Sobha Ltd

NSE:SOBHA

Earnings Call Transcript 2023-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to the Sobha Limited Q1 FY '23 Results Conference Call, hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Adhidev Chattopadhyay. Thank you, and over to you, sir.

[Adhidev Chattopadhyay, analyst]

Good evening, everyone. On behalf of ICICI Securities, I'd like to welcome everyone today to the Q1 FY '23 results call of Sobha Limited. From the management, we have with us today, Mr. Jagadish Nangineni, the Managing Director; Mr. Yogesh Bansal, the Chief Financial Officer; Mr. Ramesh Babu, the Senior VP, Finance; Mr. Vighneshwar Bhat, the Company Secretary and Compliance Officer; and Mr. Soumyadeep Saha, the Head of IR. I would now like to hand over the call to the management for their opening remarks. Over to you. Thank you.

[Jagadish Nangineni, executive]

Thank you, Adhidev, for your kind introduction. Thank you and ICICI Securities team for organizing this call. Good evening, everyone, and wish you all a happy Raksha Bandhan and advance wishes on our 76th Independence Day, a momentous and proud occasion for all Indians on completing 75 years of independence. My team and I are happy to interact with you post our first quarterly results of the financial year '22/'23.

We have already shared the operational update of the company in early July 2022, and the investor presentation based on the audited financial results adopted by the Board can be downloaded from sobha.com. The 3 months of April to June 2022 quarter was an exciting one for Sobha on all fronts. Our teams have been working hard to hit all the operational goals of residential real estate, sales, new launches, collections, billing, project completion, handovers, design for new projects. And on contractual and manufacturing front, too, we have been steady in all activities.

This quarter, as you would have noticed, we sold more at better prices, enabling highest performance in both volume and value. This showcases strong consumer confidence, higher affordability, aspiration for high-quality homes. It also showcases strong brand acceptance in a competitive market. Customers have -- seems to have taken inflation in housing ownership costs in their stride.

All the factors contributing to higher home sales like increasing population concentration in large cities, disposable income, nuclearization of families, easier access to finance have accelerated and sustained this demand. The beginning of this quarter has started with 2 new project launches, Sobha Sentosa in Southeast Bangalore and Sobha Victoria Park in North Bangalore.

Couple of months later, we launched Sobha Royal Crest in South Bangalore. With help of these new launches, for the first time, we have achieved 1 million square feet of sales in Bangalore, in a single city, in a single quarter. We added -- additionally, we added higher area into our existing project in Pune, Sobha Nesara, taking advantage of the changed FAR regulations in Pune.

On the operational front, we have completed Sobha Blossom, a plotted development colony in Chennai. We received OC for the first 3 towers in the apartment project in Gurgaon, Sobha City. And we completed Row Houses in Pristine, and we completed 1 tower in Dream Acres in Bangalore. I'm also happy to share that we have completed the land sale transaction in this quarter by receiving a pending amount of about INR 155 crores of -- the sale of which has taken place in Q2 FY '22.

Proceeds from this has helped us further debt reduction. Our relentless focus on operational excellence has resulted in superior cash flows, resulting in reducing our debt by INR 940 crores in the past 7 quarters without any aid of external capital -- equity capital. We are further enhancing our capabilities operationally by investing in technology across functions to better integrate, optimize our costs, improve our customer experience simultaneously as we scale.

With this brief commentary, I would like to hand it over to Yogesh, our Chief Financial Officer, to give his comments on the quarterly performance.

[Yogesh Bansal, executive]

Thank you, sir. Good evening, all. We are happy to share that in this quarter, Sobha has shown steady improvement in sales, reduced debt even further with support of cash flow and successfully launched 3 new projects in Bangalore. I would like to take through our sales highlights. During the quarter, we have achieved total sales volume of 1.36 million square feet of super built-up area valued at INR 11.45 billion, which is highest ever since inception.

