quarter, the unrecognized revenue balance was INR3825 crores. Looking ahead, we remain optimistic about the demand environment across our core markets. Our launch pipeline, strengthened business development portfolio, consistent operating cash flow and healthy balance sheet provides us with confidence as we move through the year. We continue to hold our guidance for the full year FY 'twenty seven, so we expect to reach a bookings growth of 35 to 40% over previous year. Business development of INR 4,000 to 5,000 crores during this year and EBITDA margins on new sales in the range of 22% to 25%.

8:38 The building blocks to achieve this are firmly in place. With that, I will conclude my remarks, and we can now begin the question and answer session. 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 touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Amit Srivastava from three sixty one Capital.

9:37 Congratulations, sir, on a very good set of numbers, and thank you for the opportunity for the call. So my first question is in terms of the details of the booking numbers, which we have seen is very strong. And this is one of the projects where we have seen a very strong sales, which has come from the Equality. So just wanted to understand the demand trend, what is the underlying demand for the overall market? Is this a project specific demand which has driven this kind of response? Or is the underlying demand for the our core markets like Gujarat or Bangalore is strong that across the project line, we can expect a similar response going ahead? Right. Thanks, Amit, for the question.

10:22 So Amit, I think it's a combination of both. I think the market, to our understanding, remains definitely strong enough to be able to absorb the kind of inventory in the projects we are to the market currently. Second, aquacity, of course, the quality of the development, it's a very large project that we are doing. And I think the concept itself has been very, very appealing to the customer. So I think it's been a combination of both. But I think from our portfolio perspective, when we are looking at the market, I think we are seeing the markets as being reasonably strong, stable and responding quite well to most of the projects, which we are bringing right now in terms of our offering. So underlying demand is still strong, that's what we can infer from that? Yes. I would say, Amit, the underlying demand is still quite strong.

11:14 Okay. And second, in terms of the launches pipeline, if you look at, how much the GDV we are going to launch during the next three quarters? And if you can give the project wise now based on the revised plan? So Amit, we have guided for about INR 3,000 to 3,500 crores of booking value that we are intending to put in terms of the price supply in the market. This is going to be largely six launches that we're working on. And one of them is going to be from Ahmedabad. We expect three projects from Bengaluru to hit the market and two from Mumbai. So put together about INR 3,000 to 3,005 because some of the projects we might only bring some phases, not the full project inventory. So this is the guidance.

12:01 On the INR 3,500 crore we will launch or the INR 3,400 crore is the opportunity of GDP basically? So INR 3,000 to 3,500 crore is what we intend to launch in these six projects in the market. Okay. Second, in terms of the project, if you look at, we have unrecognized revenue of around INR 3,800 crores. And in this quarter, we have seen a very good jump up in our margin. But just to understand on a normalized EBITDA margin, how to understand in a INR 3,800 crore of revenue which we have and how we will going to book it over the next one or two years, what would be the trend in terms of if you can give any kind of ballpark numbers for that in terms of profitability as well as in terms of number, in terms of the top line?

12:52 So in terms of the margin profile, I think, of course, this quarter has been, I would say, quite a very strong one because of one of the projects that was booked in terms of the building use completion. But normally, I think our guidance is about 25% EBITDA margin on our port. So I think over a period of time, we will expect to maintain that kind of average for both the unrecognized revenue and also the unsold inventory that we may have in our portfolio. In terms of booking, I think we haven't put out very clear year wise guidance. But when we are talking about INR 5,100 crores of cash flow, which are probably sitting from unsold inventory plus the balance collectible, we are saying this INR 5,000 crore of cash flows will come over the next four to five years. I think the revenue recognition is still a little sporadic because it is very, very approval link. So we haven't come to annual guidance so far on the revenue recognition part.

13:53 Any divergence in terms of the margin profile, if we are doing any horizontal and vertical project, if you can give that range? Largely, think more than horizontal and I would say vertical, I think for us, the margin percentage is very whether it's been an outright project or a JD project. When we give a range of 22 to 25, probably I think our JD projects are slightly on the lower end of this particular range and our outright projects are on the higher end of the range. So together bringing us to this average between 22% to 25% on a portfolio level. In our case, I think our while we maintain this guidance, our current portfolio that have currently got recognized, as you can see, are slightly on the higher side.

