Sunteck Realty (NSE:SUNTECK) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Sunteck Realty Limited q two FY twenty seven earnings conference call. Today, we have with us mister Kamal Khetan, the chairman and managing director of the company and Mr. Prashant Jobain, the Chief Financial Officer. Please note that this call will be for thirty minutes, and all participants for this duration will be in the listen only mode. This conference call is being recorded, and the transcript for the same may be put on the company's website. After the management discussion, there will be an opportunity for you to ask questions during the question and answer session. We request you to restrict questions to two per participant. 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 the 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 prospect.

1:18 These forward looking statements are based on the expectations and projections and may involve a number of risks and uncertainties and other factors that could cause actual results, opportunities and growth potential to differ materially from those suggested by such statements. I now hand the conference over to mister Kamal Khetan from Sunteck Realty Limited. Thank you, and over to you, sir. A very good evening to everyone, and thank you for joining us for our earnings conference call for second quarter and first half of FY 'twenty seven. I will keep my remarks brief and focused on the key developments of the half.

2:09 I am pleased to share that Sunteck has delivered a strong performance, reflecting our continued growth momentum of operational excellence and commitment to creating long term value for our stakeholders. We have delivered a strong first half with growth across presales, collections, cash flows, revenue and profits, sustaining the CAGR of 25% across all major operational and financial parameters over the last five years. On business development, during the quarter, we have acquired a new land parcel of 4.5 acre at Borebili West through an outright purchase. This takes our assembled landholding at Borebili West from seven acres to 11.5 acres and with an estimated GDV value of 80,000,000,000.

3:06 This will further enhance the project scale, development potential and set the benchmark for Uber luxury living in that micro market. With this addition, our total GDV stands at $69,000,000,000 of which $260,000,000,000 is already launched or to be launched, providing us several years of launch visibility. We continue to evaluate further business development opportunities, several of which are at advanced stage. Our approach remains focused, disciplined and capital efficient. Every new acquisition must clear the same filters we have always applied, a high IRR, a high equity multiple and a minimum project level EBITDA margins of 30 to 35%.

4:01 We will continue to do our acquisition across all models such as capital light JDA JV, redevelopment and outright purchases. Now on Nepinci Road, this is one of our most significant project in our Uber luxury portfolio. Approvals are at advanced stage. And once the construction is underway, the project will be a meaningful contributor to both presales and collections. Since now we don't see the visibility in terms of Dubai project. Now since we don't see the visibility to launch the Dubai project in next one or two quarters in spite of we being launch ready for the Dubai project, to keep the GDV number more realistic, we have moved the Dubai project from to be launched GDV to upcoming for launch GDV.

5:01 And this has been explained properly by us in the Slide 10 of Q2 and H1 FY 'twenty seven investor presentation. However, our conviction in the project or its economics continues to remain very bullish. Our launch pipeline for FY 'twenty seven, excluding Dubai, stands at $70,000,000,000 and the second half is weighted towards launches. The key launches planned for H2 are Sunteck Belveda Park at Meera Road on the Western Express Highway, which we are confident will be our second half second successful project at Meera Road after Sunteck Skypark and our residential project at Anweri along the Western Express Highway.

5:53 Finally, on sustainability, we have retained our GRESB Green Green Five Star rating for second consecutive year with our score improving to 98.8% in 2026 from 98.6% in 2025, even as GRESB average declined to 86.2% from 88%, widening our lead over the benchmark. During the quarter, 4th Avenue at Sunteck City also achieved the Edge Advanced Certification from Green Business Certification, GBCI, with over 50% savings in energy, water and embodied carbon, an estimated CO2 saving of 1,100 tonnes annually.

6:50 This recognition reflects our focus on resource efficiency and sustainable construction and keep us rated among the best in the global real estate. I shall now hand over the call to Prashant Chaube to take you through the financial performance for Q2 and H1 FY twenty twenty seven in greater detail. Thank you, sir. Good evening, everyone. Our results and investor presentation are available on our website and the stock exchanges. The CMD has covered the developments of the half. I will focus on what is driving the numbers. The key operational and financial highlights are as follows.