We were able to achieve best ever price realization of INR 8,431 per square feet, which is up by 11% year-on-year, 2% Q-on-Q. Bangalore has seen highest ever quarterly sales volume. We have crossed 1 million square feet mark in Bangalore, as mentioned by our MD. In total, Bangalore has contributed INR 8.58 billion with 1.06 million square feet of sales.

[ Pune ], GIFT City and NCR region also continue to do well. In GIFT City, we saw 43% Q-on-Q volume increase, with utilization also moving up close to by 10% Q-on-Q, sales volume achieved by quarterly highest for the region. It will -- debt reduction and cash flow highlights. As of June 30, 2022, our net debt stood at INR 21.1 billion. During the quarter, we have reduced [indiscernible]. Our debt-to-equity ratio also come down to 0.84 as compared to last quarter [indiscernible] 0.93.

We have reduced our finance cost by 30% year-on-year. In this quarter, our finance cost was INR 58.1 crores. Our borrowing cost also in this quarter is one of the industry lowest at 8.45%. Our MD told that in last 7 quarters, we have managed to reduce our net debt by INR 9.4 billion. Our total cash flow -- operational cash flow in this quarter [indiscernible] year-on-year to INR 11.18 billion.

Real estate cash [ inflow was ] up by 62% year-on-year to INR 8.88 billion. Our net operating cash flow also up by 39% year-on-year to INR 1.87 billion. We have generated free cash flow of INR 2.27 billion in this quarter. Out of INR 2.27 billion, we have received INR 1.55 billion from [ sales, ] monetization of land. If I briefly touch this land sale, we have done land sale in Q2 '22 for INR 1.72 billion. So out of that, we received particularly -- that particular month, INR 15.06 crores. Balance, we have received in this quarter.

And we have recognized revenue in that particular quarter, Q2 '22.

Moving to our P&L. Total income for Q1 '23 stands at INR 4.8 billion, up by 26% year-on-year. Real estate contributed INR 3.7 billion, up by 53% year-on-year. Contractual business had generated INR 294 million. Manufacturing [indiscernible] INR [ 786 ] million. EBITDA for Q1 '23 stands at INR 0.96 billion, margin of 20%. PBT for Q1 '23 was INR 0.22 billion, up by 71%, with a margin of 4%. Net profit for the Q1 '23 stands at INR 0.14 billion (sic) [ INR 0.15 billion ] up by 27%, with a margin of 3%. I thank you all the participation. And now we can open the floor for the question-and-answer session.

[Operator]

[Operator Instructions] We take the first question from the line of Mr. Puneet Gulati from HSBC.

[Puneet Gulati, analyst]

Congratulations on good numbers and solid debt reduction. My first question is actually on the land side. You are quite regularly selling land and raising cash. Can you give some color on what is the quality of the land that you are selling? Who is it that you're selling to? And what are your plans for future in similar area?

[Jagadish Nangineni, executive]

Good evening, Puneet. This particular land sale, which was done last financial year, it was -- this land was acquired by us way back in 2004 and '05. And for certain regulatory reasons and multiple ownerships, we could not develop this over several years. And hence, -- this -- we had taken a call that it is better off to sell rather than continue to keep it because it was not a developable portfolio -- it did not come in the developable portfolio. Hence, it was in the best interest of the company to hive if off.

And so that's what it is. The way we are monetizing land, Puneet, it's very clear that we would not like to monetize any land, which can contribute to development for us. Wherever the development is possible, we are, in fact, incrementally investing in those. And wherever we clearly, we see that there are issues which we cannot resolve or it's going to take extended time and if we get the right value, we are deciding to hive it off.

But going forward, I don't see any large, major land parcels that we would like to sell unless we get a much better valuation, or we foresee similar situation where we think it's not feasible to develop. So this is a large amount after quite a bit of time for us where we have received this close to INR 155 crores. So which I think it's a one-off thing. But going forward, like I explained, it's going to be very strategic, and it's not going to be based on any financial pressure on us.

