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Godrej Properties Ltd
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Ladies and gentlemen, good day, and welcome to the Godrej Properties Limited Q4 FY '24 Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Kshitij Jain from Godrej Properties. Thank you, and over to you.
Yes. Hi. Good afternoon, everyone, and thank you for joining us on Godrej Properties Q4 FY '24 Results Conference Call. We have with us Mr. Pirojsha Godrej, Executive Chairperson; Mr. Gaurav Pandey, Managing Director and CEO; and Mr. Rajendra Khetawat, CFO of the company.
Before we begin this call, I would like to point out that some statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the results presentation.
I would now like to invite Mr. Godrej to make his opening remarks. Over to you, sir.
Good afternoon, everyone. Thank you for joining us for Godrej Properties fourth quarter financial year '24 conference call. I'll begin by discussing the highlights of the quarter, and we then look forward to taking your questions and suggestions.
I'm happy to share that GPL has registered its best-ever quarter and most operational parameters in the fourth quarter. In terms of new bookings, Godrej Properties achieved its highest-ever quarterly and annual sales, booking values for the quarter stood at INR 9,519 crores, up 135% year-on-year over what was at the time out best-ever quarter, and 66% quarter-on-quarter over what was also our best-ever quarter at the time.
This was the third consecutive quarter and fifth time in the last 6 quarters that GPL is at its highest-ever quarterly sales benchmarks. Booking value for the full year 2024 stood at INR 22,527 crores, up 84% year-on-year with the previous best-ever year and 61% above the guidance we provided at the start of the year. Both the quarterly and annual sales values to the higher-ever announced by any publicly listed real estate developer in India until date. This sales growth was on the back of both an improving project mix as well as strong volume growth of 31% in financial year '24. This strong growth is attributed to an extremely strong customer response to some of our new launches during the quarter. Godrej balance and NCR achieved a booking value of INR 3,008 crores and Godrej reserve in MMR achieved a booking value of INR 2,693 crores.
Both of these projects are the best-ever launches for Godrej Properties in these respective markets. In financial year '24, 4 projects, including Godrej Aristocrat launched in quarter 3 and Godrej Tropical Isle launched in quarter 2 achieved over INR 2,000 crores of booking value, and all 4 of these projects are owned outside by Godrej Properties. Godrej Properties bookings in NCR in the financial year '24 grew 180% to just over INR 10,000 crores, and Godrej Properties bookings in the Mumbai region grew over 114% to INR 6,545 crores.
GPL also achieved its highest ever cash collections and net operating cash flow. Collections were INR 4,693 crores for the fourth quarter and INR 11,436 crores for the financial year, leading to net operating cash flow growth of 16% year-on-year to INR 2,670 crores in the fourth quarter and growth of 23% to INR 4,334 crores for the full year. This was aided by delivering 6 million square feet across 7 cities in the fourth quarter, taking the annual value of deliveries to 12.5 million square feet, another record milestone for Godrej Properties.
The strong cash collections allowed GPL to reduce net debt by over INR 700 crores in the fourth quarter despite strong business development investment. With a large number of project completions in the last quarter, GPL recorded its highest-ever reported net profit numbers on a quarterly and annual basis. Our total income for the fourth quarter increased by 1% and stood at INR 1,952 crores. Our EBITDA increased by 3% to INR 649 crores, and net profit increased by 14% to INR 471 crores over a very strong base quarter.
For financial year '24, our total income increased by 45% to INR 4,362 crores. EBITDA increased by 20% to INR 1,197 crores, and net profit increased by 27% to INR 725 crores. From a business development perspective, I'm happy to announce that Godrej Properties entered the Hyderabad market in the fourth quarter with 2 land deals with an estimated booking value potential of nearly INR 5,000 crores.
The Hyderabad market is amongst the largest and fastest-growing residential real estate markets in the country, and these acquisitions are in line with our strategy of strengthening our portfolio across the key markets in India. In all, we added 4 group housing projects with an estimated booking value of INR 12,800 crores in the fourth quarter of the financial year and a total 10 new projects with an estimated booking value of just over INR 21,000 crores in the full financial year.
We believe financial year '24 has been a transformative year of the Godrej Properties with high -- huge growth in bookings and especially in GPL share of bookings. Our hypothesis of raising capital 5 years before deploying aggressively into business development when market conditions were favorable for investments and using these new projects to deliver exponential growth in bookings if we believe playing out exactly as we had hoped.
While reported cash flow and earnings growth has been strong, we believe these parameters will see a sharp upward trajectory in the years ahead, which is the high bookings combined with GPL's increased economic interest in each project. The pro forma P&L details including in our investor presentation provides a sense of the growth potential in the P&L as the projects launched our chief revenue recognition, largely in financial year '27 and financial year '28.