14:42 But considering the outright mix plus basically the plotted and the high rise mix, I think we expect finally we will be between this range of 22% to 25%. Okay. Last question. Sir, in terms of the OCF generation, if you look at this quarter, we have done around INR 81 crores. So we are growing very fast in terms of collection or booking value. But our OCF generation, it seems like it's flattening over the last two years, if you look at. So can you give us some guidance how much we can do this year? And what would be the percentage or numbers will be there for the over the period of this year, full year? So last year, we had done about INR 400 crores of OCF. And what we mentioned even in our previous call that this year we are targeting to be somewhere in the range of again INR 400 crores to INR 500 crores on the OCF front.

15:33 So we are actually quarter one is in line with what we have been chasing for the full year. And if you see, I think while the OCF trend compared to last two quarters looks slightly slower, but we are quite happy about it because the larger incremental outflows towards construction costs, which has been a conscious effort to ramp up from our end. And even OCF of INR 81 crores on a base of INR $3.36 crores of collection is exactly in line with the kind of margin profile we are guiding for. So in a way, we are saying we are catching up well on construction. And it's generally one of the problems in the industry has been slower construction outflows. So we are quite happy that we are able to see these kind of outflows in our portfolio and still the OCF profile is largely in line with the project margin profile. Okay.

16:23 Okay. Sure, sir. Thank you very much for the position. Thank you, anyone who wishes to ask a question may press star and 1 on the touch tone telephone. To ask a question, please press star and 1 now. The next question is from the line of from. Please proceed with your question. Yes, Arvind. Yes. Hi, Arvind. We can hear you. So in terms of launch pipeline for this year, so have you also included this boarding of project, which we not or this will happen next year?

17:13 So, Dhananjay, we are saying in Mumbai, we are looking at two launches currently. As you know, we have three projects in the portfolio in Mumbai, which have been added. And we are hoping one of the launches that we are going to do is the Goregaon project for now. And what is the consumption area? This, I mean, for this project, entire social media? What's the development area? So the carpet area that we're generating for the market is about 6.7 lakh square feet. It's a redevelopment project. So this is the area that we will be putting for sale. Remaining, of course, is there is a redevelopment component that we are building for the members. So that how much is that the redevelopment we are doing for members? We can get back to you on that.

17:59 There are about 200 plus units that we have to give to the members there, but we can get back to you on the construction exactly for the members. How long it will take in terms of... Mean, once we put for launches or to complete this project for three years? Sorry. I could not understand the question. So Gaurigaon is a typical 35 floor plus building in Mumbai. So we are expecting to take about four years to complete the project once we hit the ground. So it's a combination it's going to be a combination of our JD plus outright. So today, when we look at the land outflows, we might be closer to in the range of INR 600 crores to INR 900 crores. So that is the kind of outflow we are likely to see, but it's a combination of what finally we do in terms of outright, what do we do in terms of JD, which will determine the fresh land outflows from our end.

19:18 But right now, I would say INR 600 crores to INR 900 crores, maybe that could be the kind of range we might look at. Right. So, Dhanjal, I think we have started very, very well and but because some of the OCs are lined up in quarter four, of course, we are reasonably sure we're going to see a strong growth over the previous financial year in terms of the revenue number. But very difficult to give an exact range at this particular stage because some of the OCs are lined up in the fourth quarter as well. And that can sometimes meaningfully swing the revenue recognition because it's just dependent on the last approval.

20:18 So we have taken that feedback and we are thinking whether we will start talking about this more exclusively. But for now, what you can expect is a reasonably strong growth over the previous year, but we're not guiding for it at this stage. Okay. In terms of labor costs, have you seen any So I think so generally, the cost of manpower labor, I think, has been on the uptick in the last few years with a lot of construction activity, which is ongoing. Having said this, I think from a project perspective, are these costs big enough to impact the project profitability?

21:06 Not at this particular stage. So there could be some increases that are happening, which are gradual, but they are not impacting project profitability in our case because we budget for some of these upfront when we are signing up on the project. The next question is from the line of Vishal from Axis Securities. Please proceed with your question. Hello. Congratulations on a great quarter. So you obviously recognized a lot of revenue this quarter and you have OCs in Q4.