[Puneet Gulati, analyst]

Yes. But I'm just -- from the buyer's perspective, what kind of use is we envisaging for this [indiscernible]?

[Jagadish Nangineni, executive]

Yes. So buyers, in this particular case, Puneet, the buyer was -- is an existing developer in Bangalore. I think he has certain other land parcels or has an interest in and around. So -- and it makes sense for him to develop this as a commercial or a semicommercial and residential. I think largely commercial.

[Puneet Gulati, analyst]

Largely commercial. Okay. Got it. And how are you looking at monetizing your land in Hosur and other areas, which are still kind of slightly far from the city centers?

[Jagadish Nangineni, executive]

So Hosur, we have been, in fact, mentioning this that we are monetizing it through developments in the nature of plotting or wherever possible, selling it if that is not a contiguous land, which cannot be developed. So we have identified a large chunk of land, which we can develop as plots. And currently, we are in the permission stage, which we would like to launch as soon as possible, probably in the next couple of quarters, we should be able to launch the Hosur project.

And that is one large chunk of the land that we would monetize. And there are a few other land parcels, which are not really contiguous, and we are actively seeking buyers for smaller parcels. And wherever we find the right opportunities, we would do the monetization of those lands.

[Puneet Gulati, analyst]

Understood. And in terms of your launch pipeline, you launched about roughly 2 million square feet of salable area. And your total pipeline plan was about 13 million. So should we think you're broadly on track to launch the full 12, 13 million square feet? Or do you think the number could be lesser?

[Jagadish Nangineni, executive]

So we have indicated in our investor presentation, there is about 12.11 million square feet of new launches. In that -- these are the launches that we are fairly confident of achieving in the next -- in this financial year and in the next financial year. Out of this 12, I think another 2 to 3 million square feet can easily be done in this financial year.

And if we are lucky, then we might do far more, depending on the time line that usually takes for the permissions, which is a little bit uncertain. But largely, we should be able to do 2 million to 3 million this financial year. And the next financial year, we should be able to do the -- largely the remaining ones. Puneet?

[Operator]

Sir, I think his line has got dropped. So I'm promoting the next question is from the line of Mr. Girish Choudhary from Spark Capital.

[Girish Choudhary, analyst]

Firstly, on the debt, we have seen a good reduction in that over the last year or 12 to 15 months. So how should we think of further reduction in debt? What would be your internal targets for, let's say, over the next 1 to 2 years?

[Jagadish Nangineni, executive]

So Girish, on debt reduction, so the way we look at it is now going forward on a yearly basis, we should be able to -- if we sustain the current volumes of sales and in terms of collections, then we should be fairly -- we are fairly confident of generating at least about INR 500 crores of free cash flow, which we have done last year also.

I think going forward also, it's doable without -- before considering any planned investments. So even if you take part of the -- if you take -- consider 50% of it go for new business development and 50% for debt reduction, that would largely be the way we would like to move. See, in a long term -- very long term, we would like to keep the debt as low as possible.

Currently, it's -- debt to equity is 0.83. Naturally, even if it's not -- if you maintain the debt levels at the same -- at the same level, sorry, with the increase in equity, I think that equity will go down in the next couple of years further. But from absolute level also, depending on our ability to invest in the new lands, we are fairly confident that we will either maintain the debt level or reduce it incrementally.

[Girish Choudhary, analyst]

Got it, sir. So since you mentioned on the investments, so how are you seeing that business development from [ here onwards ]. In the recent past, we focused more on deleveraging and have not done enough deals. So what can we expect on business development from here onwards?

[Jagadish Nangineni, executive]

So our business development pipeline has been robust in the -- and we have quite a few opportunities lined up. And it's a continuous process, and we have not finalized any specific deals where we can -- we will invest large amounts. But the existing -- the main capital that we will allocate going forward for land, one is for our existing deals that we have already signed or existing land that we already -- we think that incrementally, if we invest, it will come to a project level very soon. So these are the first priority.