For financial year '25, we hope to grow residential bookings by over 20% over a high base to INR 27,000 crores through the launch of a large number of exciting new projects combined with strong company sale. This, combined with continued strong project delivery, should allow us to build on momentum generated in financial year '24 in strong operating cash flow generation. On that point, I conclude my remarks. Thank you for joining us on the call. We would now be happy to discuss any questions, comments or suggestions you may have.
[Operator Instructions] We'll take our first question from the line of Abhinav Sinha from Jefferies India.
Congratulations on the strong numbers that we have seen. Sir, with the scale that we have achieved on sales now, I mean, what's the medium-term target looks like? I know -- I mean, you've given a strong guidance for '25. But what's the view from a 3-year basis now?
Thanks, Abhinav. I think Page 3 is more demanding now than it has been in past years. So I think we'd like to stick with our guidance of 20% growth over medium term. Of course, it might get calibrated upward or downward based on market conditions and how strong business development additions from here are. But over the next few years, I think the 20% number remains the aspiration.
Okay. And for FY '25, if you can help us, I mean, on the guidance, how much can we say volumes versus pricing?
I think it will depend a little bit on the [ bricks-and-mortar ] approvals, et cetera comes to, but if you look at it over the think's been a fair mix of growth in volumes, which last year was 31% and year before that 40% and I think pricing is in 2 parts, it's important to remember, one is actual pricing growth for the same projects because of market conditions.
I think a lot of GPL growth has come from repositioning the company into a stronger set of locations and the pricing growth that is a company that I tell you, you really have to break up the booking value growth into 3 buckets. One is kind of volume growth. The second is repositioning or kind of improved project portfolio growth, and the last is like-for-like pricing growth. And I think all 3 will continue to contribute in the year ahead.
Okay. Sir, also, if I may ask a little bit of clarity on the family agreement that just came out, yesterday. So a few questions there. Firstly, is it -- can you clarify the MOU that we have for the Vikhroli development? It will continue beyond the 6-year exclusivity period because I understand there is some sort of apprehension out there.
Thanks, Abhinav. Yes, it's very clear that VM has already been in place for many years and it will continue exactly as is and is applicable for the entire Vikhroli and there's no time-bound period to which it is applicable.
So coded properties will act as the development manager in partner Godrej & Boyce, which is the land owner and developer of the development. So we greatly look forward to playing a role in that project. And we're quite happy that after several years, in Q4, we actually had a launch under this development management relationship. We launched the project called Godrej Vistas, which is off to a good beginning. So hope to see a lot more activity in Vikhroli in the years ahead. But just to be very clear, there's certainly no time limit after which the DM doesn't continue.
Great. And sir, just the last question from my side. On the exclusivity part also, so how does the usage of brand name work, say, in the next 6 years and even beyond that? I mean how do you see that as such?
So we have a part of this understanding for all each side existing categories, there is an agreement that we won't use the brand and won't compete with each other in those places. So let me clarify how this works.
For the first 6 years, Godrej & Boyce is not going to do any real estate development outside of land that it already owns today. So on the land that it owns today, Vikhroli, of course, being the main one of those, it is free to do development, including using the Godrej brand, but it cannot do any development on new land parcels beyond that.
Post the 6-year period, Godrej & Boyce is free to do development on other lands, but cannot do the Godrej brand for those developments. So that is a very important description. I should also point out that Godrej & Boyce has an existing construction business, and that is actually their exclusive business.
So while Godrej Properties is free to do construction for its captive purposes of developing its own projects if we haven't wanted to backward integrate, they are free to do so. But we will not be for 6 years, able to do third-party construction services for the developers of our company. And after a 6-year period, we can provide such services, but we won't be using the Godrej brand for that.
So -- and that is true across all categories. That's one of the other side has a presence in. So it has been a little bit of confusion on this, saying that they can be competing Godrej developers et cetera. That is not at all the case. The development to Godrej & Boyce from a property development perspective for the next 6 years is entirely limited to land we already own. Of course, the most important of those lands in Vikhroli, which will be developed through the DM. And 4, 6 years, we are absolutely free to setup a real estate development company. It would have to operate without the Godrej brand.
The next question is from the line of Parikshit Kandpal from HDFC Securities.
Congratulations on a great year. So just delving a little bit more on the family settlement agreement. So now with this in place, do you think there will be acceleration in launches because we have so much of land in Vikhroli? So now all these issues ironed out, do you think we can get at least every year a launch coming in from the Vikhroli land?
I think as we indicated in the press release, the timing of launches in Vikhroli will be largely determined by Godrej & Boyce. But certainly, I think this clarity will remain in the more intensive process. And as I said, I'm very happy that we've launched the project under its arrangement after 3 years in Q4, and we'd certainly hope to see many more such projects ahead.
