DLF Ltd

NSE:DLF

Earnings Call Transcript 2023-Q4

[Operator]

Good day, and welcome to DLF Limited Q4 and FY '23 Earnings Conference Call. We have with us today on the call Mr. Ashok Tyagi, Whole Time Director and CEO, DLF Limited; Mr. Vivek Anand, Group CFO; Mr. Sriram Khattar, MD, Rental Business; Mr. Aakash Ohri, Chief Business Officer and Group Executive Director.

[Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vivek Anand. Thank you, and over to you, sir.

[Vivek Anand, executive]

Yes. Thank you, Faizan. Thank you. Audible? Clear?

[Operator]

Yes, sir. Your audio is clear to me.

[Vivek Anand, executive]

Good. So good morning, and welcome to DLF Limited Quarter 4 and Financial Year '23 Earnings Webcast. Thank you for joining us on a Saturday. We are very happy to announce our business, which delivered record performance across all key parameters.

We'll start with the highlights of the business. Financial highlights for quarter 4 financial year '23, DLF Limited consolidated. Consolidated revenue stood at INR 1,576 crores, gross margin at 57%. EBITDA stood at INR 518 crores, net profit at INR 581 crores, reflecting year-on-year growth of 40%.

Financial highlights for financial year '23 DLF Limited consolidated. Consolidated revenue stood at INR 6,012 crores, gross margin at 57%. EBITDA stood at INR 2,043 crores, net profit at INR 2,053 crores, reflecting year-on-year growth of 36%.

The Board of Directors have recommended a dividend of INR 4 per share subject to approval of the shareholders.

During last quarter, our residential business delivered a record performance by clocking new sales booking of INR 8,458 crores, reflecting a year-on-year growth of 210%. Cumulative new launches for the fiscal were around 10 million square feet and new sales stood at INR 15,058 crores, which is again a record number for annual sales booking.

These figures obviously are on account of overwhelming response for The Arbour project, which created a new benchmark in residential sales by setting a record of being entirely sold during the pre formal launch phase garnering new sales booking of INR 8,000-plus crores. This strong response led to the preponement of a significant portion of Arbour sales that we had actually planned to release for the forthcoming quarters, approximately INR 4,000 crores.

The success of this product stands as a testament of the immense faith that our customers have reposed towards our brand and a strong endorsement towards an aspirational lifestyle. The strong business performance led to a healthy surplus cash generation, enabling significant strengthening of our balance sheet. Consequently, our net debt now stands reduced to INR 721 crores, one of the lowest levels. Further to this strong performance, our credit rating was upgraded to CRISIL AA stable outlook and ICRA AA-stable outlook during the year.

Our offerings across multiple geographies continue to be the preferred choice of customers, enabling healthy growth in our business. The residential upcycle, along with rising demand for luxury segment, enthuses us to remain committed towards scaling up

[Audio Gap]

Similar phasing as in financial year '23, which means you will see a significant portion of new launches towards the second half.

I'll now move to the financial highlights for financial year '23 of DLF Cyber City Developers Limited consolidated results. Rental income grew to INR 3,967 crores, a year-on-year growth of 19%. Consolidated revenue of INR 5,419 crores, reflecting a 19% year-on-year growth. EBITDA at INR 4,148 crores, year-on-year growth of 19%. Net profit of INR 1,429 crores reflecting year-on-year growth of 43%.

[Audio Gap]

Destination and hence, continue our expansion plans in this segment across multiple markets. We continue to work extensively towards our upcoming retail destination, Mall of India, Gurgaon, for which planning is at advanced stages.

We continue to remain a positive outlook for both our businesses and remain committed to delivering consistent and profitable growth by bringing quality new offerings across multiple markets. We believe that our business, backed by a strong balance sheet and healthy cash flows remains well poised to deliver across all parameters.

Right, with this, I end here, and we are now open for questions and answers. Thank you.

[Operator]

[Operator Instructions]

[Audio Gap]

[Saurabh Kumar, analyst]

Residential part one is how would you think about your sales guidance for next year after this INR 15,000 crore sales this year. And should we assume that similar 60%, 65% sales through velocity that you have achieved this year? Secondly, specifically, in terms of Arbour, why would you not hold on to inventory if the product is so good? Was there some issues on the taxes being better into this financial year, which led you to this decision? And on the office side, basically, what were the mix of the SEZ, non-SEZ in the portfolio? Are you seeing some pressure on the SEZ side there? And on the retail side, you've said that the malls will double in the next 4, 5 years, what are these products? So a bunch of questions.