21:55 So are you looking at revenue recognition to moderate in the next up next two quarters in Q4 of this financial year and Q1 of next financial year it picks up again? Vishal, we are, of course, hoping to recognize revenue as soon as many of these OCs come in. We do have a good pipeline for the current year in terms of OCs, which are currently lined up. But the quarters are slightly difficult to predict whether we will have some of those in Q3 or Q2. I think that's slightly difficult to predict at this particular stage. But we are definitely going to see some, I would say, reasonably large uptick over the previous financial year when it comes to the accounting revenue that has been reported.

22:45 So my next question is basically on business development and MMR region. You've done BD in MMR recently. Do you feel a higher chunk of your projects could be in MMR as compared to Gujarat soon? And what is the progress with the Kopoli project? So I think, Vishal, we remain quite bullish, in fact, on the Mumbai market. So we are continuously looking for more opportunities there. And currently, we have INR 4,000 plus of GDV already logged in the market, and we are looking at more opportunities. So we do expect, yes, Mumbai is going be a very large contributor. But it won't be at the cost of probably any defocus on Gujarat or Bangalore. I think we remain focused on adding projects in these two cities as well.

23:34 But I think Mumbai, every incremental project can bring a lot of addition in terms of booking value. So yes, there's a possibility Mumbai grows faster than these two markets in terms of addition of GDV, that's a possibility. Second, I think a launch perspective, Pencopoli, we are working on this particular project in terms of approval. And like I said, we are hopeful that we are able to bring at least two out of the three projects in Mumbai the market in the current year. And H2, we do have some of these projects which are part of our launch pipeline, including the Pembcorpoli one. Okay, thank you. That answers my question. Once again congrats on a great quarter.

24:20 Thank you, Ashant. Thank you. The next question is from the line of Ishita Rudha from Investment. Please proceed with your question. Thank you so much for the opportunity. What was the incremental efforts taken by the company on sales and marketing to drive up the sustain in sales? And can we expect a similar or a higher run rate in coming quarters? So, Ishuda, I think from a sales perspective, we have been trying to strengthen our distribution capabilities and the way our processes and the teams work. So I think we have invested quite a bit in terms of one, spending the team all across all the three cities where we are now present and even ensuring that our distribution in terms of our channel partner reach, our marketing reach is further enhanced. So, think that has started to show in terms of the results and the numbers that we are seeing on the sustenance front.

25:25 There is a compared to what we were aiming for probably on sustenance, we may with the first quarter being much better, it's possible that sustenance may be slightly more than maybe what we were aiming for. But having said this, we are an industry where inventory is always a function of the approvals you get. So while we are maintaining the overall sales guidance for the year, there is a possibility that sustainers may contribute slightly more because of the buildup in terms of our own teams internally. That's great to hear. Thank you so much and all the best. Thank you. Thank you. The next question is from the line of from Investments.

26:21 Please proceed with your question. Hi. Good evening. So a few questions from my side. So my first question is your unrecognized revenue has increased to approximately crores. Could you help us understand the expected timeline for converting this into reported revenue over the next few years? Ekaan, thank you for the sorry, Anirud, thank you for the question. See, this 3,800 crores of unrecognized revenue is essentially like Priyansh was mentioning, is a combination of the OCs that we'll get. So broadly, when we look at our project portfolio, it's a combination of plotted as well as high rise.

27:08 Plotted projects will typically get recognized over two to three years. And the high rise components, the OC comes in about four years or so. So it is going to be a mixture of these two things. Broadly, would say that all of this would get recognized over the next four years. Okay. Okay. Understood. So my next question is that the presentation highlights an estimated unrealized operated cash flow exceeding INR 5,100 crores for the existing portfolio. What are the key assumptions behind this estimate? And how should investors think about its realization over the project life cycle? So, Arvind, I think, like I mentioned, when we talk about this INR 5,100 crores of cash flow, we are saying we are targeting to look most of this probably getting realized over the next four to five years.

28:03 So this is as the projects continue to move ahead. And this is, of course, from the existing set of projects. This number keeps on changing depending on when the as and when new projects start getting into the portfolio. So over the next five years, we feel we should be able to monetize most of it. And in terms of assumptions, generally when we give out these assumptions, the price is based on what we would have underwritten that particular project at. And even when it comes to our costing, we have a robust process where when we are underwriting a project, we look at what exactly is expected outflow. So we have taken those assumptions and basis that concluded and estimated this INR 5,100 crores of future cash flow.

