Prestige Estates Projects Ltd
NSE:PRESTIGE

Watchlist Manager
Prestige Estates Projects Ltd Logo
Prestige Estates Projects Ltd
NSE:PRESTIGE
Watchlist
Price: 1 755.05 INR -2.2% Market Closed
Market Cap: 756B INR
Have any thoughts about
Prestige Estates Projects Ltd?
Write Note

Earnings Call Transcript

Earnings Call Transcript
2023-Q2

from 0
Operator

Good day, ladies and gentlemen, and welcome to the Q2 FY '23 Earnings Conference Call of Prestige Estates hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Samar Sarda from Axis Capital. Thank you, and over to you, sir.

S
Samar Sarda
analyst

Thanks, Michelle. Welcome again, everybody, and thanks for taking out the time. As always, on the management, we have Mr. Irfan Razack, Venkat, Amit and the senior team. Sir, firstly, I congratulate you for a very good performance for the first half of this fiscal.

Mr. Razack, if you could take over for your initial comments before we jump into Q&A.

I
Irfan Razack
executive

Thank you, Samar. Welcome, everybody, to this call. It's again a pleasure to meet all of you and to take your questions. It's been quite a hectic quarter for us. I think we've clocked the higher sales, the company has done in a quarter, that is INR 3,500 crores plus in a quarter, and the collections also have been the highest in the quarter.

So all this has actually led us to a lot of positivity, and we've concluded the half year with about INR 6,500-plus crores of top line revenue and almost INR 5,000 crores of collections. So that is where we are now, and that is helping us to leapfrog to the next level.

But given the teams have worked hard and seeing that we continue in the same game, of course, the external atmosphere also is changing rapidly in terms of interest rate hikes and all that. In spite of it, we believe that this thing will sustain. And going forward, good locations and good product, price, property will definitely yield results as we go on up. Venkat, anything you want to add?

V
Venkata Narayana
executive

Yes. Thank you, sir. And to add a few other things, what we have done during this quarter, in the presentation we have mentioned that it's been a good first half of the year. 8.18 million area -- square feet of area sold overall. We had the realization close to over INR 8,000 per square foot. And we sold an average 30-plus units a day during the first 6 months of this fiscal.

We've launched close to 17 million square foot across various segments and geographies, and we just inaugurated one of our largest residential development, Prestige Jindal City, that's around [ 6.12 ] million square foot that comes to this quarter.

With that, completion is also over 10 million square foot so far this year. And the sales for this quarter has come from all the geographies, including new geographies that we have added for the residential segment, Mumbai, which contributed INR 400-plus crores of sales. Of course, Bangalore has been the leader with INR 2,600 crores of new sales.

In terms of financial highlights, we didn't have any major projects getting completed this year. All the revenue recognitions have been incremental revenue recognition from various ongoing projects and sale of completed inventory. We had, overall, for this quarter, INR 1,474 crores of revenue with INR 415 crores of EBITDA and INR 149.2 crores of PAT.

EBITDA is at 28% and PAT is at 10.1%. Half of the -- first half of the year, overall, we had INR 3,486 crores of revenue with 27.27% of EBITDA and 11.48% of PAT. It's been a very good quarter and half year. We've got a lot of projects that are in the final leg of approval to be launched across the geographies.

We have two projects in Hyderabad, namely Prestige City and other projects at Kokapet in Hyderabad. Maybe end of Q3 or beginning -- in the middle of Q4 is when that would get launched. Chennai, we have Prestige Pallava Gardens, large residential, probably that is getting ready for launch. And we have two projects in Bombay, one is Prestige Ocean Towers in Marine Lines and Prestige [indiscernible] at Worli and we have waiting for approval for Sector 150 at Noida to be launched. So we have a robust launch pipeline and with the existing inventory, which is very less compared to the run rate that we have in terms of sales, which is INR 6,500 crores.

That's the 6 months of inventory that we have. The launches are going to be the key. And we would like to highlight that the entire team is working hard to get the approval so that we can launch the project. And other point we want to highlight is, in spite of the sales, the collections also have been equally good and debt equity remains almost where it was last quarter, 0.41, is where we are at.

And we look forward to another exciting quarter and rest of the year. Thank you. With this, we would like to open the forum for question and answers. Maybe one last bit that I would probably want to share is the cash flows, the amount that we have spent for the construction. During this quarter, close to INR 1,600 crores of money we have spent on construction, INR 1,000 crores for the residential and INR 600 crores between office, retail and hospitality, which is CapEx. And we also had money spent towards land deposits and the buying back of stake close to INR 1,000 crores during this quarter.

Entire half year, as a whole, if you look at, from a development portfolio, we had close to INR 900 crores to INR 1,000 crores of surplus cash flows coming in. We've seen our collections have been over INR 4,700 crores. And the spend towards residential has been INR 2,166 crores, projects that are meant for sale, and we had an overall business development activity of INR 1,847 crores, totaling to INR 3,900 crores as against the collections of INR 4,700 crores.