Okay. And this 10% DM, so is there any change there or anything post the settlement?
No change to the agreement of any kind. It's exactly what it was, which is, as you said, 10% of top line.
Okay. And just the last question on the promoters now. I mean we have both the family. So now because of the promoter shareholding, will it get classified into like public shareholding and what's the future? I mean, how will the shareholding change post this?
So I should clarify that the family so far has announced its intent and the agreement it has gotten into. The immediate next step is to seek regulatory approval which we will be doing over these next few weeks. Assuming those come true is we are able to close as envisioned. The family will be depromoterized from each other sites of the group. There will remain some amount of cross-holding between both the groups and those can continue thereafter.
Okay. And on this, now we are seeing that in Noida, NCR, we already reached INR 10,000 crores of sales and MMR also just crossed INR 6,000 crores. So now incremental growth, do you think there's still scope for these 2 markets to offer you incremental growth in FY '25, given you have already announced the INR 27,000 crores of [indiscernible]? And with such high market share, do you think there's still scope for you to grow from these 2 markets?
Yes, certainly. I think we have a lot of scope to grow in these markets. If you look at NCR, as an example, as in the market, it's fantastic. The team performed fantastically also and they have stopped to go rather than our CEO in NCR [indiscernible] in our team because I think the numbers are very strong.
But largely, we delivered through the launch of 3 projects. I think we have the potential this year to launch at least 5 or 6 projects. So certainly, we hope that market conditions the same that we can see strong growth in NCR as well.
In Mumbai, we had a very strong fourth quarter. We have several new large projects that are now in the market, where we have additional towers and additional inventory to be launched in the year ahead. We have some exciting launches planned in places like Worli. So again, I see no reason that we shouldn't be able to grow off this base.
The next question is from the line of Puneet Gulati from HSBC.
Congrats on great numbers. My first question is with respect to your INR 27,000 crores guidance. How much of this should we think will come from sustenance and how much of it is dependent on your launches?
Thanks for the question. Say essentially, we -- when we plan a launch calendar for a year, we always see for series of projects with some buffer. And of course, we have a lot of sustainability. We don't really have a clear guidance on the sustenance and launch. It frankly changes from quarter-to-quarter.
If you look at the quarter 1, 2 of the last year, it was largely balanced with some launches. But if you see, let's say, quarter 4, it was just up about 84% or to 80%-plus worth, largely your launches. So I think quarter-to-quarter, it would shift. But fair to say, it will be very launch heavy year balanced with the amount of sustenance. Largely, launches would be the bigger contributor.
So will it be possible to share what is the value of unsold inventory that we have?
I'll find. I won't have a number to share with you. But fair to say in every geography, we have a huge set of inventory. Rule of thumb is whatever guidance we give you, the launch -- the available inventory that we have in stock is usually at least 2x available in our mind is when we typically give you a forecast.
So when you say INR 27,000 crores, you're saying INR 54,000 crores worth of entry?
We will have visibility in our pipeline of about INR 50,000 crores. Our total to entry is even significantly higher, but the one I'm talking about is mostly in the pipeline funnel that we get to see. Finally, it's a combination of launches that will hit in the market, but that probably typically makes our estimate.
So if I were to just do some basic math here. So you're talking about INR 30,000 crores of new launches. Does that mean about INR 24,000 crores of inventory is remaining to be sold from the projects already under execution? Is that how one should think about this?
Not really. Project to project, it will differ.
At portfolio level.
Profit number of unsold stock -- I agree, which is unsold stock of launch inventory, right?
Yes.
This question is answered. So I'll probably get back to you on the unsold stock. But fair to say, if you look at the recent launches, if I can give you an example, last year, we did a launch in Tropical Isle, right? This was sold out to 0 inventory available. We did an Aristocrat largely about 80% plus sold and again, some amount of sold was in Q4, so about maybe 10-odd-percent. Then we did reserve. Reserves have got close to INR 4,000 crores of stock available.
So the recent launches, if you see anything which is INR 2,000-plus crores, the residual inventory is about 10% with the exception of Godrej reserve. But historically, if you see very old projects of ours, they were always launched in phases. And typically, in year 1, we would sell in launch back then aboutt 70% and then substance would follow. So if you ask me in this INR 27,000 crores projects, which were launched in the H2 of last year in NCR, not much of sustenance is available, we practically have sold them out, but you'll have a good amount of inventory as new tower launches in Mumbai and other locations.
And INR 30,000 crores launch will include that number as well, right?
Yes, yes. INR 27,000 crores of guidance that we've given will include all of that. And launches, as you rightly said, will include the new tower launches as well.