[Vivek Anand, executive]

So Saurabh, good morning. On the guidance piece for next year, that's a tricky one, frankly, because I know you are possibly leading us down a slippery part. So the way we look at it, frankly, we try to be very balanced about it. I think in some sense -- and then I'll get Aakash to chip in. I think the Q1 and Q2 are really linked to each other. In all fairness, our estimation and our plan on Arbour was very transparently that it's an INR 8,000 crore launch. We'll possibly do between INR 3,000 crores to INR 3,500 crores in Q4 and the balance across end Q2 of the next fiscal.

I think as -- and I request Aakash to chip in. I think even Aakash, with all his decades of experience was...

[Audio Gap]

And they all have signed the agreement to sale, which is under RERA. Even that threshold was met 100%. So really, frankly, we had no option, but I mean, I don't think we had -- we had any rationale or frankly, almost any logistical opportunity for us to actually defer Arbour sale across 2 or 3 quarters. I mean it all came in 1 quarter. I think it's obviously a delight. It's also in all fairness left a lot of our own friends and acquaintances unhappy who could not get the allotment, and that's fine. But really, [Foreign Language] I would say that our normalized sales for this year should really have been in the range of 10,000 to 11,000. It just happened to INR 15,000 crore because this INR 4,000 crores preponement happened. So we'll still keep our head guided. And we'll see that next year, we should still be looking at a...

[Audio Gap]

[Aakash Ohri, executive]

Absolutely. I think just to add, Saurabh, I think this year, we've launched 10 million square feet of products adding up to almost a sales potential of INR 15,000 crores. I think we got a...

[Audio Gap]

Ambition is very clear, really to really grow from here, there is no doubt about that. But having said that, as Mr. Tyagi explained, from a guidance point of view, it will be 11,000 to 12,000, which we believe is achievable, and we will certainly try our best to really beat that estimate.

[Vivek Anand, executive]

So Saurabh, on Arbour, let me just also comment. Now you asked a question about was this done for any tax benefits and all, let me tell you, I was in the thick of things then. Short of being lynched and kind of taking a call on certain things on the ground. There was literally -- there was nothing one could do. It was such a pleasure, ladies and gentlemen, after a long time to see this tsunami of owners, and I mean, prospects and CPs and partners.

[Audio Gap]

Group housing product in Gurgaon. A lot of work, seating had been done. As you know, compliance-related post data only we can get down to doing stuff. So...

[Audio Gap]

In the interest of the customers' benefit first, a call was taken to do that. So I don't think there was any -- I mean, there are -- Mr. Tyagi and Vivek have already talked about it, but I don't think there is any tax-related matter. But I think it's very grateful for an opportunity like this. You should have been there to kind of live that moment with us. But I think there are no doubts. The whole world and the mothers were here. It was a big endorsement to the DLF brand. I think that's all I'd like to say. But the celebrations here have been very muted, as per Mr. Tyagi's strict instruction. So I don't know whether to celebrate or to take your compliment. So...

[Ashok Tyagi, executive]

So [indiscernible]

[Vivek Anand, executive]

So moving on to the rental portfolio. Saurabh, your question was SEZ...

[Audio Gap]

In terms of rental income falls to below 20%, 22%, 20-odd percent. Now SEC is a little concerned in the market because of the sunset clause. In our portfolio, our SEZ has maintained an occupancy of about 50...

[Audio Gap]

And the combined vacancy is about 10%. Now while this is happening, we have been advocating and socializing through the CII and the NAREDCO and the Asia Pac Real Estate Association with the Ministry of Finance, Department of Revenue and with the Commerce Ministry. And I am given to understand that they are in the final state of amending the SEZ Act rules, which is within the power of the commerce minister, which will extend the building-wise denotification to a floor-wise denotification.

I also understand that the Ministry of Commerce is going to lean on the development commissioners to ease the speed at which the denotification is allowed. So there is little pain, I would say, for the next few months, but I don't see it lasting for long.

Now this will have 2 impacts, one very positive impact and one a slight negative impact. The positive impact is that it will bring very high-quality real estate to the market with the ability to lease. And developers who have these developments in good locations and have credibility will do well. Marginally, especially in, say, Hyderabad, there will be a site subdued rentals for about 2, 3 quarters before some of the stock gets absorbed.