And the CapEx; office, retail and hospitality, all put together, we'll spend around INR 850 crores to INR 900 crores of construction during the first half of the year. Thank you. And with this, I would like to open the forum for question now.

Operator

[Operator Instructions] We have the first question from the line of Parikshit Kandpal from HDFC Securities.

P
Parikshit Kandpal
analyst

Hearty congratulations on a great quarter and all-round performance, both on cash flows and presales. So I'm a little bit worried with the acceleration in the presales [indiscernible] presentation you have only about INR 33,000 crores of new stock or upcoming projects. And with the current run rate of INR 7000 crores plus of annual sales. So just wanted to [indiscernible] brain how are you looking at the business development pipeline because we hardly have any inventory to sales.

V
Venkata Narayana
executive

As I mentioned in the opening remarks, we have at least a visibility -- clear visibility for over 10 million square foot of projects that can even go up to 15 million square foot in the next two quarters, spread across Bombay, Bangalore, Hyderabad, Chennai and NCR. So that should not be a problem. We're gearing up for the losses of these projects. And of course, if you look at our overall upcoming project pipeline, in terms of residential, it is even more bigger and continuous business development activity also is happening. We are conscious of the fact that we need to launch more projects to sustain this run rate. We have another 57 million square foot overall residential projects which are in upcoming portfolio. So of that 10 million to 15 million square foot will get launched, and the remaining projects are under planning stage.

P
Parikshit Kandpal
analyst

Sir, again, my question was more on the business development side. [indiscernible] so what's the target of gross development value addition in this year. So basically, I'm more pointing towards the business development for a year as a whole, like some of the developers were doing similar and [indiscernible] to add INR 15,000 crores to INR 16,000 crores of gross development value or the new GDV. So what's the target there? And any updates on the [indiscernible] because I think last quarter, you did mention about [indiscernible], if you can update us also on that.

V
Venkata Narayana
executive

So we have -- in terms of business, see, that is something which we have not put in the presentation because there are various deals and in different stages of discussions. Some of them are close to signing. Some of them, maybe nonbinding term sheets. Some of them are in diligent stages. So we have enough business development activities that is happening for all the [indiscernible] we are presenting, including that those on where we are not present. We are looking at making an entry. And overall, the value once those deals get materialized, what they can give is going to be close to 2 years of the current run rate. So that's almost going to be around INR 20,000 crores to INR 25,000 crores of the turnover of project size.

Second is, yes, we are working with now in the platform under [indiscernible] particular independent assets we are putting into a separate SPV. And HDFC, we have undeployed capital from the old platform that we have started with them for residential. We're going to draw and utilize that money. There's another of INR 2,500 crores of platform that we have signed so far. We had deployed only close to INR 500 crores, INR 2,000 crores of money we are exhausting that money to build up a platform and then start putting money into this.

P
Parikshit Kandpal
analyst

Okay. Second question on the commercial side. So we have moved the [indiscernible] project to ongoing. So what's the update on the BKC projects? Do you think this quarter will move into ongoing projects? Have all the approvals being secured? And also if you can tell us, you have given that rental costs [indiscernible] '26, '27 and '28. So if you can highlight what the lease status for some of the key large projects which are ongoing, both in Bangalore and Mumbai.

V
Venkata Narayana
executive

So -- as you rightly noticed, the Mahalaxmi project, Prestige Liberty Towers has moved to ongoing from upcoming. And the BKC projects will move to ongoing projects during this quarter. We have primarily five projects that are nearing completion. That is Prestige Cyber Green at Kochi, Prestige Alpha Tech at Kharadi, Pune. We have Tech Park IV and Tech Pacific Park, both put together is almost 1.8 million square foot in Bangalore. And we have Prestige Sky Tech that's going to get completed in Hyderabad. These are the projects that are going to be ready, all put together is going to be around 5 million square foot of projects. We have, at different places in advanced stages of leasing complexes, they have already signed leases, which will come into this quarter. And therefore, the rentals will start growing from FY '23 and FY '24, and these projects will start contributing to their annuity portfolio.

P
Parikshit Kandpal
analyst

Okay. And just the last question on the Forum Falcon City Mall. So it's completed. You're showing it under completion. So what is the total lease status here...

V
Venkata Narayana
executive

That mall has been pretty much leased out. It's only the documentation that is happening with respect to 30% of the tenant, remaining 70% even documentation isn't completed, and they are doing their fit-outs. We are opening the mall to the public on 1st of December. Of course, it will take 4 to 6 months for all the tenants to open and mall to start functioning in a full-fledged way. And this is going to be one of the best malls in the metro connectivity and great amount of catchment in that area and we have, in fact, locked in some good rentals.