Okay. So just following up on that as well. You've been selling significant amount of what you launched in the year itself. So how are you thinking about cost and pricing? Don't you want to keep some bit of inventory for later dates to realize better prices? Or are you thinking that best to capitalize on current prices?
Sir, if you ask me from a litigation strategy and inventory management, I think it's market to market, right? I mean if we see, for example, north as the market, our ability to charge premium to our underwriting is very live right now. So if I give you some examples, look at the launch of Q3, which was Aristocrat between what was our underwriting to the imputed profit that you've shown, it was almost like close to 1.8, 2x of our underwriting profit. So if you see that there is an immediate opportunity basis what we've underwritten, we can significantly enhance our profitability.
The cost will not be as high than our opportunity to capture the upside immediately. But likewise, in certain markets, like you could see Bombay, while this has picked up Mumbai real estate highest-selling project. And we had the opportunity to, of course, launch more inventory, but we are very conscious of launching inventory in phases because we believe there is far more price upside available.
Of course, given the launch itself fa much higher underwriting, much higher price performance versus underwriting, but we believe in that particular micro-market, where there is hardly any supply, we would be able to command more premium.
So finally, it's a call between immediate price upside opportunity available versus long-term cost. Wherever we feel the opportunity is better than there is, we kind of capitalize only. But yes, their time tree also will do [indiscernible].
Okay. That's helpful. Lastly, on the commercial portfolio, if you can guide us as to what is your share of capital employed? And what is your share of net operating income from the commercial portfolio?
Total rental portfolio opportunity is about INR 1,100 crores. Godrej Properties share and a full potential is about INR 270-odd crores. And of course, as and when we will hit OTs, this will continue to come. There will be some OTs -- most of the OTs will hit in this year itself. So we have already one OT last year. And this year, we'll see the OT of all the residual core inventory. Our share of profit is different in different projects in Godrej, 2 for example, it is about 50%. And you would appreciate that we saw a massive leasing uptake in Q4, almost close to 98% plus thereabout, 94% is the current leasing of Godrej 2.
In another commercial portfolio, which is the project fee, which has just recently opened, you would see that there is 100% owned by Godrej Properties. We've seen some fantastic occupancy, about 67%, a very high amount of EBITDA. And it is just the start of property in terms of its operations, we hope to see even better returns in the coming years.
So yes, I mean, our commercial portfolio, frankly, is outperforming our own internal estimate because there's a very strong uptake in 2024, and I think FY '25 likely would be even more exciting.
Understood. And are you likely to place more commercial projects?
I mean we have a partnership with Godrej Fund Management, as we would appreciate. It's very opportunistic to how we see the development. I think currently, we have a good focus on these specific projects. There's nothing immediately in our mind, to be very frank. And currently, with more execution towards ensuring the leasing, everything gets over. But fair to say, if we do see something very exciting coming quarters will be, of course, [indiscernible].
There will be growth, I think, these commercial projects, including 1 this year for sure. But as Gaurav was saying, I think it's correct. It's the key focus for the -- on the commercial side will be to stabilize and start operations for these 4 or 5 assets that are completing this year.
Understood. That's very helpful. And lastly, sorry, 1 more for you, Pirojsha. So the MOU is only applicable for Vikhroli and not for any other land passages? There was Mohali, Hyderabad, that's no longer effective now.
Correct. It's just for Vikhroli. And I think some of the Hyderabad property and all the taxes, I don't think in the system anymore. But yes, I accept the MOU is for Vikhroli.
[Operator Instructions] The next question is from the line of Saurabh Kumar from JPMorgan.
Congratulations. So I had a few questions. The first is essentially on this economic interest. So we feel this economic interest go up. Can one expect this to keep going up to, like, let's say, 90%, 95%? Or do you think it's 85-odd we take out now?
No, I don't think it will keep going up. It already was 85%. So it's already at a very high level. So I would not expect it to really grow up from here. It might go up down a little year-on-year basis, whether JVs are contributing, et cetera. But I'd say I would not expect it to start going to [indiscernible] or anything like that. And you would have seen even this year, we did have some joint ventures added.
Yes. So effectively, the EBIT, which you're reporting about the pro forma EBIT. If you adjust for the stake then on a normalized project basis, you should have earned close to 30%. Because of this, we are basically happy to 125%. That's the broad understanding I'm coming with, right?
Yes. I think, again, there is a lot of projects and structures beyond JVP in our price. But yes, I think there is room to continue to improve margins, given the kind of momentum in the market.
So typically, what we essentially do, when we underwrite transactions agnostic to the deal structure are your targeted imputed margin metrics are very similar. The only difference is that when you actually hit the market, if it is 100% on project and the market is supporting our ability to significantly take the margin up is the opportunity available.