Second priority is, if we find -- wherever we find the right opportunity on a joint development basis. Third is, which we are finding some opportunities there and outside purchase opportunities are also available. Those also we are seriously evaluating some of them. So I think a combination of these, we should be able to -- we will continue to invest.

Our overall -- currently, we are at about 5 million square feet run rate of sales. We would like to increase it to 7 million to 8 million square feet. If you have to do that, then we'll have to invest at a similar pace for business development. We recognize that, and that's what we would plan for in terms of cash outflow for the -- for land.

[Girish Choudhary, analyst]

Sure, sure. Got it. And then lastly, in the contracts and manufacturing business, the expenses have seen a sharp jump, both Q-o-Q and Y-o-Y, and we are seeing negative cash flow from this business. So any reasons why and what can we expect in the near to medium term?

[Jagadish Nangineni, executive]

Yes. So we had just completed one of a large contract, which is based in Kerala. That we have recognized all the expenses towards it. And we -- and that's the main cause for the increase in expenses.

[Operator]

We take the next question from the line of Mr. Pritesh Sheth from Motilal Oswal.

[Pritesh Sheth, analyst]

So firstly, on such a strong performance both on the volume side, which we have sustained for last 3, 4 quarters, and our prices have also jacked up. How do you see this year overall panning out? You earlier guided for around 5 million square feet kind of a number. Surely, I think with this performance, you can better it and considering also the fact that we are going to launch more projects. So how do you see this year in terms of volume as well as value [indiscernible]?

[Jagadish Nangineni, executive]

See, at the beginning of the financial year, Pritesh, we were clear that our one of the goals in this financial year is to improve our margins because last financial year, we have seen substantial increase in cost of construction. So given that background and also increasing interest rate costs, so we were not clear as how the market would -- the customers would take -- absorb the new pricing and new -- higher cost of homeownership. And it looks like the customers have taken in their side the inflationary aspects in the homeownership. And that we can clearly see in the sales volume as well.

So now the confidence for us to achieve higher numbers at these prices seems to be much better. And we are witnessing that on the ground. All the leading indicators also suggest that the demand seems to be robust. So now going forward, from this quarter to the end of the year, we think that fairly we'll be able to do at least the similar numbers as what we have done last quarter and given that we have enough inventory and some new launches also coming up.

So I think we should be able to deliver from a volume perspective, about 10% to 15% more. And from a value perspective, the pricing from last financial year, maybe -- overall, maybe about 5% increase. So overall, I think from a sales value, we should be able to do between 15% to 20% increase.

[Pritesh Sheth, analyst]

Sure. Great to hear that. And secondly, on pricing, I've seen -- since you give all the data city wise, I've seen at least INR 500, INR 600 per square feet kind of the increase across many cities like Bangalore, GIFT City, et cetera. So all of that is because of price hikes you have taken? Or is it something related to mix as well? So just if you can quantify the amount of price hikes that you have taken on a like-for-like basis in this quarter?

[Jagadish Nangineni, executive]

Yes. So it is a combination of 2 factors, Pritesh, actually. First is, its absolute price hike, which we have done during the quarter. It's -- actually, the price hike really gets reflected over a period of time, if you see because of the sales mix of the project. One, you can see -- one can see that the price realization between last Q1 FY '22 to Q1 FY '23, there has been an increase of 10.5%.

So -- but in the last quarter, specifically, we have hiked largely in Bangalore, the price hike has been between 4% to 6% across some of the projects. The second factor is also that some of the apartments or the villas or the plots that we have sold earlier, but we could not conclude the transactions. So we have canceled those, and we booked at the new price. So that also -- at a smaller volume, sometimes in the other cities, it reflects a higher realization. So both these, if you look at it, then it contributes to higher price [indiscernible].

[Pritesh Sheth, analyst]

Got it. And one last on launches. I mean you have had 2 million square feet of new launches. But apart from that, any area which we released from the existing projects, if you can quantify that? And how should we see that going forward in this year? Like how much of the launches would come from the ongoing projects where area is yet to be released for launch?