P
Parikshit Kandpal
analyst

Okay. And sir, on the [ AIS ] platform, how much have we raised totally? And can you...

V
Venkata Narayana
executive

The total commitment from the fund is under INR 2,500 crores, and we will put the unused money of HDFC platform to use first and then start putting the money of [ AIS ] into utilization.

Operator

We have the next question from the line of Puneet from HSBC Bank.

P
Puneet Gulati
analyst

Congratulations on great numbers. My first is, if you can share on the sales, how much of it was plotted sales? How much of it was commercial sales? Some color on the sales breakup?

V
Venkata Narayana
executive

Both plotted and commercial put together during this quarter would be around 15% to 20%. That predominantly coming from apartment sales, Prestige Orchards in Hyderabad is what we had launched, which was sold and Park Drive, it's in Bangalore, a small portion of that, Park Drive. And not much of sales from the commercial portfolio. So all put altogether would be between 15% and 20%.

P
Puneet Gulati
analyst

Okay. And also, can you share what would be Prestige share of sales in the INR 3,500 crore number? Also for collections and volume?

V
Venkata Narayana
executive

Prestige share of sales, I don't -- we don't have it handy here, but I can share it with you, because now more than the area share we are doing most of the projects as a revenue share. So the sales are asked and we just have to give their portion of the revenue. So all sales will be accounted with us. So as per the -- nonetheless I'll give the breakup.

P
Puneet Gulati
analyst

Okay, okay. And sorry, I missed how much is the money undeployed from HDFC? And what is the arrangement now?

V
Venkata Narayana
executive

The original platform that we are paying for INR 2,500 crores, we've deployed INR 500 crores and the balance 2,000 has to be deployed. We're looking at deployment into various projects with -- in the stage of delivery on the...

P
Puneet Gulati
analyst

Remember, it was for the affordable part, right? Is that still the...

V
Venkata Narayana
executive

Affordable and mid income.

P
Puneet Gulati
analyst

Yes. So that's still the intent. You can't use that money in Mumbai or can you use that money in Mumbai?

V
Venkata Narayana
executive

No, we are not using that money in Mumbai. We are using between Hyderabad, Chennai and Bangalore.

P
Puneet Gulati
analyst

Okay. Hyderabad, Chennai and Bangalore. Okay. That's good. And secondly, on your commercial projects, you talked about 5 million square feet getting completed. Would you like to keep it on your portfolio to earn rentals? Or is there a plan to flip it off and then redeploying that cash for a higher return again?

V
Venkata Narayana
executive

Not as of now, sir. I think next 3 to 4 years, we will continue to build this portfolio again to a sizable scale. We -- like we did in the last 5, 6 years before we did the Blackstone transaction. And then once we reach the scale, we'll take a decision.

Operator

[Operator Instructions] We have the next question from the line of Ritwik Sheth from One-Up Financial.

R
Ritwik Sheth
analyst

Sir, my first question is regarding to the CWIP in the commercial, retail and hospitality projects. Is it possible to share the CWIP figure as of September 2022?

V
Venkata Narayana
executive

1 minute, Mr. Amit, our CFO, will be able to give us number. You're talking about [indiscernible] CapEx projects?

R
Ritwik Sheth
analyst

Yes. Correct. Yes.

V
Venkata Narayana
executive

The CapEx on total -- or CapEx project is close to INR 2,929 crores, what we've spent indeed.

R
Ritwik Sheth
analyst

Okay. And what would be the balance amount to be spent over the next, say, 4 or 5 years to complete all the projects that we have mentioned?

V
Venkata Narayana
executive

Only our share is around INR 7,000 crores.

R
Ritwik Sheth
analyst

Okay. INR 7,000 crores is left. So it's safe to assume that we'll be spending it over the next 4 to 5 years, right?

V
Venkata Narayana
executive

Right.

R
Ritwik Sheth
analyst

Sure. Okay. And sir, would it be possible to share the gross and net debt figure in the JV and associates, which doesn't get consolidated in the balance sheet?

V
Venkata Narayana
executive

The gross debt Prestige share would be close to INR 1,000 crores to INR 1,200 crores, which it does not get consolidated. So the existing debt plus INR 1,200 crores is what we can add.

R
Ritwik Sheth
analyst

Okay, INR 1,200 crores. That's the gross debt?

V
Venkata Narayana
executive

Yes.

R
Ritwik Sheth
analyst

And this will be mainly related to the BKC project, right?

V
Venkata Narayana
executive

It mainly pertains to the DIAL project as in Delhi.

R
Ritwik Sheth
analyst

So the DIAL project. Okay. Sure, sir. And sir, just one broad question. We are currently at INR 12,000 crores of run rate if I look at the first half, so -- and we have about INR 35,000 crores of ongoing and upcoming projects in the residential side. So 3x of what we are. So what would be a comfortable level for us because to grow on this base, we'll have to add on BD projects as you have been mentioning in the last two quarters. So what would be a comfortable level for us on the total ongoing and upcoming projects, inventory value-wise?