28:49 Okay, okay. So sir, your net debt to equity has increased to 0.29x as the company continue to invest for growth. What would be the comfortable leverage range over the medium term, especially considering the strong project acquisition pipeline? So we've said also in the past, and we are maintaining our comfort at one:one debt equity. So till that level, we're quite comfortable. So we do expect a gradual increase in our debt level, which is a part of our conscious strategy to expand and increase the portfolio size. And we remain quite comfortable when we are looking at this particular debt level because it's also when we look at the debt, it's also a function of the kind of OCF we generate and equity basis, a function of the revenue recognition point that we all were speaking about for quite some time.

29:45 So when you look at the total collections in total OCA that we look at, this one:one is a very comfortable threshold in our view. Understood, sir. So one last question from my side. So you had a great start to this financial year. Could you share your expectations for the bookings, your collections and the business development for the full year? And what are the key opportunities and risk that investors should monitor over the next three quarters? So in terms of our guidance for the bookings, we said we expect to grow by about 35% to 40% over previous year, which takes us to a range of INR 2,100 crores to INR 2,200 crores in terms of a number for the current year. When it comes to business development, INR 4,000 crores to 5,000 crores was the GDV target or the aim we were looking at. And we've already done close to about INR 2,600 crores. So we feel we are on track maybe aiming for the higher band in terms of the GDV on the BD front.

30:49 And I think for now, we remain quite confident that we are giving these guidances out, I think fairly on track. From a collection perspective, we have not put out a total annual guidance, but if you see, I think the quarter we've had, this is actually our second best quarter in terms of collections in our history. So quarter four was our best ever quarter and we so we are happy to see that we are now clocking INR 300 crores quite frequently in terms of our collection numbers. So we do expect to have a decent growth over the last year in terms of collections as well. Okay, sir. Understood. So thank you for the opportunity, sir. That is from my side. Right. Thank you. Thank you. The next question is from the line of Janam Shah from Securities.

31:39 Please proceed with your question. Yeah. Hi, sir. Thanks for the opportunity. Great set of numbers. So my question is more from a futuristic perspective. Firstly, if we see a journey eventually after getting the emerge from the current entity and now are doing a good sustenance since we have came a long way. Earlier, what you step on is that whenever we had any specific, what you can say, launch at that point in time, at that quarter, we'll be having a good sale for a quarter also, then sustenance is eventually tied up. Now we are doing good sustenance is eventually after, you can say, going into this market. And the question would be, let's say, after reaching this 2,000 CR plus kind of a presales, how we will be seeing, let's say, next five to ten years' time? We are still not a very large player in any of the market, which is Mumbai, Bangalore, NCR.

32:26 We are still a large player in Ahmedabad. How do we see our overall journey to be a, let's say, national player or something like that? And because the real estate cycle has been good between, let's say, twenty two till date, even if it goes for next few years, how do we able to do it in a better way to, let's say, go towards maybe 5,000, 10,000, whatever maybe the number for the business, considering we already have a good overall project pipeline along with the BD that we are doing. Right. Very interesting question. And so when we look at firstly our four to five year plan, I think our guidance has been that we can continue to grow at about 25% to 30% CAGR. And I think we remain quite confident that we should be able to achieve this.

33:12 Now when you look at the split, I think what has interestingly happened on our portfolio now and which is by our strategy and design, the inventory that we have sitting in our portfolio now, we have actually reasonable stock in all the three markets. And like I said, if you see Mumbai sitting at INR 4,000 crore plus worth of stock. Bangalore is close to INR 3,000 crore worth of stock. So now we are truly moving beyond one market in the right possible way. So I think this 25%, 30% CAGR will also bring us to a very reasonable scale in the next five years. And while we are maintaining this particular trajectory, I think if we are able to do this particular phase of growth quite well, we believe I think from there, think truly becoming one of the large developers on a national level, I think gets incrementally easier once you have put your foothold in three markets, which are fairly large. I think that opportunity and I think now that particular vision is seeming, I think within our plan, within our reach. At the same time, I think we've always said we will continue to maintain a very deep focus on profitability.