So whilst there is a temporary blip, but I believe it's very, very temporary and when the Ministry of Commerce comes out with the new guidelines, I think we will do well. In terms of our budgeting, et cetera, we have been purchased for the next year. And we are going with the assumption that SEZ vacancy will remain, by and large, similar. It will improve by 100, 200 basis points.

On the mall space, yes, doubling is very much on the cards. If you have seen the analyst presentations, 2 million worth of retail is under -- about 1.5 in retail is under construction in the books of DLF. We've got the Avenue Mall, Goa, which is construction is going on full swing. And the 2 high street shopping centers, one in DLF 5 and the other near DLF-Midtown, the construction is in full swing. And our plan for Mall of India, Gurgaon, has now reached at quite an advanced stage. And I dare say that when we meet next time, we'll probably share the news with you that construction is either commenced or is about to commence.

So if you take about 2.6 million -- downtown -- sorry, Mall of India, Gurgaon, and you take the existing developments that are happening, the total automatically is roughly double of where we stand today at between 4, 4.5 million square feet.

Now one more point on the expansion I would like to share, that in the Vasant Kunj Complex, where we have 2 malls, The Promenade and The Emporio, the total size of these malls is about 800,000 square feet, slightly below 800,000. And we have the potential FAR to do another 500,000 square feet in that complex. And that's right in the center of town. Unlike some of our competitors, we have yet not utilized this FAR. And we plan to -- we are also sort of going through a master planning of those sites. But we plan to take it up after the construction at Mall of India has commenced and has stabilized.

Similarly, at DLF Avenue in Saket, we have the ability to construct another 200,000 square feet of GLA, which we shall do at a later date because as you know, we have just renovated DLF Avenue about 2, 2.5 years back, and we would let it through for some time before we take up that GLA.

[Operator]

The next question is from the line of Pritesh Sheth from Motilal Oswal.

[Pritesh Sheth, analyst]

Firstly, congratulations on a great year and congratulations surpassing everyone to be the largest developer in residential this year. My first question is, again, on Arbour, and this is with regards to pricing rather than the demand. So what's the strategy? What's the strategy here? Because since our last Investor Day last year, it came across that we are very optimistic on the pricing part. While in Arbour, we started probably at a lower rate than the market was expecting. And we have sold at around 1,700, 1,800 per square feet. I'm not trying to criticize, but just wanted to understand the strategy from here on. Were we trying to suppress the price increase that was happening in Gurgaon and potentially would have impacted the affordability in the future? So just wanted to understand your thoughts on that.

[Aakash Ohri, executive]

So as for others concerned, again, with this particular thing, as I said, it has been great learning. So as far as the price points are concerned, we deliberated, it went back and forth. See, when you're sourcing leads and when you're setting up a certain agenda, you should always set it up at a higher price point because we build it from a ground-up story is there are more disappointments than anything else. So everybody has to plan their budgets. So when you are doing something like that, you'll always -- because even your numbers aren't finalized and all that, so you are kind of sussing the market out, but you always put it out in a way as transparent as possible and say you're going to be aware about a certain number. So that's what we did.

But with regard to -- see what happens is there are 2 things here. If you [indiscernible] projects where other developers have launched a month after when the collections begin, that's when it actually gives you the real picture of what the demand is, you know, and that's when most of the cancellations and all that happen. So that speculation is something and then there is this [indiscernible] people back it up with money. So that's one.

With regard to Arbour again, in terms of price strategy, that area, let me tell you, we are still about at least about maybe 20%, 25%, if not more, higher than what that Golf Course Extension area demanded or traded at that point in time. So to be fair, I think we could have, to your point, gone up to maybe 40%, 50%. But I think sometimes sales is more important. And to create that a certain amount of hype and actual test out the market is more important than is playing around with price points. So I think that's where it was.

As it stands in the Golf Course Extension, I can talk about 14th of February. I don't think there was any trade that was happening beyond 14,000 irrespective of what people were saying. They would start to launch a product at [ S-17 ] and then discount it by 3,000, 4,000. So really, I don't think the prices went beyond that.

So therefore, for us to come on, to launch something at an 18,000 was -- for that area was a new benchmark. And please understand there is a clear distinction between Golf Course or DLF 5 or Golf Course Road versus that. So yet we launched, I thought the pricing was pretty aggressive at 18,000. Now that you look at it in retrospect, yes, could you have done better? I'm sure we could have done more. But I think we'll do much more in the future. So that's okay. But I think -- I hope I've been able to explain that to you.