V
Venkata Narayana
executive

Sir, now, with regard to run rate -- with regard to maintaining this run rate of, say, INR 12,000 crores, our offering should be at least in the range of INR 20,000 crores. So that is 60% of that gets sold also is around INR 12,000 crores of run rate. But as many mentioned earlier in the conversation, the total stock that we're having INR 6,500 crores right now, but therefore, the launches we can see and I've also given the details of which our projects are ready for the launch in the second half of this year.

And the various business development activities that are going on. So we will see, based on the demand that we have and offtake that we have. So a way to add each location in the existing geographies that we are operating. Only new thing would be -- it's taking a long time to launch a product in Noida because of the approval -- last stage of approval. And we may add a project in Gurgaon in this quarter.

R
Ritwik Sheth
analyst

So you'd -- basically, you would like to have ongoing projects north of INR 20,000 crores. That's...

V
Venkata Narayana
executive

That's the idea. So that offering will be comprehensive across the geographies, and there will be options at least to the customers to choose from.

R
Ritwik Sheth
analyst

Sure, sure. And sir, just if I may squeeze one last question. What is the HDFC platform, if you can just refresh how does that work for us?

V
Venkata Narayana
executive

We had in the past when we had disclosed too, had signed a INR 2,500 crores platform with them to develop affordable and middle-income portfolio. And we did draw money from them and deploy it in two projects, and the balance money that is to be deployed. Now we are looking at various projects in Bangalore, Hyderabad and Chennai to draw that and deploy into various projects.

R
Ritwik Sheth
analyst

Okay. Yes. I was talking about the economic interest for Prestige, what would be it like in a typical project?

V
Venkata Narayana
executive

So what we have -- are we understanding, there's no change. The platform deal that we had signed, it remains the same. They contribute a significant amount of money. We contribute the balance. Till a particular threshold, the returns will get shared in the ratio of contribution, after that equally. And beyond that, it's going to be entirely to us -- mostly to us.

Operator

[Operator Instructions] We have the next question from the line of Pritesh Sheth from Motilal Oswal Financial Services.

P
Pritesh Sheth
analyst

Sir, firstly, in terms of Bangalore contribution for this quarter, around INR 2,600 crores and largely, it came from Prestige City and with that inventory reducing and now almost we are sold out. So how do you plan to maintain this run rate in Bangalore? And considering looking at your pipeline in probably only project which I can right now look at in terms of which is large size is the [ Park Grove ], right? So what's the launch time line there? And how are we planning to sustain this run rate in Bangalore?

I
Irfan Razack
executive

No, no, it's not only [ Park Grove ], it is also we've got Prestige Lavender Fields, we've got Prestige Serenity Shores, Elm Park as well as Phase II of Primrose Hills and Prestige Sanctuary, all these will get done within this quarter or early next quarter. So there is a huge pipeline. [ Park Grove ], we are looking at it only probably -- Park Grove, we are looking at it, if all this inventory comes in to sort of time even in the next fiscal because this will give us enough numbers. And if all goes well, and we still need inventory, Park Grove approvals come, we could do Park Grove also in the last quarter of this fiscal.

So there is enough inventory. And apart from this, we've got a huge pipeline of land bank where all the planning processes are going on and approval process will go on. So it's ongoing process. There's enough inventory in Bangalore. In Hyderabad, we've got a very large tract of land, which is called Prestige City Hyderabad. Even there, that will be almost INR 8,000 crores worth of revenue that will come from there. That project is under approval. And also in Hyderabad, we've got one more project called Prestige Clairmont, which is owned by us fully and that one will give us about INR 1,000 crores of revenue.

P
Pritesh Sheth
analyst

Okay. So very confident, I mean we can sustain this run rate on the quarterly basis in Bangalore?

I
Irfan Razack
executive

Yes. I don't see any -- in terms of visibility of raw material or stock for the next two financial years. Of course, the business is ongoing, if things keep going well. There's more and more things we can do. We don't want to over trade. We have enough inventory now coming up in Mumbai because first phase of Prestige City Mulund has done well. And that we can -- once substantial inventory is closed, we can even launch the second phase. That is the Forest Hills. So there's a strategy. Things are going well and we will adopt that strategy and move on, no issues.

P
Pritesh Sheth
analyst

Great to hear that, sir. And if I heard the initial comments correctly, in terms of launch, we are also looking to launch the Shivshahi project. I don't recollect the name which you called out?

I
Irfan Razack
executive

That's called Prestige [indiscernible]. Even that also the planning process is over now. It all depends on how soon we get approvals and the rest of the title stuff that happens. Once that falls in place, even [indiscernible] will be on. We are trying hard to see that it comes at least in the last quarter of this financial year. And also there is in Marine Lines that is called the Ocean Towers, that also -- but these are high-value properties. So high value will not give us such huge sort of traction that we get from the mid income, but even though revenues will come from there.