[Jagadish Nangineni, executive]

Yes. So Pritesh, we have about 13 million square feet of unreleased -- a combination of unreleased plus existing inventory. So of that, about you can say -- unreleased, we typically don't, again, mention it as a new launch, but that's about 6 million to 7 million square feet -- about 6.5 million square feet. Of that, we -- based on the pace of the sale, we will release it during this financial year.

But I think I do not have the exact number of how much we will be able to release, that will entirely depend on the pace of sale in each of these cities. But they are available for us to be launched at any point of time. So it's not contingent upon any kind of approvals. So it entirely depends on the way we sell in the coming months.

[Operator]

We take the next question from the line of Nikhil Kanodia from HDFC Securities.

[Unknown Analyst]

Congratulations on the very good set of numbers. Sir, I have 2 follow-up questions on the basis of the questions asked by previous participants. So one is you mentioned that in case of Bengaluru, you have taken 4% to 6% price hike. So what is the price hike that you would have taken across region and at the blended portfolio level?

[Jagadish Nangineni, executive]

Good evening, Nikhil. The right -- like I mentioned earlier, the price hike that we have done during this quarter is -- in Bangalore is between 4% to 6% in various projects. But it does not get reflected in the price realization because of the sales mix that happened across various projects, old projects, new projects. So hence, it looks like the price increase is not as high as what it is.

[Unknown Analyst]

Okay. So you mean to say blended level, it is a very negligible thing. So there is no reporting on that case?

[Jagadish Nangineni, executive]

Yes. I mean if you look at the price hike, like for example, we have launched new projects, right, in Bangalore. So there is no corresponding price hike for them. So it becomes a little -- that's why it becomes a little tough to see what exactly the price hike is.

[Unknown Analyst]

Okay, sir. Fair enough. Understood. And sir, you mentioned about your launch pipeline of around 12.1 million square feet. So in that case also, is it possible to quantify what is the pipeline region-wise? Like in case of Bengaluru, what is the number of projects and the area that is there for in the launch pipeline?

[Jagadish Nangineni, executive]

Yes. It is already given in the investor presentation in Slide 17. But if I have to just reiterate it, Bangalore has about 6.5 million square feet and rest of it distributed across various cities.

[Operator]

[Operator Instructions] We take the next question from the line of Mr. Dhruvesh Sanghvi from Prospero Tree.

[Dhruvesh Sanghvi, analyst]

Congratulations for a good set of numbers, Jagadishji, and -- am I audible, sorry?

[Jagadish Nangineni, executive]

Yes, Dhruvesh, clearly audible.

[Dhruvesh Sanghvi, analyst]

So yes, I have a couple of questions. One is, when we just see it from a slight past, let's say, somewhere around pre-COVID times, or when the ex CFO and ex CMD were there, whenever the questions related to debt or debt reductions were asked, there was never a comment about absolute level, and there is a welcome change that you are positively commenting about absolute debt levels as well, not just ratios. So very welcome on that.

But what has led to this big mindset change? Is it just you versus the old guy or there is a management, Board level thinking that considering COVID and the kind of disruption we saw, we should not get into such sort of situations ever again? if you can just give some rationale around that?

[Jagadish Nangineni, executive]

Good question, Dhruvesh. This is a combination of several factors. But I would say that one of the biggest factors was also COVID because at the -- when such an event has happened, it is very clearly visible for us that any kind of uncertainty of this scale can really put us in situations which are very tough to handle and ideally would like to avoid in future. That's one.

So we -- the overall, as a management, we have taken a call that this is something that needs to be addressed. And hence, we have worked upon it. And second is given that this is our one of the goals and strategically, it -- so we have operationally enabled it by thorough reviews and also continuous focus on both inflows and outflows and a tight control on all the aspects of it. So that -- with both these combinations, we have achieved this.