But whether we are doing any deal today or we'll do in future with the JV project and outside, our return expectations are very similar when we underwrite a deal. It's not different for a JV project or outright for that matter.
Yes. So that's a core, the underwriting margin, which we're targeting is about 25% valid inside and gross?
Yes, yes. In planted, of course, it is much higher. But yes, ballpark what you're saying is right.
Okay. Got it. And in the underwriting, you -- I'm assuming now you keep construction buffers maybe -- I mean if you can quantify the amount of buffer, you're keeping your underwriting.
Yes, we do try and keep -- but to be very frank, that's a risk to the market. In fact, if you see our pro forma. We've intentionally even shown you a scenario with 10% sort of a contingency exactly to help one get a perspective. But eventually, in execution, our ability to manage costs will either improve the returns or could largely reduce it. But fair to say what we are publishing in terms of the range is what we aspire to hit.
Yes. So this completed its after fostering in the contingency or without the contingency?
There obviously is some contingency figure even in the base that there will be some escalation that is part of the basic business planning. What we think is beyond that, so even the base number that we provided as actual, obviously have some factor of contingency for escalations and others. We just wanted to clearly show that this number is not something set in stone, that there is execution risk attached to this. So we've just tried to present a range which shows kind of if, for any reason execution sees deterioration in this, slightly up to 10% of projected EBITDA what the ratios would look like under such a scenario.
Yes, I understand that. Okay. Got it. Just very quickly moving on to business development. So you've done INR 20,000 crores this year, next year is 20. So I underline you have a back book. But in an environment where, let's say, property prices are going higher than land prices, won't you want to do more BD at this point of the cycle and like slow down later? Or are you -- I mean, why are you taking for the conservative when BD connects to next year, at least?
Yes. Honestly, I think our BD guidance is probably the one we pay the least attention to, if I'm being totally honest. Because BD will really depend on what we are seeing during the year and the specific opportunity. There is not supposed to be if we see great opportunities, any -- 20 is not going to form any kind of upper cap certainly. But we've seen in past years, for example, in FY '23, where I think we guided around 15,000 and ended up doing 35,000 or so.
So certainly, I wouldn't look at this INR 20,000 crores as an upper cap. And we would hope to, if we see the right opportunities, go well faster. And you're right that I think just intuitively, BD growth should be at least at replacement level. So if we see the right opportunity, I don't think we'll stop from taking them. But at the same time, I think meeting our guidance is important to us on business development, the fact here that it's not something we do at any cost. So if we feel the opportunities are not correct for whatever reason, we won't be overly aggressive. And we do feel we have a good portfolio for the next couple of years in any case.
Okay. Got it. And just on this Bombay, so you've obviously scaled up nicely. But I mean your market share in Bombay will still be maybe or between, I'm guessing between #6 to #8. In terms of new project acquisitions also, Bombay doesn't seem to be that big this year at least. So how would you be thinking about this market? You've done very well in Delhi, NCR and some of the other markets. What's your strategy for Bombay? And is there a market share aspiration you have here?
Essentially, to see even the guidance that we've given from a launch point of view, right? It's almost -- in fact, the highest launch volume that we talked about from a value point of view is in Bombay, which is about INR 9,500 crores. But coming on a bit of forward-looking and how we're looking at Bombay portfolio, if you try and see what is happening in Bombay for the last year, we'll try and appreciate the point of infection. Bombay used to be a product for sort of a broadened business for a couple of years back about INR 1,500 crores, INR 1,600 crores.
And FY '23, this became almost double of that, say, for the first time, we crossed INR 3,000 crores kind of a number. And what's happened in last financial, it crossed INR 6,000 plus number, INR 5,500 crores thereabouts. So essentially, last year, we were trying to see that the acquisitions that we have done in FY '22 and '23, how are they going to pay out because there were some 7 high capital, very important transaction we did starting from projects like the Mahalaxmi project that we have, the Kandivali project we had, something in Azad Nagar, Ananda, and the likes of it.
Now having seen that playing out really well, you would see continued momentum in Bombay. And if I just want to give you some very, very broad level sort of pipeline indicators that we have, we have something in Carmichael Road. We have something very exciting finally coming up in Worli this year, we've done something in Bhandup as a planning. We have close to INR 4,000-plus crores worth of inventory available in Kandivali projects. And then there's something coming up also in Navi Mumbai.
So I think we have a very robust pipeline for this year. But I think the determination to do more is going to be a little more stronger from Bombay this year because of the last year's execution strategy kind of playing out well. So I think it's a bit of a spot-through approach that we will continue every quarter to buy land where we feel we are very confident. Then if it crosses a particular threshold of capital deployment and booking value available in this particular micro-marketing geography, we will wait for the launch to happen. And with success, we will, of course, double down and add more. And this has played out very well for us. If you see last year, it was -- last year it was the NCR, then it was MMR. And I think you will see a lot of action even in the markets like South and Pune this year.