P
Pritesh Sheth
analyst

Sure. And in terms of the pipeline business [indiscernible] pipeline, you indicated around INR 20,000 crores, INR 25,000 crores. How is the mix in terms of outright because of late you have been inclined to getting into outright land transactions. So mix in terms of outright versus JV, JV? And what sort of spending that you are looking at in terms of maybe that's next 1, 1.5 year in terms of business element?

I
Irfan Razack
executive

Yes. I mean it's not that I definitely don't want to do [ JVA ] or I want to do only outright. It depends on a case-to-case basis, depending on the land owner, depending on the type of deal we get and what sense it makes to the company on the bottom line. We take decisions on whether it's JV or outright. Sometimes it's also a mix, partly it's outright, partly it's [ JVA ]. So this is part of our business process, which goes on, really can't define to say, okay, it will be so much percent outright or X percent [ JVA ], it's always on a case to case, you have to decide. Main thing is it should make sense for us financially and then the bottom line should be protected.

P
Pritesh Sheth
analyst

Sure. And just in terms of spending, if you want to highlight, how much we would need in terms of investments over the next 1, 1.5 years for business element?

I
Irfan Razack
executive

See, the good part is I'll take you how much we need to invest. But before I say that, now there's a lot of investment that we've already done on some land, Bangalore, Hyderabad, even in Mumbai. Now these are all getting sold. So I look at getting positive cash flows from these and Venkat will just add up to the exact number that probably would be required on what we have committed in the various geographies.

V
Venkata Narayana
executive

Yes. So the balance that we have to pay towards the upcoming projects would be around INR 500 crores to INR 550 crores. And the new business development activity that we are doing, of course, that's close to -- we need to execute, we need to find some pace of discussion. To give the adequate amount of raw material for us to launch and sell, we may have to spend between INR 2,500 crores to INR 3,000 crores a year.

Operator

[Operator Instructions] We have a follow-up question from the line of Ritwik Sheth from One-Up Financial.

R
Ritwik Sheth
analyst

Sir, in the opening remarks, you mentioned about the cash flow. Could you -- can you repeat it, please? I think I missed a part of it.

V
Venkata Narayana
executive

See, overall, if you look at cash collections for this half of the year is around INR 4,700 crores. So one minute, let me -- I needed to brief up for you and then let me to explain, INR 4,450 crores, okay? Now, what we are spending towards the construction of a residential portfolio and the commercial portfolio meant for sale, in the first half of the year is around INR 2,100 crores.

Okay. So the -- and in addition to that, what we have spent towards the business development -- only towards the residential, if we look at, is INR 1,400 crores. That makes it around INR 3,500 crores as against INR 4,700 crores of money that we have collected. There is also business development that we have done with respect to commercial, retail and hospitality. I'm only comparing the development portfolio.

R
Ritwik Sheth
analyst

Right, right. So -- and what would be the CapEx? You mentioned INR 900 crores we have spent in office, retail and hospitality in the half, right?

V
Venkata Narayana
executive

That's right.

R
Ritwik Sheth
analyst

That will be over and top of this INR 1,400 crores and INR 2,100 crores?

V
Venkata Narayana
executive

Which is correct.

R
Ritwik Sheth
analyst

Right. Okay. So basically, we would be -- we have about INR 500 crores of deficit if I just add up all the -- INR 500 crores or INR 600 crores of deficit, which includes the...

V
Venkata Narayana
executive

Not really. INR 3,500 crores minus INR 4,700 crores is INR 1,200 crores. And what has been spent on this is INR 900 crores.

R
Ritwik Sheth
analyst

Yes. So we will be cash positive, sorry.

V
Venkata Narayana
executive

Yes. But, see, the way to look at office, retail and hospitality is, they are not developmental businesses. You should -- this is portfolio and wherein 2/3 of money, we do well in the bank and 1/3 is our equity contribution broadly, I'm saying this. So you're not counting the inflows of the project, if you add up commercial, retail, hospitality.

R
Ritwik Sheth
analyst

Yes. What I'm trying to understand is that despite no top line or no cash flow from the residential -- from the commercial, retail and hospitality, we have managed to have cash surplus and spend INR 900 crores on developing the assets as well?

V
Venkata Narayana
executive

Despite them, it is correct.

R
Ritwik Sheth
analyst

Yes, yes, yes. Sure. Okay. And would it be possible for Q2 as well, please?

V
Venkata Narayana
executive

Yes, for half of the year. This is first half of the year.

Operator

We have the next question from the line of Biplab Debbarma from Antique Stockbroking.

B
Biplab Debbarma
analyst

So my first question is on Mulund. So Mulund micro market, as you know, has been seeing significant traction on that -- difference on many top developers. So it's really commendable as a new player, you have received very strong response. So sir, I just wanted to know in terms of absolute sales value and as a percentage of total inventory loans, how much you have sold in Mulund till date?