[Dhruvesh Sanghvi, analyst]

Right. So the other -- from a story point of view, when I think aloud like this that, okay, are we a premium builder? The answer is yes. Are we building ourselves? The answer is yes. In fact, we are making doors and bricks also, not just building as a contractor. Additionally, we provide value-added services in terms of furniture and other thinking on that area.

In addition to that, our sales through agents are very low versus the competition. And we are repaying debt and our cost of borrowing is much better versus a lot of unorganized players. But then when we see our margins, I mean, everything is in our favor, but still margins are very poor in the listed space or the organized market space. And I understand that there is the accounting aspect to it that what we sold just 2, 3 years back and it start getting reflected in the next 1, 2, 3 years.

But can you give us some sense on how we should look at margins and how they are low? And I also understand the mix between the EPC versus the real estate space. So really cutting to the real point that there is a lot of overheads that we have as an organization, which a lot of other people don't have. So is there an answer in the form of only volumes? Or there is an absolute possibility of saving a large amount by operational management? And there has been a lot of focus after you have come on the word, operations, focus, processes, checklists, et cetera. So am I thinking correct? And some guidance on this area?

[Jagadish Nangineni, executive]

Another good question, Dhruvesh. In order to understand the current margins or past margins and probably the near-term future margins, the -- we'll have to look at the environment in which we operated in the last 5 to 6 years, where the real estate as a sector was facing a lot of headwinds. And in the recent past, there has been a lot of cost increases also. So specifically, this has affected our projects where we have undertaken in the form of joint development, where the -- as the cost increased for us and the realization is the same, then it does impact some of the margins. But that part, whether it will affect in the future also, it will be till such time where we have -- we will recognize income where the joint development projects are getting completed. But in future, it looks to me like that -- it looks to me that it is very -- we have been able to increase our pricing, probably we are trying to optimize our costs on all fronts. And hence, there should be definite change in the improvement in the margins.

So the overall backward integration model that we have seen, that will -- no doubt will help us in the future.

[Operator]

Sir, the line for the previous participant has been disconnected, sir. We have the next question from the line of Sameer.

[Sameer Baisiwala, analyst]

My first question is on the contractual business. Sir, what's the outlook over here? And what's the current pricing that you are quoting?

[Jagadish Nangineni, executive]

Good evening, Sameer. The outlook on the contractual and manufacturing business, Sameer, it continues to remain the same that we would actively seek opportunities in the space where it is -- where our margins are well protected, and it is a -- the counterparty is a reputable client. And we also operate only in institutional and commercial. So given that space, we continue to seek opportunities there. So there is no shying away from doing -- seeking out new opportunities.

So the second question you had was what's the pricing? So the pricing, essentially, what we are trying to see is learning from the past, some of the past experiences, seeing if we can reduce our risk on some of the commodity prices better than what we have done earlier in the past contracts. We are trying to see if we can achieve that. But otherwise, the rest of the way we function will continue to remain the same.

[Sameer Baisiwala, analyst]

Okay. But sir, how does the pipeline look like for this business? Would you be going back to the same volumes that you were doing pre-COVID? Or it's going to take some time?

[Jagadish Nangineni, executive]

Pre-COVID, Sameer, we had a mix of both Infosys and non-Infosys contracts, right? And Infosys was a reasonably large vertical. But post-COVID, I think Infosys itself is not developing new campuses. And hence, the CapEx that's provided by them for building out new buildings has become lower. And hence, from that perspective, a large part of the business has reduced.

But however, if you look at the -- we have been steadily building our other client business. And the last couple of years, of course, because of COVID, we were not able to execute some of the projects, but we have a reasonable pipeline to achieve a good top line in terms of the -- in terms of contractual business. So if you specifically ask if you have a order book for this, we have a reasonably good order book for these -- we have close to about INR 500 crores of order book, which we'll have to execute in the next year, 1.5 years. Along with this, we are aggressively seeking out new opportunities. So I think we'll be continuing to build that pipeline.