7:38 Presales stood at INR $8.24 crores in quarter two of FY 'twenty seven and INR $16.11 crores in H1 of FY 'twenty seven. The segment mix of our presale remains well balanced in quarter two. Uber luxury contributed 25%, premium luxury 51% and aspiration luxury 25%. This mix carries a high embedded EBITDA margin on both our FY twenty twenty six and H1 FY twenty twenty seven presales, which will flow through to reported profitability as projects reach revenue recognition. Collections stood at INR371 crores in quarter two and INR780 crores in H1 FY twenty twenty seven.

8:27 As recent sales are weighted towards early stage projects where milestones linked collections are back ended. On reported financials, in quarter two, revenue grew 27% year on year to INR 3,200,000,000, EBITDA 13% and PAT 17%. In H1, revenue grew 16% to INR 5,100,000,000, EBITDA 23% to INR 1,600,000,000 with an embedded EBITDA margin expanding 160 bps to 30% and PAT 20% to 1,000,000,000. At the halfway mark, EBITDA and PAT already stand at substantial levels of FY twenty twenty six numbers.

9:18 And with the second half typically our strong half, we are well placed for a strong year. Reported margins will continue to converge towards the embedded EBITDA margin of our presales. On cash flows, our net operating cash flow surplus for H1 grew 27% year on year to INR 3,500,000,000, which is 63 percent of FY 'twenty six record full year surplus and 45% of collections, up from 40% a year ago. On a trailing twelve month basis, the surplus stands at INR 6,300,000,000. This surplus was delivered investing INR 3,900,000,000 in business development during the half.

10:10 Finally, annuity income is running at an annualized INR 86 crores against INR 76 crores in FY 'twenty six. Thank you. With this, we open the floor for questions. Thank you. We will now begin the question and answer session. 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 comes from the line of Harsh Patak with Motilar Oswal. Please go ahead.

11:07 Yeah. Hi, sir. Good evening. My first question is on the launch pipeline for h two. Like, you highlighted there is 7,000 crores of pipeline coming up in h two, and the two projects you highlighted for and. So what would be the respective GDV of these projects and any other phases of existing project that we are planning to launch? Good evening, Harsh. Yeah. So I will first tell you... Take you through the... All the launches which we are from the existing project and the new project. So what we are looking at, Sunteck, Belveda Park, which is in the Mira Road to the next project in Mira Road. This is one launch. And another one, which is on the Andheri Western Express Highway, again, a residential redevelopment project.

12:00 Third is we are looking at a new tower at Sunteck City, ODC, Al Dhawya project, which we launched Tower 1. Now we are looking in H2, the Tower 2. And Bodhivale West 1 phase, which is which we have recently acquired and added to the seven acres existing land parcel, that also we are looking to do it in H2, plus the new tower at Sunteck Beach Residences, which is our SBR, one more new phase or new couple of towers in Sunteck World and couple of new towers in Sunteck Crescent Park. So all these put together makes total of INR 7,000 crores. And when it comes to the new launch in Mira Road 2, you specifically asked what is the GDV, we are looking at close to INR 1,200 crores to INR 1,400 crores GDV from there.

12:53 And Aneri West, the new project once again on the Western Express Highway, there we are looking at the GDV again close to similar INR $12.50 crores to INR 1,500 crores. Understood. Thanks for the details. My next question is on the sales mix. I think this quarter, we have seen some improvement in sales on the affordable housing segment. So how are you seeing, you know, the traction in the respective segment that that including mid income and the affordable housing? And how do we expect the overall annual to be for this year? So we have seen that obviously in the last quarter also we said we are seeing uptick in our aspirational luxury segment, And that's what we are seeing that percentage of growth we are seeing in at least both the projects where it is Nai Gao and plus the Kalyan project.