V
Venkata Narayana
executive

We haven't launched -- so we haven't launched the full inventory yet. So the phases that we have launched so far, 60% of what we have launched is what we have sold so far.

B
Biplab Debbarma
analyst

So 60% of Phase 1 launch have sold and that would complement to what kind of around, just a ballpark, what kind of sales value?

V
Venkata Narayana
executive

We've sold a little over around INR 1,100 crores from May 17 to 30th September in Prestige City Mulund.

B
Biplab Debbarma
analyst

That's a great number. That's a great number. And second question is on Liberty Towers. You have put it in the sales. Just wanted to know how are we selling the entire thing or the same stuck-up sales or it would be something like sales plus [indiscernible] and what could be the reason for the same? I mean why you opted for that kind of strategy?

V
Venkata Narayana
executive

We are going to -- we brought this project in from upcoming projects to ongoing projects.

I
Irfan Razack
executive

We have actually just put that as a launch project, but we are not selling...

B
Biplab Debbarma
analyst

Okay. Okay. So it will be -- as of now, it is under lease model or it is not yet decided?

V
Venkata Narayana
executive

Lease model. Not sale model.

B
Biplab Debbarma
analyst

Okay. So you have just put it in on ongoing projects. And one final question is on the deal pipeline, how is the deal pipeline you are seeing in [ MMR ]. In a short period of time, you have done quite a big lucrative deal. But going forward, because [ MMR ] has been seen -- the reason I'm asking is because [ MMR ] has been seeing significant traction in sales volume after so many years. And it seems like many of those developers who intended -- already intended to JDA/JVA are now coming back and saying we'll do our projects. So in terms of deal pipeline, how is the velocity and how is the deal flow? Are you seeing enough number of deals coming to you? Can you just give us some insight on that, what you are seeing?

V
Venkata Narayana
executive

If you think, what we have done in terms of deals so far is good. What is in pipeline is better.

B
Biplab Debbarma
analyst

Okay. That's very reassuring. And one final question is that the [ finance screen ], I see you had excluded Jeejamata project. So...

V
Venkata Narayana
executive

This is an upcoming project, 4.5 million square foot is there.

B
Biplab Debbarma
analyst

Okay. It's in upcoming, you have to look from ongoing. Okay, sir. Excellent set of numbers.

Operator

[Operator Instructions] We have the next question from the line of Abhinav Sinha from Jefferies.

A
Abhinav Sinha
analyst

First question on presales. We've done about 5,500 in first half. I believe it's given a target of 12,000 for the full year, right? And would you like to increase the target now?

V
Venkata Narayana
executive

Abhinav, you are giving the targets, we are working for you. You are the one who said in the beginning of the year that we should be looking at INR 12,000 crores.

A
Abhinav Sinha
analyst

So I mean what's next?

I
Irfan Razack
executive

Abhinav, yes, we will achieve INR 12,000 crores, maybe we'll exceed INR 12,000 crores. But obviously, not maybe we will, [Foreign Language ], will cross INR 13,000 crores also. But at the moment, we will stick to our INR 12,000 crores. Our internal target for us has been much, much higher.

A
Abhinav Sinha
analyst

Right. And sir, looking at the momentum that we have, so -- can you also, in the next, say, 2 years or 3 years out, is there a reasonable sales CAGR to extend, how much will be the pricing component of that?

V
Venkata Narayana
executive

To the previous, looking at what?

A
Abhinav Sinha
analyst

Yes, what is the presales number that you're looking at in, say, 2 to 3 years or...

V
Venkata Narayana
executive

So Abhinav, the only region that we are not present in terms of which contributes significantly to the residential sales is NCR and Pune and of course, in residential, Pune. Now -- so these two regions will definitely have a potential of INR 2,000 crores to INR 3,000 crores run rate per annum, if we have a good offering. So now we look at every market differently and try to grow better and deeper in these markets, enough micro pockets within these markets. So still with each saturation level, we think there is enough room for growing in the next 3 to 4 years.

I don't want to put numbers to it. But last year, when we had this discussion, you mentioned saying the INR 10,000 crores of presales for the last year was a big jump from the previous year, which was INR 5,400 crores. And then these days, we will find it difficult to grow. But thanks to the contribution from the entire team, the new region of Mumbai contributing and people of Mumbai have welcomed us with open heart. So therefore, the similar reception if we get for our projects in NCR region, I think over a period of 2, 3 years, we can go to a much bigger number, which could be double that of what we have done.

A
Abhinav Sinha
analyst

Okay. Sir, on the gearing side now, we had a flattish quarter, and I believe there was some small amount of inflow from asset sale also. But are we sort of flattening out there? I mean, it's 0.4, 0.5, we begin to expect in the next 2 quarters?