Okay. All right. Very helpful. Just one last question. So on your residential projects. So you had this an extra slide. So effectively, you have to get approximately, from what I can calculate, around INR 64,000, crores, INR 38,000 crores. Is that cash to collect? Is that number broadly my understanding?
Yes. Correct. Correct, sir.
Okay. And what is the cost to finish against it?
That we have not been giving that guidance. But then you can have a normal percentage of life whatever is a normal construction. We always see it gives us what is our expected profit now with pro forma, you can very well do a marked calculation.
Yes. But your land cost should be about 20%, 25% of years, right? I mean that's the number...
Depend. It can range from -- anywhere from 15% to 25%. Yes, it depends on project to project, sir.
We'll take our next question from the line of Parvez Qazi from Nuvama Group.
Congratulations for a great set of numbers. My questions are related to the cash flows. In line with the sales, we have seen pretty decent improvement in our operating cash flows. I mean, if 1 looks at quarterly basis, on an average, our construction and project-related outflows have been somewhere closer to about INR 2,000-odd crores. And therefore, there is a fair bit of volatility in our net operating cash flow, depending on the collections. So how do we see on an annual basis, our operating cash flow going ahead? That's the first question.
And the second, I mean, in terms of our land-related CapEx, we have done roughly about INR 5,500 crores this year. How do we see that going ahead? And consequently, what would be our debt trajectory in future?
Let me try and break it up into sort of parts. See, essential, as rightly said, the operating cash flow is largely coming out of collections growth. If you see our collection's CAGR, it's about 34.7% and if -- what is more noticeable is to see the trend from FY '22. So from FY '22, our collection is almost doubled. And again, an interesting data point is to see points of inflection, like last year, I want to say last meaning FY '23, the quarter 4 sales was about INR 4,000-odd crores.
This year, in the quarter 4, collections is more than that, right? So I think collections is following a sort of a lag of 3 to 5 quarters in every project because all our payment plans are constructionally linked. And I think the idea is that if we continue to sell well and we ensure that the collection's payment plan are very, very front-ended, your collections with the great efficiency will continue with the CAGR that we've already been seeing in the last 2, 3 years.
In terms of operating cash flow, again, if you see it going at a 50% plus CAGR. Now that being said, from a future and FY '25 point of view, as you see, this is 1 year. You are normally a little more conservative in giving us collection guidance. Last year, we gave a collection guidance about INR 10,000 crores, then we delivered something INR 11,300 crores, INR 11,400 crores. The year before that was a similar, we had given a conservative and were able to achieve. We understood that the kind of sales we'd achieved in FY '24 is very, very high quality, which has given us the confidence to kind of step out and give us relatively much higher guidance, which is about INR 15,000 crores.
And I think fair to say with that kind of guidance, we will see a continued good trajectory of operating cash and there beyond. Now the second bucket, which is mostly on our ability to invest and how we are seeing debt and all, I think we've always maintained in every earnings call that our gearing ratio that we're comfortable is between 0.5:1 to 1:1. I think we were 0.72 in Q3. In quarter 4, we've become 0.62. In fact, this is the first quarter in the recent quarters, where we have close to INR 700 crores of free cash flow, something which previous calls, the question was being asked.
So I think if we continue to be prudent, we calibrate our investment strategy to opportunity. We will maintain 0.5:1 and 1:1 with a net debt never crossing above INR 10,000 crores. So I think it's purely the growth momentum, strong asset management, very strong quality of sales and monitoring of that, which is resulting into this opportunity to have a continued trajectory of aggressive growth.
[Operator Instructions] We'll take the next question from the line of Pritesh Sheth from Motilal Oswal.
Congrats on a great year. First, again, on Vikhroli. So post Godrej Vistas is launched, we can see only one project which is left with Godrej & Boyce. So that's the only project where we have MOU in place right now. And then for the rest of the projects, the MOUs will follow up on time-to-time basis. Is that understanding right?
No. The MOU is for the whole land. So we have an MOU in place for the whole Vikhroli land. There are no Godrej & Boyce forms to develop individual parts of it. It will be developed through the VM. We have Godrej Vistas, currently under development.
As you rightly pointed out, there's another identified partner, which is in the planning stage and hopefully will be available to be launched immediately upon Godrej Vistas completing.
There is, of course, a lot of other land that could potentially come up for development. It would be appropriate for me to comment on that in detail at this stage as we get more visibility on exact plan from Godrej & Boyce. We'll, of course, share them after the correct time.
Sure. So anything that gets developed in the Vikhroli land would be through us as per the MOU, right?