[Sameer Baisiwala, analyst]

Okay. And just on the new launches, have you launched that project on the 26-acre parcel near Dream Acres? Or that is not 1 of those 3 launches?

[Jagadish Nangineni, executive]

No. That is another launch, Sameer, which is of about 3.3 million square feet. That is not part of the 3 new launches that we have done. But I think if current -- we hope to do that launch by first quarter of next financial year. If we are lucky, then probably we can get this year, too.

[Sameer Baisiwala, analyst]

Okay. And just a quick clarification. You mentioned, I think, 4% to 6% price increase across projects in Bangalore, but this is for the old projects, right?

[Jagadish Nangineni, executive]

That's correct, Sameer.

[Operator]

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

[Abhinav Sinha, analyst]

Quick one on the various geographies outside Bangalore. Sir, I wanted to check that, a, in Kochi, we have seen the sales momentum has come down quite a bit. So what's the reason for that and the outlook there? And secondly, in Gurgaon, when are we expecting the next project launch to happen there?

[Jagadish Nangineni, executive]

So with regard to the first question, Kochi and in some -- couple of other cities in Kerala, that is Calicut and in Thrissur, this quarter, what we have done is we have actually seen wherever there are customers who have not been paying for some time, we have canceled those units. And hence, it looks like that the performance in Kochi and -- in fact, if you look at Calicut, it's a negative number. So this looks like we have not done well. But new sales have been in the similar range as what we have been doing earlier. But these cancellations have affected the reported sales numbers.

And coming to the Gurgaon launch, in Gurgaon, we have 1 project, which is [ Karma ], which we have signed up some time back. So I think that we are going ahead in terms of the next steps in terms of [indiscernible]. So I think we'll get clarity for that in the next quarter or a couple of quarters. The timing of which -- it will be clear. So we think that if we are lucky, then we can do this financial year, or it might go to the next financial year.

[Abhinav Sinha, analyst]

Okay. So even without Gurgaon and with these cancellations in Kerala, you're still hopeful of that 15%, 20% Y-o-Y sales growth, and that's largely Bangalore is it, this year?

[Jagadish Nangineni, executive]

Yes, Abhinav. The -- without these new launches -- we are not counting on new launches from Gurgaon, but there are -- there is existing inventory in Gurgaon, which needs to be released in Sobha City, and there is some inventory in International City, too. So that, I think, is a reasonable inventory to cater to the projection of sales that we have for Gurgaon.

And for other cities, now the -- we have about 300,000 square feet in Pune, and we have enough inventory in GIFT City and in Chennai and in Kerala. So if these perform even similar or slightly better than last financial year, then I think we should be able to do the numbers that I have [ previously ] indicated.

[Operator]

We take the next question from the line of Parvez Akhtar from Edelweiss Securities.

[Parvez Qazi, analyst]

Congratulations for a great set of numbers.

[Jagadish Nangineni, executive]

Thank you, Parvez.

[Parvez Qazi, analyst]

So my question is with regards to our future launch pipeline, what is the status of approvals? And you said that you're fairly confident that you'll be able to do another 2, 3 million square feet in this year and then rest depends on launches. So what is the status of approvals on this launch pipeline?

[Jagadish Nangineni, executive]

The -- Parvez, for the launches that we are planning to do this financial year, so most of the one which I had indicated about 2 million to 3 million square feet, those are in fairly advanced stage. And we should be able to do it in the next couple of quarters, wherein probably we are a couple of steps away from applying to RERA. But otherwise, the remaining ones are at also where we have already designed it, we have applied for building plan approvals or initial licensing requirements.

So those also -- some of them will take a little bit more time because some of the projects will require environment clearance. So -- and those will come in the subsequent financial year.

[Parvez Qazi, analyst]

But is it fair to assume that this entire 12 million square feet will get launched over FY '23 and '24?

[Jagadish Nangineni, executive]

Largely -- to a large extent, yes.