V
Venkata Narayana
executive

0.4, 0.5, debt equity?

A
Abhinav Sinha
analyst

Sir, of debt equity, yes.

V
Venkata Narayana
executive

Yes, 0.5 is what we have given guidance for this year. I think we feel that we will not cross that number.

A
Abhinav Sinha
analyst

But is that like a reasonable stable number to expect over the medium term also or you will sort of fly a bit more in the years ahead?

V
Venkata Narayana
executive

No. With -- if we can continue this kind of run rate in the development portfolio and the collections are going to be commensurate with the sales, we should be able to manage within that number.

A
Abhinav Sinha
analyst

Okay. Sir, last question on the P&L front. So I mean you're sort of stuck in the INR 100 crores a quarter plus/minus, I mean maybe go up to INR 150 crores sometimes. But not crossing that and when is it a reasonable time to expect higher profitability?

V
Venkata Narayana
executive

So the highest sales have happened in FY '22. So majority of them are coming from newly launched than the completed. The moment these projects come for revenue recognition, which would be 3 years from now, that's when you will keep definitely quantum jump in terms of financials.

Operator

We have the next question from the line of Alpesh Thacker from Antique Stockbroking.

A
Alpesh Thacker
analyst

Congratulations for a very good set of numbers. Just one from the strategy perspective. We have spent quite some time in MMR and have been doing really well here now. So as for your assessment so far, how do you find this market in terms of opportunities going at for you? And will we continue to play this market via JV/JD model? Or are we open to outright land purchases as well. So that's my first question.

And just one more to it. So are you -- what are the key challenges that you envisage in terms of streaming up in this market compared to, let's say, Bangalore?

V
Venkata Narayana
executive

First and foremost, we want to thank everybody in that region for the welcome that they have given and for the love and affection for Prestige Group, and all the customers who have bought homes from us, very, very encouraging. Therefore, we have right now 6 projects in Mumbai at BKC II project and Prestige Liberty Towers at Mahalakshmi. We have Prestige Jasdan, 3 residential projects, 3 office and 3 residential. Residential being at Mahalaxmi. We have one at Pali Hill, which is Prestige Daffodils and we have Prestige City at Mulund.

That's NCLT transaction. Prestige Daffodils is a redevelopment transaction and Prestige [indiscernible] outright. So this is what we will give you in terms of strategy. So there is some way redevelopment, some way outright by NCLT. We're looking at the opportunities the way they come and evaluate. We have two more projects in the pipeline since we set the plan we would like to spend. We're happy with what we are doing, and we have got large big committed team there. These projects are coming up at Marine Lines. We have Prestige [indiscernible] coming at Worli, these two projects. And there are a few transactions, which are under discussion, which will become probably maybe upcoming projects in a couple of quarters.

A
Alpesh Thacker
analyst

And just last one from my side. So probably I've missed it in the initial comments. So how much CapEx is left in our retail and commercial ongoing for this? And what is the status of the DIAL project? What is the ground status over there?

V
Venkata Narayana
executive

INR 10,000 crores is the balance to spend Prestige share in retail, office and hospitality projects, which will be spent over a period of 4 years, and that will contribute to the annuity portfolio significantly. As far as DIAL project is concerned, we made tremendous progress from the time we have entered that project. And if all goes well, of course, [indiscernible] in that region, some weather issues. But at the pace at which we have been doing, we continue and finish -- to continue to work, 2024, the year after next, is when the project will get completed.

Operator

We have a follow-up question from the line of Parikshit Kandpal from HDFC Securities.

P
Parikshit Kandpal
analyst

Sir, my question is on the commercial market outlook. So with which under construction and forthcoming pipeline. So given the headwinds -- global headwinds and [indiscernible] issues coming in, so how do we see the outlook for the office market, both in Bangalore and Mumbai? The Mumbai portfolio is also quite sizable. BTC itself at 4.5 million close to about where the absorption in BKC is about 3 lakh to 4 lakh square feet annually. So how do you intend to lease out? So if you can give some outlook on views on both these markets? How do you pursue this?

V
Venkata Narayana
executive

Now whatever is getting completed is on a priority for leasing. As I mentioned earlier, we have a project getting completed in Kochi, two of them in Bangalore, one in Hyderabad, Prestige Sky Tech and one in Pune. And all these places, we are active discussions. Some amount of area we have already leased and they are doing fit-outs. And there are discussions that are going on. And we are confident that this will get leased out given the quality of the building and the inquiries, they will get filled out soon.

What you mentioned with respect to BKC and Bombay commercial activity, we are -- BKC is still an upcoming project. It's going to come to ongoing projects this quarter. And there is 3.5 years to 4 years of time to complete. And we are confident that with the kind of design, the building specification that we have gotten access to metro station, which is being right in front, we should be able to lease them out. And we have time to do that.