13:58 When it comes to Uber luxury segment, we have been doing, obviously, sales from whatever we do at BKC and the Natuzzi Road. Obviously, the inventory at BKC is now diminishing. So that's where we will see the much bigger run coming from the Uber luxury segment from Nipinsi Road. And in the premium luxury segment, obviously, sales mix has been 50%. So now when it comes to the mix, I would say Uber luxury segment did 27% and premium luxury segment did 50% and aspirational luxury segment did 23%. Understood, sir. So how should we look at the... Sorry?

14:48 Yes. I was just trying to know what is the pre sales we should be expecting for the entire year and also if you can give some color on the collections part also. Yes. So we are very clear. We have been always maintaining that we are looking at a growth of 25%, which we are again very confident because H1, there was no major launches and still we could achieved a 19% year on year growth in H1. And we have a new launch pipeline, as I mentioned earlier, 7,000 crores due to which we are very, very confident that our guidance or our expectation of 25% year on year growth in the full year of FY twenty twenty seven, we will be able to maintain easily.

15:41 Okay, sir. Thank you for taking my questions. Thank you. Thank you, Harsh. The next question comes from the line of Pritesh Seth with Axis Capital. Please go ahead. Yeah. Thanks for the opportunity. Congrats on the steady growth comments. First question is on this new land that we acquired. Is it within the same location where we had earlier land as well? And in terms of launch, I think, where you mentioned that second... The new one will get launched this year.

16:28 Any update you want to provide on the, you know, older land parcels which we, you know, anyways had? Yes. No, no. So what we said is we have added 4.5 acres. That does not mean that new one will be launched first. It will be together consolidated. So I mentioned in the speech that this will only make us, in fact, more I mean, this will increase the size of the project. And obviously, it will give us the most strength. It will be the one of the largest project in that micro market because 11.5 acre land parcel. And that will only give us more better project designing and better thing, better product in that micro market. So we are not saying that it will be consolidated land parcel. So it is touching the boundary of this seven acres.

17:25 So it will be total one project of 11.5 acres. Got it. To see some progress there. Second, on the commercial project of the ODC, you know, any update you want to provide in terms of construction where we are, you know, design, when can we, see some progress in construction and what could be the delivery timeline there? So in ODC, 5th Avenue is a part of our residential project, Al Dhawya, and the commercial project. We have already started the execution because it is a one contiguous park line parcel. So obviously, commercial building is coming separately.

18:11 The construction has started and the residential building is coming separately. The one tower of residential has already started. And in Q2, we are looking to launch another tower of residential, which is Aldavia II, whatever we call it. And that also will be launched and the construction for that also we are looking to start in H2 itself. And the construction for commercial also as would have started. We have started all the entire 5th Avenue construction, you can say, have started. Interesting. Got it. Okay. And just one last, think since we now have a very sizable pipeline, pretty diverse as well across different micro markets within MMR, what should we consider as a focus from here on? I mean, should we would we keep looking at such business development opportunities while we are launching the projects that you are already signed or for now, at least for next couple of years, the focus would be to bring this project online and, you know, not too much on on the business development side?

19:20 No, no. We are very clear. If you see, in fact we are looking at our strong cash flows and our strong balance sheet, our net debt is only 0.09. And you must have seen in last two years, last year we spent almost close to INR800 crores in business development. And in H1, we have almost spent close to INR400 crores. And because our balance sheet is so strong and it's so strong cash flows, net cash flow surplus, we will continue to aggressively keep looking at more business development opportunities. And to mention, we are already on advanced stage of one or two business development deals. And you will continue to see this momentum in a similar manner without compromising on our filters, not to compromise our EBITDA margin of less than 30%, 35%.

20:17 And all those filters will continue to remain and discipline. That's all. Interesting. Thanks for that clarity and all the best. Thank you, Ritesh. Thank you. The next question comes from the line of Abhinav Sena with Jefferies Group. Please go ahead. Sir, couple of questions. So firstly, on Natian Sea Road project, can you tell us where we exactly are in terms of approval process? And can we expect the launch with ZERA by March 27? Abhinav, we are very confident. Obviously, we know that is a very important project of us. Although it represents still now only INR 3,000 crore of GDV, but for us, that is a very like a crown in our portfolio.