[Ashok Tyagi, executive]

And also for a relatively new micro market, in retrofit it wasn't a bad idea to lead some markup for the customers also. I mean it also sort of tells them that they are almost making a certain mark of almost within 90 days of buying.

[Vivek Anand, executive]

And also just to add, as Aakash rightly said that in that micro market, our pricing is almost 15% higher than the market. I would also like to also add on the quality of sales. Pricing cannot be just set in isolation, right? So if you really look at the quality of sales, we've been able to moderately sell the entire [indiscernible] in 3 months, but we've been able to actually collect 10% within the first 30 days. We've been able to sign agreements with all 1,134 customers in the first 30 days. And we are happy to share that our end-user estimation is higher than 55%. So I think you have to really look at everything in totality and not just one element of sales, which is price.

[Pritesh Sheth, analyst]

And thanks for raising that end user point. So of late I've seen company marketing it's project in Singapore and Dubai. So we have started this obviously, NRI marketing as well, would have been prevalent earlier as well. But what's the strategy there? I mean would those demand would still be considered as end user demand considering that they are really NRI investors, and they would always settle there? So your strategy on that.

[Vivek Anand, executive]

Yes. So NRI has contributed to about 20% of the business. And -- we have thankfully -- I can -- I have to state we have an NRI who returned from Singapore, Mr. Sriram Khattar, he invested in DLF Property and lived in that. So we have millions of examples like this. The NRIs -- I'll tell you something. This constancy, we were not aggressively targeting after having done that maybe previously. When I remember when I used to run golf and other businesses, they would welcome us with open arms and all that. And it was a great relationship. After that, we kind of stepped back from that market, colleagues who were kind of running it earlier.

So when I saw the opportunity right now for the last 1 year specifically, there was constant and consistent feedbacks and demand from the NRI market saying that by the time they get prepped up, it's sold. They never get the inventory. So I've tried it out in a project called Grove in Q3, when we spoke about, I tried it out in The Valley Gardens in Panchkula and [indiscernible], which you all are aware of. And this time, we went a little more aggressive. Our NRI contributions have been almost 14%, 15% if I look at 15,000, but actually, we started -- if I look at the 10,000 guidance we've given, it's almost 20%. So that is a market which is ready. That is a market which is wanting good real estate investments to make.

And for the future, I mean, I have seen so many NRIs come back and want to settle in areas, which are fully provided for security, safety aspects that they look at, green, sustainable. I think that's what DLF stands for. So there is a -- I'm seeing a tremendous demand from that market. I've been making those statements. I know they've got a chance to read them. But whether it's the Middle East, U.S. is giving us one of -- U.S. is one of our biggest markets. And then, of course, you've got Southeast Asia.

So I think this time, there -- there was a concerted plan from Q1 to target the NRIs. It's up on a lot of [indiscernible] through. And this year, again, we'll continue the trend. But NRIs have -- what I think right now is they always love to invest. And they've been -- other than the Indian markets where they lost money previously, they kind of spent their money or wanted to invest all over the world other than India. I'm seeing that trend change over the last year, 1 year, 1.5 years and a very hard thing to do that. And we are going to be continuing to be there in those markets because they're very precise. They know what they want. There are no hassles. They work like those countries. The payments come on time. The agreements are done, either they are on or they are not. So it's a very clear and clean system of working with the NRIs.

[Aakash Ohri, executive]

And Pritesh, one more thing you mentioned about end users. So please appreciate anybody who is buying a INR 8 crore property in most cases, it could be his second property, it may not be his first property. When we say end user, we are looking at people who are looking to buy this property and holding it for a very long term versus short-term investors, who will buy, pay 20%, flip it over, which used to be the overwhelming trend set is about 7, 8 years back. These are people who are buying the properties, a serious investment decisions, either for staying or for renting as a second property or whatever. But we are not looking to flip it over short to medium term. That's what end user really means. You mentioned that if somebody is still in Singapore, how can he end use them. So I'm just clarifying that.

[Pritesh Sheth, analyst]

Got it. Got it. And one last question on the launch pipeline for next year. It really looks too good. I've seen like around 4 million, 4.5 million square feet of projects being added this year. If I adjust the second phase of Arbour, so I would like to know what are those projects that we have added to our pipeline. Probably Crest 2 is one, but apart from that.