That's right.
Okay, perfect. And secondly, on the micro-market. So NCR MMR, we did well. What's your view on Pune and Bangalore? Specifically, FY '25 does look great for Bangalore in terms of launches, right? So can we assume like Pune sustaining the same run rate and Bangalore contributing to material growth next year that we are targeting?
I think you can actually count on both showing strong growth in the year ahead. I think as we look at INR 27,000 crores, we look to have another strong year in NCR and Mumbai. Gaurav spoke a little bit about the Mumbai pipeline. I mentioned in NCR, the INR 10,000 crore number from FY '24 is largely on the back of 3 launches. We have the potential for 6 in FY '25.
In Bangalore, I think we have a very strong pipeline and actually, it was a little bit of a timing, where a big launch, in particular, stripped out of BO, we provide a much better FY '24 as well. We're quite confident of seeing a big number in Bangalore in FY '25.
And Pune also, we have both a few new projects that we're looking forward to bringing to market that are already in the portfolio, and it will be an area of focus from a business development perspective as well. And just to add to that, both, we also have an entirely new market, which contributed nothing in FY '24, which is our [indiscernible] market. So between all of those, we think there's good visibility of us getting to this INR 27,000 crore number.
Sure. And underlying assumption for FY '25 would be Mumbai and I mean, MMR and NCR sustaining the run rate that they had done in FY '24, or there is a growth incorporated for these 2 markets as well in those numbers? I mean, just asking from the perspective...
[indiscernible] the growth in these markets provide certainly.
Sure. Okay, okay. And just lastly, on the included margins. We see 27% kind of EBITDA margins. Was that margins tilted by a large contribution from NCR, either upside or downside? Or how do you expect this margins -- this margin trajectory going ahead consuming other markets like Pune, Bangalore and Hyderabad start contributing to a little larger extent?
I think it's a little bit dependent on market conditions. But I think overall, these kinds of margins, we're expecting to be at the 25% to 30% is a reasonable expectation of the profit development might be a little bit higher than that. But I don't think the geographic mix will necessarily change things very significantly. It's more the project mix within each city. I think if you have more high-end projects and so forth or more right on projects, both have an impact. But I wouldn't expect that if we do more in Bangalore, for example, is the other that would have any kind of negative impact on margins.
If I just to add on. Like I mentioned some time back, whenever we underwrite transactions or return ratios from underwriting, sir, is -- or more or less same for all markets. Just of course, there's the opportunity, finally, when you hit the market, your ability to take price up site in certain markets, creates more acceleration. But I think from a long-term issue, I see, our aspiration and direction from BD is to have geographic agnostic, similar kind of return profile.
We'll take our next question from the line of Jatin Kalra from Bank of America.
This is Kunal. Pirojsha, it's great to see the pro forma P&L out there. My first question is, once again, going back to the imputed EBIT margin. Just want to broadly understand, is the 27% number that you've registered for FY '24 broadly synchronized with the kind of opportunities you see out there on an ongoing basis. I'm trying to understand if all the price increase, which has happened in several of the markets over the past 12 to 18 months, is it already captured in this 27%? Or does it start to play out from here?
I think this is one we did an actual sales during the year for the price increases across some of the projects would be captured in this. I think it's important to keep in mind that we have seen a price increase in the sector. But honestly, this is very much exactly what we kind of expected at this stage of the cycle.
In fact, if you look at it in the price increase or is the base of price increase has been much higher in markets like NCR and Bangalore, some of the Maharashtra markets like Mumbai and Pune, we haven't really seen that level of price increase there. You might think those markets continue to pick up. So overall, I think this margin, at least in the near term is sustainable with the project portfolio we have -- we hope to maintain or improve that.
Understand. Okay. And then just again, going back to the geographical mix of bookings. NCR has broken through the ranks and contributing very nicely with the overall mix. Is that something which should continue for the next 2 to 3 years as well? I'm sure a few percentage points difference here and there is okay, but overall, are you looking at the skewed tilting in favor of any of the other markets in a big fashion or this is a fairly representative trend that we've seen in FY '24?
I see my view is this comes down to execution by the individual teams in those markets. There is no real constraint we see from an umbrella perspective to growth in any of them. Market share even in NCR would be relatively modest sales. So in terms of being able to add to that through new projects, I think the opportunity remains immense. I think, Gaurav, himself was running the NCR business. The NCR team has been doing very well for many years. But certainly, there's no inherent track. They have to 40% plus of GPL business. So they'll have to execute at a very high level. I think teams are fully geared up and fully seen the kind of numbers, NCR and Mumbai this year and certainly have stopped their competitive juices. So I think all teams have an opportunity. These are all big markets.