34:18 So while we expect to be one of the large national developers over this ten year journey that you're talking about, but at the same time, I think we are not going to compromise financial discipline just to achieve booking value growth. So we are feeling nearer to our plans. I think the way this company, like you said, is getting built over the last ten years and the next five year plan. And maybe I think after five years, we'll probably take a stock whether we look at more markets, whether we how do we evaluate our next set of growth. Got it, sir. Got it. So one more thing on this future plan is that if we see all the larger players, here or there, there always are some kind of a commercial or a retail portfolio wherein they'll get annuity kind of an income. Of course, the upfront CapEx will be higher in that case. We are only focused as of now on the residential part. Are we planning to have anything on the, you can say, annuity portfolio? Maybe not today, but maybe after two, three years time or something like that.

35:12 Even in the worst case scenario, let's say something goes off for the registered market as a whole, we'll have a suspense kind of even the cash flow, which will eventually take care of our overall company in the worst case scenario. Right. Think, Genham, it's a very fair point and we something we are also thinking about and we take your input and feedback on this. This is something which we are also thinking about. There's a possibility, I think, few years we will want to look at this particular opportunity. Today, I think step one for us is that we also want to develop some of these assets, probably I think and test out the development even if they are done with an intent for sale basis. So we may actually look at probably understanding more assets from a for sale basis. And then maybe once we have delivered some of these, we know the nuances of delivering some of these assets. And then we can probably at a future date also look at what you probably mentioned that we can hold it in our portfolio. It's few years away, but something that we are thinking about as we grow, think that could also be an interesting use of capital once this cash flow that we're talking about, which is in a way going to realize over the balance sheet starts coming in, we can think about this.

36:23 Got it, sir. Got it. Yes. That's it from my side. Thank you so much. Thank you, gentlemen. Thank you. The next question is from the line of Prisha from Shah Family Office. Please proceed with your question. Hello, sir. Good evening. So I have a couple of questions. So first being, you know, the company now has sizable pipeline of projects planned. You know, for a launch across Gujarat, Mumbai, Bangalore, etcetera. So which of these launches are expected over the next two, three years, and what level of free sales contribution we can expect coming from these recently launched projects?

37:11 Prisha. So Prisha, for this year, like I said, one project in Ahmedabad, we are definitely looking at launching one of the new projects that we had acquired, which is in West Lapur and Anzaba. So that is what we'll bring to market. Bangalore, we expect the three projects, one of them already in fact, which has received approval is a new Sarjapur project that we had acquired. So that has already got approvals as well. So that is also going to be one of the launches. Other than two more projects in Bangalore that we are working on in terms of getting to the market. Mumbai, two more projects, so which will allow us frankly launches in all the three cities that we operate in. I think again when we talk about next year, we are building our PD pipeline for all the three markets and we are hoping that we can continue and in fact augment this run rate of about INR 3,000 crores to INR 3,500 crores of booking value that we intend to bring the current year. We are hoping next year, in fact, we will be able to bring more inventory with BD actually going quite well for us.

38:14 Okay. Understood, sir. And coming to the operating cash flow, which fairly remained strong during the quarter despite the continuous investment which we are doing in land and the approvals and everything. So keeping that in mind, how do you intend to balance the capital deployment towards the business development, you know, by also maintaining the leverage... The healthy leverage which we are having currently along with the cash generation? So, Prisha, if you see our... Generally, quarterly run rate, so if you probably were analyzing our operating cash flow, we can do about INR 400 crores to INR 500 crores of cash flow, which can come from our operating business itself. So that is the first part, which will go towards new BD and new land acquisition.

39:10 Second, like we said, I think on the balance sheet, we have enough room to be able to add quite some debt. We are at 0.29 and we have said we are comfortable one:one, so that also gives us a fairly large chunk of money which we can borrow. And when I'm giving our BD guidance, I'm saying we are looking at about 600, INR 2,000 crore from a cash deployment within the current year. So I think with INR 400 crores, if it's coming from operating side and with deadlines being comfortably available, I think we have enough room to be able to meet this guidance of the business development land deployment that we're talking about. Understood, sir. Very well answered. And coming to just one more last question, if I may. So the the adjusted EBITDA margin, which improved meaningfully at around 48 to 49% this particular quarter.