[Vivek Anand, executive]

Okay. So the estimate for the current year is 11 million square feet. So let me start with luxury. Luxury, we've given an estimate of close to 5 million square feet, of which we will have a residential housing coming up in DLF 5. That will be close to 3.5 million square feet plus another [indiscernible] coming up in May. That's for luxury. I'll move to premium, which is approximately 5 million square feet, which includes DLF City, Garden City Floors and residential [indiscernible] with New Gurugram. Then we have projected some SCO [indiscernible] Panipat and New Gurugram. And finally, it's Noida IT Park and Data Center. So those are broadly the project and the locations, which are part of this [indiscernible].

[Pritesh Sheth, analyst]

Your voice cracked a bit in between. So if I got it correctly, there is a Chennai project, which is planned in premium and...

[Vivek Anand, executive]

Chennai is a luxury project.

[Pritesh Sheth, analyst]

Yes. Okay. Luxury project. And there is a residential housing in New Gurgaon that too is going to be a high-rise project, right?

[Vivek Anand, executive]

Yes, that's right. It could be a mid to high rise. It won't be independent floors, but it could be mid- to high-rise. Let's see where exactly the building will finally settle in.

[Operator]

The next question is a text question from the line of Biplab Debbarma from Antique Stockbroking.

As per news report, Cognizant is cutting back on 11 million square feet in office space in order to save cost. Cognizant is one of the top clients. Is Cognizant vacating DLF offices too? Would it be a new trend?

[Sriram Khattar, executive]

Well, let me answer this question at a little broader level before I come specifically to Cognizant. See, after the COVID, there are 2, 3 things that have got established. One is that India's digital backbone is very strong. Two, India has a compelling case for cost competitiveness in terms of English-speaking young techies on one side and global quality real estate at a fraction of a cost on the other. So the long-term trend does not change at all.

The other is that we, in DLF and my brethren in the industry, are also seeing a shift from third-party IT service providers that too who was -- who have been very extensive in their approach and not focused on one side. The trend moving to global capability centers, which are much more stronger and much more sort of sticky.

Now Cognizant has had a bad run. And in our portfolio, they have given up over the years about 30%, 35% space, primarily in Chennai. Compared to what I understand about 60% space in some of the other buildings that they occupy. Does it impact us? Until now, no. Will it impact us in future? Yes, there will be a marginal impact of 5, 6 months before we lease the place again. And please understand that as and when, say, Cognizant vacates, our mark-to-market rentals are about 18%, 20%, 25% higher depending on the location compared to the existing rentals today.

[Vivek Anand, executive]

Let me just reiterate what Sriram said. I think a medium-term trend, you will see is a declining over time share of the third-party IT, ITS providers with respect to the captive [ DCCs ]. That I think is just a trend that is here and you can't deny that.

[Sriram Khattar, executive]

Yes. So just to take this logic a little forward, we have had 3 new buildings in the last 3, 4 years, and you're aware of that. One is Cyber Park. One is Downtown 2 and 3 in Gurgaon, which is 1.5 million square feet. And one is about 3.3 million square feet in Downtown Chennai. The total of these buildings put together is about 8 million, 9 million square feet. And I dare say that we don't even have a single third-party IT service provider in these. This has been predominantly taken up by the global capability centers and the chance in which the take-up is larger. So in these sort of 8, 9 million square feet, the total number of tenants are about 30 to 35. That's a very positive trend that we see in our portfolio.

We also see that the demand that is coming up and the potential employees that are there are quite strong from the global capability centers rather from the third-party IT service providers, who definitely take up space, but the volumes that they take up are far lower. And what moves the needle is the space taken by the global capability centers and not by the third-party providers.

[Operator]

Sir, we have one more question from the same participant.

You're planning to launch 11 million square feet valued at INR 20,000 crores. What would be the ticket size?

[Vivek Anand, executive]

Yes, it ranges -- it will possibly be in a range of INR 2 crores to INR 15 crores, I'll say.

[Operator]

The next question is the text question from the line of Parvez Qazi from Nuvama Group.

Of the 2.2 MSF expected to be completed in Downtown Chennai in FY '24, how much has been prereleased?

[Vivek Anand, executive]

Yes. So Downtown Chennai is 3 towers, totaling to about 3.3 million square feet. We have out of this already preleased about 2.8, 2.9 million, including the -- some bit of hard options, which 2 very large tenants have there. And so about 400,000, 450,000 square feet is left to be leased. I think it's been a very positive development, and it's been to about 5, 6 tenants only. And we are just now starting to plan for the -- we have another 3 million to 3.2 million further to construct there, and we have initiated the process of planning to start the construction of those. It will take a little time for the -- for this project to complete, say, another 8-odd months. And then we will -- we should commence the construction of the balance.