21:11 And we are looking to launch with RERA as early definitely before end of FY 2027. And on ground work has commenced, so when we said last quarter that we have already demolished one complete building, the demolition of the second building has also started, and I think it will be all finished within next ten to fifteen days. And we are looking to start because there are a couple of buildings, as you know. So we will very soon even start in next few days the demolition of the third or fourth building also. So that's how we are very clear. We want to definitely with the RERA, we want to launch properly before the end of FY 2027.

22:00 Okay. And so secondly, again, going back to the Bourrivli project. So now you have two projects or three projects because there used to be one in the some no development zone. Can you please help me here? Already there is a just to make you know, it already has a resort running there and a club running there. So it is not exactly exactly in this zone or something. So we are very clear that we are confident that we will be able to launch that project. Hence, we accumulated another 4.5 acre of land parcel and that we have purchased to make it bigger and better project.

22:49 And hence, that's why we have taken that and we will be launching we are looking to launch very soon even that project. Okay. So this 4.5 acres acquired this quarter, this sort of is adjoining to the previous the previous land parcel. Will make this land parcel bigger and better. Great. And the one which we had announced in the last quarter, that is a separate location altogether? Last quarter, we didn't announce any Bodhi Valley project. The quarter before, so because Last quarter, we announced maybe the Meera Road project. We have taken up from the we have taken removed from we have moved it in GDV. We have moved it in the GDV.

23:37 So it was not in the GDV because last quarter itself, we started getting feeler that we will be able to get the approvals near we are near to the approvals. Hence, we must have moved that. So that is the same project, old project, which we were not showing in GDB till now. Sir. Thank you. Thank you. Thank you. The next question comes from the line of Vasudev with Nuvama Wealth Management. Please go ahead. Yes. Thank you for the opportunity, sir, and congratulations on a great set of numbers. Sir, if I'm not wrong, we've done a new phase launch in the Skypark project. So is it possible to give, you know, details, like, what is the area in GDV that is launched here and sold in the same quarter?

24:29 Hi, Vasudev. Prashant Desai. So till now in Sunteck Skypark, have launched three towers, of which Tower 3 was launched just a few months back. And it has done pretty well for us. Our total GDV for that tower is close to around crores. And we are also going to get some extra area also in that project going forward. So yes, out of that, we have been doing sales in quarter one and quarter two both. And in quarter two, we have done a sales of almost INR200 crores. Just to correct, Vasudev, it's not exactly Tower 3.

25:16 It's a higher floors of Tower 1, Tower 2 and Tower 3, which we launched. And that launch is equivalent to one new tower. This is the extra FSI, obviously, due to the new policy, which we have got. So we have increased the number of floors on all the towers. So there are total four towers, which are supposed to be there, out of which already three towers were launched. And now what we launched, the higher floors of Tower 1, Tower 2 and Tower 3, and which total if you put it together is equivalent to one new tower. That's what. Okay. Okay, Vasil. Okay. Sure, sir. That was helpful. And secondly, sir, if you can give us the list of projects that we're expecting to complete in FY 'twenty seven, which would contribute to our P and L revenues?

26:13 So Vasudev, yes. So we are we will be doing more recognition obviously from our Sunteck One World NIGO project completion, more revenues coming from there. And then Sunteck ODC City, Avenue 1, we have got higher floors, which we are constructing, we will complete. Then 4th Avenue, we have got very large number of floors. We were waiting for that height. We have started construction there also. That also we will complete in FY 2027 itself. And then ODC, we have this commercial project, Sunteck Pinnacle, which will get completed now recently.

26:59 And then all the ready inventories, what we are looking from our BKC and other projects, that will all give us a good revenue and that we are very confident that, that will give us our H2 good momentum and results numbers from there. Sure, sir. Got it. That's it from me. Thank you. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Kamal Khetan for the closing remarks. Thank you all for taking the time out of your busy schedule to join us today.

27:48 If any of your queries have been left unanswered, please feel free to reach out to us. We truly value your continued support and looking forward to strengthening this relationship. Thank you once again. Thank you, sir. Ladies and gentlemen, on behalf of Sunteck Realty Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.