40:03 So how should we as an investor view this? Like, should we consider it as a sustainable margin profile or, you know, were there any project any project mix or revenue recognition factors that could have benefited this quarter? So, basically, two viewpoints. Yeah. So I think, of course, we are quite delighted that some of our projects in our portfolio are reporting this kind of margin. But when we are advising you, we will always say, I think, look at the aggregate and the average portfolio margin. Average portfolio margin that we look at is about 25%. Fortunately, in our case, many of our projects have overperformed on that particular on that margin. And one of the projects which got into revenue recognition in this quarter was Orchard, where we above our guidance. So we will advise and treat it maybe as one project which has done exceedingly well.

40:59 But at the same time, probably factor in a 25% EBITDA at this particular stage as a company average. Okay, sir. Thank you so much. Those were all my questions and all the best for upcoming quarters. Thank you so much. Thank you. The next question is from the line of Arvind Singh from IT Investments. Please proceed with your question. Hello. Am I audible, sir? Yes, Arvind. Hi. Hi, sir. So congratulation on great set of numbers. So just wanted to ask a question on the industry side. So how much price appreciation do you see in the upcoming next two to three years on the overall real estate industry? Because I think there are a lot of price appreciation happened in the last three, four years. So just wanted to know your broad view on the pricing.

41:51 So I think you're right, Arvind, over the last few years, I think a lot of price appreciation has happened. My personal view is I think now the price increase cycle, I think, is stabilizing, while because the demand remains strong, there are pockets where there are opportunities to pull up the pricing. But at least when we are underwriting, we our business plan, we are ensuring we are not dependent on very large price hikes. So that is generally something we avoided as a part of our underwriting strategy. So we believe, I think now the price increases should be slightly moderated. The demand continues to be very, very strong. I think in most of the markets where we are operating, I think the absorption is strong. But at the same time, I don't think we will now see the kind of price increases that we may have seen in the last three, four years. I think it's going to be slightly moderated in terms of the increases.

42:47 Okay. Great to hear. And sir, one more question that many of the investors said that the real estate cycle is almost done, but you guys are posting the robust numbers. So where do you see this cycle? Where we are in the real estate cycle, if you can give us just broad picture? So I think my own reading is that when we were probably looking at a very, very rapid uptick in growth in the cycle probably when we were talking two years ago. I think now we are in a stage where probably the cycle demand is stabilizing. But when we look at a country like ours, I think the structural demand still remains very, very strong. So even when we talk about these markets, the three markets particularly, which we are tracking very actively, I think these markets, depending on the reports you look at, I think you will be one will be looking at anywhere between INR 300 to 400 crores in terms of annual residential absorption.

43:43 So these are fairly deep and large markets in terms of the size that we look at. So even if they see some stable growth, we believe I think there is a lot of opportunity for developers like us to continue to grow even if it is the current, I would say, structural demand adding to it without the cycle demand giving a lot of uptick. Okay. And sir, one last question. How do you see if you are planning to go into the Tier two market, so how do you see the margins trajectory there? So for now, Arvind, our focus remains on largely these three cities, which are all Tier one, so Bangalore, Mumbai and Ahmedabad.

44:30 That's what we are continuing to focus on. And these three cities, I think, like I said, they give us an EBITDA of between 22% to 25%. So we are seeing that we are able to maintain these margins in all the three cities. Between the three, the price uptick in Bangalore has probably ensured that there are probably better margins in some of the projects that we may have underwritten in the past in Bangalore. So that's something which is happening as a part of the pricing cycle that you have spoken about in the last few years. Okay, great to hear sir and all the best for the upcoming results. Thank you. Thank you. Ladies and gentlemen, that was the last question from the participants.

45:19 I now hand over the conference to Mr. Priyansh Kapoor for closing comments. Over to you, sir. Thank you, everyone, for participating in today's earning call and for your continued interest in Arvind SmartSpaces. I hope we have been able to address most of your questions today. However, if there is anything we may have missed or if you require any further information, please feel free to reach out to our Investor Relations team, who will be happy to assist you. Thank you once again for your time and continued support. We look forward to interacting with you all once again in the next quarter. Thank you. Thank you. On behalf of Arvind SmartSpaces Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.