[Operator]

The next question is an audio question from the line of Kunal Lakhan from CLSA.

[Kunal Lakhan, analyst]

Firstly, congratulations on a great quarter. Secondly, when I look at your launch guidance of 11 million square feet versus 10 million square feet last year, considering the overall market is doing so well. And I mean even a peer group, like, say, M3M, clocked record sales this year. So the underlying demand in the market is pretty strong. And we have practically sold out or like substantially sold out whatever we have launched. The 11 million square feet guidance, are we being, again, very cautious in terms of new launches here?

[Ashok Tyagi, executive]

So what I'd say, Kunal, is that I think, especially when dealing with relatively premier end of the market players like us and maybe a couple of players others also in the country, maybe it's also high time that the analyst community moves away from its obsession with 1 million square feet number. It's a completely irrelevant metric really. We do it because you guys want it. I think we should be looking at the presales value and most important, the margin that we are going to generate.

I think from a margin standpoint, really that we have planned to generate by new launches next year, I think we find, hopefully, a very healthy clip growth over what we did this year, right. I can do 20 million square feet of [ plotted ] in New Gurgaon, Indore and Chandigarh, which will fill the [indiscernible]. But honestly, those things won't generate money in that format. So I think we just need to be cautious. Also, please appreciate that, in some cases, if you calibrate your launch as well, you're obviously doing what you need to do from a sales and a margin standpoint, but there's also price accretion happening in those markets, which really, with a little bit of patience, tends to pay off disproportionately.

This INR 19,000 crores we are launching really. 11 million is not the metric. INR 19,000 crores is the metric that we should look at.

[Vivek Anand, executive]

Also, Kunal, just to add to what Mr. Tyagi said, last year, our average price realization was almost INR 15,000 a square feet. And this year, it's improving or increasing to almost close to INR 18,000 a square feet, right? So I think it's the way we see it, it's more of a value gain than a volume gain.

[Kunal Lakhan, analyst]

Understood. Understood. Just a follow-up on your new launches, which you highlighted for '24, I did not hear about One Midtown. Is it scheduled for next year?

[Ashok Tyagi, executive]

So One Midtown is this year. In fact, we preponed it, Kunal, from Q2 to Q1. So you will -- most probably, it will be end of -- we planned it end of this month. So it's going on well. One Midtown is the last tower 3. Rest [indiscernible]. So it's going on. Yes, so that [indiscernible] from Q1.

[Kunal Lakhan, analyst]

Okay. Okay. So basically, the luxury segment launches would have -- 5 million square feet would have 3.5 million square feet of Phase 5 and then One Midtown and Chennai Luxury?

[Aakash Ohri, executive]

One Midtown is the part of the inventory of INR 7,000.

[Kunal Lakhan, analyst]

Secondly, just again, a clarification on the rental portfolio. So you did highlight that in the newer projects, what has been the contribution from the third-party IT providers. But on an overall portfolio basis, how much would be occupied by third-party IT providers? And are we worried on that side?

[Ashok Tyagi, executive]

I would not be able to give you a figure off hand, but I can just say that the third-party service provider as a percentage of the total portfolio is declining. Are we concerned about that? The answer is no. The reason is that within third-party service providers, it is not that everyone is weak. There are reasonably strong clients there also. And to the medium-sized third-party providers, who do niche work, like in the area of health care or property management continue to do very well. And if any hiccup happens in any sector there in the delivery sector, the reflection of that on the portfolio is minuscule. So if 1 or 2 or 3 or 4 or 5 of the weaker ones leave, it does not move the needle on the portfolio as a whole.

[Kunal Lakhan, analyst]

Sure. And just a follow-up on that, what would be the March '24 exit rental?

[Ashok Tyagi, executive]

March '24 exit rentals should be in the ballpark of INR 380 crores to INR 400 crores, INR 420 crores a month.

[Vivek Anand, executive]

So the exit rental rate on an annualized basis, it will be about INR 4,800, INR 4,900 crores.

[Operator]

The next question is a text question from the line of Mohit Agrawal from IIFL. Two questions. How is the demand for Camellias since April and changes to capital gains loss?