[Operator]

We take the next question from the line of Mr. Mohit Agrawal from IIFL.

[Mohit Agrawal, analyst]

My first question is on -- you talked about business development. Now geographically, are you going to expand more into Bangalore or you're looking at newer markets, any specific newer market that you're looking at from a business development perspective? And the second part to that question is on the entire business development competitive intensity in Bangalore, now everyone, existing players seem to be getting aggressive. We also see newer players coming in into Bangalore and they are also talking about aggressive expansion. So how have you seen the land pricing or [indiscernible] partner expectations moving there?

[Jagadish Nangineni, executive]

Good question. So I'll take the second question first. In Bangalore, that's where we have a much better advantage because we -- it's -- our pipeline or our land bank comes into a significant advantage -- gives significant advantage to us because we -- our ability to incrementally invest in our existing land bank and launch it is -- will give us enough leverage to wait for the right kind of opportunities and invest in them. That's one.

Second is, since we have been present for a long -- for almost 27 years in Bangalore and operating here, the kind of opportunities through the existing relationships that we get are always, I think, better than probably the newer players that will come into the city. So a regional -- I mean the real estate is a reasonable play. So it will take for any new player to -- time to settle down and expand. That is applicable even for us when we go to a new market.

Having said that, it's very clear that Bangalore as a market is one of the best markets for us, both in terms of -- both in terms of demand and also our own -- and also the new transactions or the deals that we are looking at. So we will continue to invest in Bangalore because, as you have seen that this quarter, we have done 1 million square feet in the first launch. So the market size is large.

We have good experience here for the last 27 years, and we should continue to invest in this market. Now going to the other cities and other markets, we think that there are 4, 5 locations, which are -- which can sustainably produce demand for residential housing. That's Hyderabad, Pune, NCR and Mumbai, apart from Chennai, of course. So these are the places which are of interest to us.

We are evaluating opportunities and all. Our priority will be in the operating locations where we are already present such as NCR, Pune and Hyderabad, we are going to launch a new project. So these will be our first priority -- [ port of call ]. But if there are any good opportunities in Bombay also, we will be willing to look at it. So we are evaluating all these opportunities simultaneously and seeking out the best return for us.

[Mohit Agrawal, analyst]

Sure. And my second question is your thoughts on -- so we have land bank which is not city centric. So on that land bank, are you open to evaluating doing like a warehousing or a data center, wherever you see that demand for that? Is there something that you see as an opportunity there?

[Jagadish Nangineni, executive]

Absolutely. That's an opportunity we can evaluate at the point of -- at an appropriate point. The current focus in those land banks has been that we would like to consolidate those. So there are certain [indiscernible] which can make the value -- which can make the land far more valuable and also developable. So that's our current focus. And once that is done, probably it might take a year, a couple of years, depending on the kind of opportunities we get to consolidate that because there are small landholdings sometimes can create longer time lines.

So we are addressing those. Once that is done, then at that time, then we can -- we will, of course, take a call whether to do something like warehousing or we can develop it as farmhouse plotting or plots, residential, whatever is the best use at that point of time.

[Mohit Agrawal, analyst]

Can you quantify or can you give some color on what are the land parcels that you've identified or where there is potential, like how big this could be? And what are the time lines around that?

[Jagadish Nangineni, executive]

Those -- I mean, as you might have seen in our land bank, we have large land parcels in peripheral areas of Bangalore, in Hosur, in Chennai. So these are the first ones which we are addressing. So the time lines and the magnitude, we will be able to give better clarity as we work on that. Do not have the -- I'm not able to divulge the complete details at this point of time.

[Operator]

Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to the management for closing comments.

[Jagadish Nangineni, executive]

Thank you all for participating in the call and patient hearing. We believe we are structured far better both financially and operationally to address the sustained demand in construction and real estate industry. This enables us to execute the disciplined growth in the coming years. With that, I wish you all a very happy long weekend. Thank you very much.

[Operator]

Thank you. On behalf of ICICI Securities, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.