P
Parikshit Kandpal
analyst

Okay. In Mahalaxmi, how many floors do you intend to build and in BKC, how many floors will be there?

V
Venkata Narayana
executive

It's 250 meters. It's about 67 floors. 67 floors is Mahalaxmi. And this is around [indiscernible] 67 floors and this would be around [ 25 to 28 ] floors.

P
Parikshit Kandpal
analyst

Okay. Got it. And just the last thing on the [indiscernible] you've guided earlier that INR 2,000 crores could be the precise contribution. So are you on track to achieve that for this financial year?

V
Venkata Narayana
executive

If we can launch the remaining 2 projects, hopefully, we should get there, that Marine Lines as well as the Worli.

P
Parikshit Kandpal
analyst

So how have you been the response to the Jasdan project, I know you have been doing quite well. So what are the sales till now in the Jasdan project. I know it's a little bit of [indiscernible] project, so it may have a slower sale velocity. But -- so how do you see that project spanning on in terms of presales?

V
Venkata Narayana
executive

It's been quite good so far, a small project compared to that of Prestige City. We have total sales of INR 150 crores from Jasdan Classic.

Operator

We have the next question from the line of Kunal Lakhan from CLSA.

K
Kunal Lakhan
analyst

Firstly, on -- if you can share some data points on how much percentage of our buyers avail of mortgage finance? And it's -- the recent hike in the mortgage rates, have we -- are we facing any pushback on the demand side? And also in the same that if you can highlight some -- or give some color on like how the demand has been in the festive season in October and November so far?

V
Venkata Narayana
executive

It's been good. So now let me first talk about the mortgage. The percentage of people who go for mortgage loans vary from region to region. Bangalore, almost 75% to 80% of the people go. Hyderabad, they will be 10% less and Mumbai is a different market. So on an average, if we were to take all regions put together, it could be around 60% to 70% of the people going for mortgage. Yes, increase in the interest rate definitely hurts by reducing the eligibility of the people. So -- because per lakh EMIs have gone up and the rate increase has been very quick. So from the people who avail mortgage point of view, so far, we haven't seen a big drop in terms of demand, but maybe one more hike can be factored in. But beyond that, I think it will start hurting the sentiment.

K
Kunal Lakhan
analyst

Beyond what mortgage rates would you think it will be...

V
Venkata Narayana
executive

Maybe another 0.5% to 0.75% hike should be okay, it must have happened by now. And beyond that, it will go to hurt.

K
Kunal Lakhan
analyst

But so far, the footfalls and the conversions are okay?

V
Venkata Narayana
executive

So far it's been okay. Therefore, it's been reflected in the sales that we have done also.

K
Kunal Lakhan
analyst

Sure. That's helpful. Secondly, I just had a question on the commercial rental ramp-up that you have put out in the presentation. So this rental ramp up to INR 2,640 crores and INR 510 crores in office and retail, are this -- I'm assuming the INR 7,000 crores of CapEx or share will get us to this number? And firstly, is this rental ramp-up our share or in total? I'm assuming that this is total?

V
Venkata Narayana
executive

No, you're talking about slide where we've given the 5-year projection?

K
Kunal Lakhan
analyst

Correct. INR 2,640 crores by, say, FY '28, is it our share or total including JV?

V
Venkata Narayana
executive

Our share.

K
Kunal Lakhan
analyst

This is our share. And even the INR 510 crores for retail. But -- so you're saying that INR 7,000 crores of CapEx that we plan to incur balance CapEx will get us to these numbers?

V
Venkata Narayana
executive

So let me get the details. The total annuity projections that you see in the slide is for ongoing as well as upcoming, okay? And the spend that you asked for earlier is the balance of finished cost of -- finished share with respect to only ongoing, which is INR 7,000 crores.

K
Kunal Lakhan
analyst

Sure.

V
Venkata Narayana
executive

And the upcoming project that will give you a rough estimate, that would be another our share of around INR 7,500 crores.

K
Kunal Lakhan
analyst

Yes, that's something I was looking for. Okay.

Operator

As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments.

I
Irfan Razack
executive

Thanks, everyone, for your participation. It's as usual been a very healthy and hectic participation. Our teams have been working hard to see that whatever goals are set, achieved and exceeded. So I think going forward also, things are looking good. They are very positive and hope to see you next quarter again.

V
Venkata Narayana
executive

Thank you. Thanks, everyone, for taking time out to be on the call. I mean, this has been a very interesting conversation that we had with all of you. We're happy to see that most of you're tracking us in detail, our interest into various geographies and the response to various projects and have been giving inputs also off-line. Thank you for the interest and inputs and everything. We look forward to your continued support. And as our Chairman said, we are, as a team, working towards seeing how we can grow beyond where we have reached, and we believe the kind of pipeline that we have got exciting times ahead. Thank you very much.

Operator

On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

All Transcripts

Back to Top