[Ashok Tyagi, executive]

Yes. So Camellia's demand. Now as you know, we're in the fag end of it, and it's been established, pretty well received, good references, everything going on pretty okay. In fact, the price points that you may know now have been increased to INR 50,000 a BSP, basic sale price, for lower floors, 8 and below; 9 and 12, about INR 55,000; and 14 and above INR 60,000 a square foot plus [ PLCs ] and everything else, which basically takes it to about anything between INR 45 crores to about INR 55 crores in apartment costs. These are the regular ones. And then, of course, the 11,000 on all are even more. So the demand has been pretty good, and we've been able to kind of maintain our price points also. So as far as Camellias is concerned, that's been good.

With reference to your point about capital gains, I didn't see that much happening in Camellias, the 31st and before. They have 2 years to invest. So probably that will be there. I don't know. But at this point in time, we've got a very healthy demand for Camellias, which is continuing. And the last whatever number of apartments that are left we'll focus on that also. But the price points have considerably gone up since we last spoke to almost about I think INR 15,000 a square foot, which is quite a big jump.

And if you all recall 18 months back, the price was INR 37,500 a square foot, which is now the same. As I just mentioned, there's anything between INR 50,000 to INR 60,000. So that's going on. But reference specifically about capital gains, I haven't seen that kind of a push from that side. But yes, hopefully, I mean they have the time. Everybody has seen it. As and when the money has come in, hopefully, I think we are on the top 3 call. I think we are on the top 1, 2, 3 properties to be invested in India. So yes.

[Operator]

We have the second question from the same participant.

How do you see cash flows next year? What do you plan to do with operating cash flow in FY '24 now that you are nearly net debt-free?

[Vivek Anand, executive]

Okay. Thanks, Mohit, for those questions. So on the cash flows, let me start with collections. So last financial year, we had a good year on the collection side. We collected INR 5,300 crores of collections we had, which was almost a growth of 25%. And as I look into '23, '24, I expect the same run rate will continue. So we expect our collections to grow 20% to 25% this year. Having said that, as you know, we are scaling up our business. So there is a significant outflow, which is happening both on the construction and the construction including the CapEx side. So we expect our construction outflow to increase by almost 50% during the financial year.

What do we -- how do we really plan to utilize this cash? I think that's something which is we've been saying very, very clearly that our first priority is to put cash behind growth, right? And we will continue to do that. The second priority is to really continue to reward our shareholders. And we've done that this year, as you know. And the third priority is to really repay the debt, right? So I think in that sequence, we'll continue to really allocate our cash what we generate year-on-year.

[Operator]

The next question is an audio video question from the line of Abhinav Sinha from Jefferies.

[Abhinav Sinha, analyst]

Sir, congrats on a [indiscernible]. Just following up on the previous question on utilization of the cash. So we have large land auction coming up in Gurgaon. Any thoughts on participating in the same?

[Ashok Tyagi, executive]

So as far as the land auctions in Gurgaon -- I don't know what you are talking about is the large land auction.

[Abhinav Sinha, analyst]

HSIIDC one.

[Ashok Tyagi, executive]

The Global City, in all fairness, at the price point that Haryana is talking about, we do not believe is a matter of interest to us as of today, frankly. But HSIIDC and other Haryana bodies, keep on coming up with localized auctions of interesting land parcels, some of which we do occasionally participate in. But those are frankly far smaller numbers. The global city is not something we are actively looking at right now.

[Abhinav Sinha, analyst]

Okay. Sir, second question on the premium pipeline. So the average pricing that you sort of [indiscernible] luxury is around 25,000. Is it fair to believe that the Phase 5 launch or Crest 2 could come closer to 30,000? Is that the right thing look at now?

[Ashok Tyagi, executive]

Yes, I wouldn't want to speculate on that right now.

Nice try on the same.

[Operator]

The next question is from the line of Sameer Baisiwala from Morgan Stanley.

[Sameer Baisiwala, analyst]

Congrats on a great quarter and the year. Just quick 2 questions. One is, do you have any more land parcels in Golf Course Extension or any plans to augment over there? And second is, in the longer term, how do you think about the retail or the mall portfolio that you are expanding?

[Ashok Tyagi, executive]

I'll answer the first one and then defer to Sriram on the second one. So I don't think we have an active land parcel of any sizable scale on the Golf Course Extension Road right now, do we? So we have -- sorry, we have one more land parcel here in Sector 69. We also have a very major land parcels closer to the Southern Peripheral Road, frankly, which actually runs into like almost a couple of hundred acres, Sameer Ji. So I think those are clearly -- I mean, both of those are on the active list of planning right now, frankly. And maybe a part of it could come up in the coming fiscal.