We have a relatively modest market share in all of them. We have an appetite for growth and we think our availability of capital to fund growth in [indiscernible]. So it will come down to the ability to secure the right business development opportunities, ability to consistently execute at scale. I'd say, if you're asking me my opinion for this year, I see the NCR portfolio remains very strong. And if market conditions there remain and they have been that probably remains our largest market this year as well. But beyond that, I think it will depend a lot on business development in NCR, our ability to replenish the portfolio strongly. And of course, however we scale up in some of the other areas happen. But overall, I think feeling pretty good about each of the key regions contributing strongly this year.
The next question is from the line of Kunal Lakhan from CLSA.
So on the cash flows, right, we've seen spend on the growth this year or other land has been higher than our operating cash flow. And I understand the OCF will go up as the collections rise. But I'm assuming the spend on the land 2 will increase as you do higher BD for the replenishment. So in terms of like funding of this growth, are we confident this will come through the internal accruals? Or would you look at raising capital at any point in time, especially equity?
Yes, I think we have no plans for the moment to raise capital. We would never kind of entirely rule that out, but certainly not -- we don't have any immediate plan for that.
I think Gaurav's point is very valid, but I think it's important to keep in mind that we are doing exactly what we said we do, which is we'll raise capital first. We'll then effectively go out and do business development disproportionate to our VEN scale, and that will release results in an increase in debt.
And in fact, even when we were raising the capital, we said we think it would be mismanaging the business to operate at an under recurring level of 0.5:1, given the kind of opportunities.
So we've done that. We -- as a result, I think demonstrated that booking value growth can be very disproportionate through that strategy, and we have now 2 years, 1 year of 55% growth in bookings, 1 year of 84%. If you look at, as we've shown in the chart, the share of bookings attributable to Godrej Properties and those growth rates increase further. So that is going to require investment.
Now if we slow the account to kind of more 20% kind of growth, the amount of business development you need to do as a proportion of your current size will not be as much as it was 3 or 4 years ago. So you will see that ratio improving.
We are not, however, very fixated, as we said multiple times, on very large free cash flow generation at this point. We could have obviously generated more free cash that we did. Last year, we chosen to invest a little less on business development. We think from a long-term value creation perspective, rapid growth and market share gain is a much stronger lever for us than kind of in your cash flow generation because I think that scale is giving us huge economies of scale, huge ability to generate cash on a much larger way. And hopefully, a quarter like the one we just had is indicative that when things are firing, you will see free cash even with a lot of business development. And that's certainly the goal. But we would quite intentionally not say that we will limit our business development to ensuring that it's lower than free cash because we don't see that as a requirement.
We think the company has a strategic advantage in its access to capital, including debt at low cost. And that having some debt on the balance sheet is an entirely intelligent part of making the best of the opportunity for growth that's available in the sector.
As Gaurav rightly pointed out, we don't want to get carried away with that logic and have a balance sheet that puts the company under any kind of stress, which is why we've indicated this range of 0.5:1 to 1:1. But honestly, we were seeing free cash flow generation becoming so high that the debt was rapidly coming below 0.5:1. That would be a time for us to look at increasing investments.
But of course, also calibrating and making sure that we're comfortable with the investments. We don't want to see making investments to make investments. We have to be confident that we're making the right investment at the right time in the cycle. That we're confident irrespective of how markets does, we'll still be able to generate the return on those investments. So I think all of those are factors in our mind as we kind of look to calibrate business development versus free cash generation.
Understood. On -- a quick one on the deal again, the restructuring rather. So on the noncompete, right, any restrictions for GPL to -- on signing projects in, say, locations in Central Mumbai or central suburbs, rather which are in and around Vikhroli outside of the land owned by GMV. Any restrictions for us?
No. There are absolutely no restrictions on GPL or any kind to do any kind of property development in part of the country or any part of the world for that matter. I think what some media has reported that there could be competition from another Godrej to real estate company, et cetera, is also entirely inaccurate.
As I've explained, the Godrej & Boyce development using the Godrej brand will be limited to lands already owned today, the biggest of which is, of course, Vikhroli, which will be developed through Godrej Properties. And the reciprocal of the business that they have it there for that we cannot encourage is construction, where we cannot use the Godrej brand even after 6 years, except, of course, if we're doing our own captive construction, there's no prohibition against that.
The next question is from the line of Rohit Gupta from Fullerton.
Sorry, my question on same as Kunal, you already answered.
Ladies and gentlemen, we'll take that as the last question for today. I would now like to hand the conference over to management for closing comments. Over to you.
I hope we've been able to answer all your questions. If you have any further questions or would like any additional information, we'd be happy to be of assistance. On behalf of the management, I once again thank you for taking the time to join us today.
Thank you.
Ladies and gentlemen, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.