What you said about, are you looking at acquiring more space there? I mean, as you know, because of a couple of developers on that -- on the Golf Extension Road, who have been under some degree of stress regulatory or financial, there have been a few land parcels, which keep on coming up through the banking auction system [indiscernible], et cetera. So I mean we are -- at least there are 1 or 2 parcels, which we have been interesting in the past, nothing specified yet. And if something does, we'll be more than happy to come and disclose. But right now as we speak, there's nothing that really, frankly, is looking near closure.

[Sriram Khattar, executive]

On the retail portfolio, at a macro level, the retail in India is going to be quite robust in the years to come because of this year, economic growth that is taking place in the country. And moving from -- to the middle class and from middle class into the upper middle class on one side, to within retail, organized retail is going to do better than the retail as a whole. And the percentage of offline sales are -- have not gone up for the last 2, 2.5 years, and I don't see them going up either.

So organized retail in good locations has in our view a very bright future. And if I can hazard to take a guess on the market as a whole, retail as a portfolio in terms of growth will do equal to or better than the growth of the offices portfolio. And that's why we embarked on this journey of about 18 months back on doubling our retail portfolio from the present, about 4.5 million to about 9 million square feet.

[Sameer Baisiwala, analyst]

Sir, you will retain the retail portfolio within DLF, or would there be plans to spin it off? And to the earlier answer [indiscernible]. So there's a couple of hundred acres of land Southern Peripheral Road, like you mentioned, which sector is that?

[Ashok Tyagi, executive]

Yes, yes. So I know there's on 74, 76, 77. So in subsectors. And there's also some of the commercial, large [indiscernible] residential. I think it's a combo of both resi and commercial.

[Sameer Baisiwala, analyst]

Okay. Got it Yes. And just on the retail portfolio, sir?

[Ashok Tyagi, executive]

So on the retail portfolio side, the retail portfolio that we are developing in the DLF side, frankly, you're right. I mean, most probably we would want to transfer it to hopefully Cyber City. But as you know, that's a decision that has to be taken jointly with our shareholders, GIC. So frankly, right now, we are developing it once it's complete and leased out so that a clear cap rate-based transfer price can be worked out. I think at that time, we will engage with Sriram and GIC on trying to transfer that. [Foreign Language], but hopefully, they will.

[Sriram Khattar, executive]

But to for clarify, out of the about 4.5 to 5 million growth, 2.623 million is within the DCCDL portfolio. What is outside the DCCDL portfolio is about 1.4, 1.5 million.

[Ashok Tyagi, executive]

And Sameer Ji, like M.S. Dhoni, you dropped yourself down in the batting order.

[Operator]

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Ashok Tyagi for closing comments. Thank you, and over to you, sir.

[Ashok Tyagi, executive]

So thank you once again, everybody, for taking out time on a Saturday and coming up and having a very nice chat.

I mean some of you who have been with us for a long time, I think really, to some degree, for a long time, there were a lot of business strategies that we have been trying to pursue. We had tough times, as you know, through the last decade in many years, both events local to us as well macro to the market.

I mean that's what it does appear that I think we are now hopefully hitting our peak stride both in the DevCo business and in the RentCo business. And the RentCo business, I think we hopefully run possibly the best office and retail portfolios that exist right now. And I think our DevCo team, we are hitting a good stride now. And hopefully, our debt problem is conclusively behind us. And the cash generation is now happening on a regular basis.

So I mean, we just hope that fiscal 2024, we can sustain the gains that we have made in the last fiscal and continue to strengthening ourselves on these things and the market holds up, even the interest rate cycle, which at one time was sort of beginning to loom in as a major challenge. Hopefully, if not at the peak, we are possibly closer to the peak than we have been in the last 12 months. And I think at some stage in 6, 9 months down the line, things should begin reversing.

So I think really, both from India really is, I think, on the cusp of a very major economic upswing. And hopefully, the real estate sector in both offices, retail and residential, should all benefit from it.

So really, with that optimism, I thank you again, and -- and thank you.

[Vivek Anand, executive]

Thank you.

[Sriram Khattar, executive]

Thank you.

[Aakash Ohri, executive]

Thank you.

[Operator]

Thank you. Ladies and gentlemen, on behalf of DLF Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.