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Sobha Ltd
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Ladies and gentlemen, good day, and welcome to Sobha Limited Q1 FY '25 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.
Yes, good evening, everyone. On behalf of ICICI Securities, I'd like to welcome everyone to the Q1 FY '25 Results Call of Sobha Limited. As always, we are represented from the management by Mr. Jagadish Nangineni, the Managing Director; and Mr. Yogesh Bansal, the Chief Financial Officer.
I'd now like to hand over the call to the management for their opening remarks. Over to you. Thank you.
Thank you, Adhidev, and ICICI Securities team for organizing this call. Good evening, everyone. Thank you for joining us for the Q1 FY '25 earnings call. This quarter has been quite positive for us. And I, along with team Sobha, are happy to be interacting with you today. You can access the investor presentation, which is based on the audited financial results adopted by the Board from our website.
In today's call, I'll briefly touch upon our performance in Q1 and our outlook for the remaining period of FY '25. The first quarter was an eventful one with 4 new project launches in real estate, 2 of them in Gurgaon and 1 product development in Chennai and one in Coimbatore. These projects combined measure 3.04 million square feet. The projects are as follows: First, Sobha Aranya, our company's first golf course-based project; second is Sobha Altus, company's first mixed-use development project, both in Gurgaon; Sobha Conserve in Chennai; and Sobha Mountain Mist in Coimbatore.
In the past 9 months, we launched an overall 10 million square feet. And currently, we have 9.24 million square feet of unsold inventory. This gives us a great visibility for our teams to work on sales for the remaining year in addition to the planned launches for the next 9 months. Majority of the recently launched inventory is in high ticket size category of over INR 5 crores, and hence, we expect the sales velocity to be moderate for such units.
We have a strong residential launch pipeline of 17.9 million square feet across 16 projects, 7 cities, and we expect these projects also to be launched in the next 6 to 8 quarters. In the remaining quarters of this financial year, we expect to do another at least 6 million square feet, taking the yearly launches to about 9 million square feet. This provides us a great impetus to the near- and medium-term performance.
We are also building a robust pipeline for future projects from our existing land bank, largely based in Bangalore, and new transactions in current operating cities and high potential nonoperating cities. The high potential nonoperating potential cities that we are currently considering are Mumbai and Noida. The current potential of these projects is about 30 million square feet. We will share details of these projects as we move into forthcoming projects from time to time. The expected time line to bring these projects into launch stage is between 1.5 to 3 years.
As you're all aware, we have recently concluded our rights issue and raised a capital of INR 2,000 crores. This capital will enable us to propel from here after laying a strong foundation of execution and fiscal and develop deep operational expertise in multiple cities in the country. This capital raise from public has come after 15 years after 2009's QIP and our landmark IPO in December 2006. The successful rights issue makes 2024 a significant milestone for the company as it is a testament to our commitment to growth and promoter's intend to contribute to the same in India.
It also shows the incredible show of support we have received from the public, investors, from our valued shareholders, from those who have continued to make us who we are, for which I'm truly grateful.
Sales in the first quarter of this fiscal has been quite encouraging, and we have done the second highest ever sales value. We have sold a total of 562 units this quarter and achieved a quarterly sales of INR 1,874 crores, registering a year-on-year growth of 28% and quarter-on-quarter growth of 24.6%. Thanks to the new launches for the first time in the history of the company, NCR has contributed to INR 852 crores, 45.5% of the overall value, overtaking Bangalore sales. GIFT City also had a remarkable quarter with a sale value of INR 93.2 crores, post launch of Sobha Elysia.
Sobha's overall price realization in Q1 FY '25 was the highest ever. This is because of the significant shift in our product mix aided by the recent launches. The demand outlook in all our operating cities continues to be steady with supply catching up to the demand.
During the quarter, we completed 0.92 million square feet in delivery and -- which is 564 units, and we are on track to complete about 5 million square feet versus about 4 million square feet in the previous financial year. In this quarter, although we have completed projects, delays in obtaining OCs have affected our revenue recognition. And hence, going forward, the revenue recognition would be in a little lagged manner for the remainder of the financial year.
Our contract revenue is steady for the quarter. And going forward, we would deemphasize on civil contract projects owing to the increase in scale of our operations in real estate. This would enable us to channel our resources to our real estate projects and increase the pace of construction, continuing with the backward integrated model of delivery, which is the hallmark of our company. Similarly, our manufacturing divisions continue to support our delivery model, while we service external customers as well.
With this overview, I now invite Yogesh, our Chief Financial Officer, to give his commentary on the financial performance in Q1, and then we can open the floor for questions. Yogesh, over to you.
Good evening, everyone, and thank you for joining us today. I am pleased to share our financial performance for the first quarter of financial year '25, ending 30th June 2024.
Starting with our cash flow. In line with previous quarters, this quarter also, we monitor our cash flow closely. The improvement in cash flow over the last 2 years is a clear testament to our focus and our constant endeavor to improve financial efficiency. We have achieved highest average quarterly inflows and crossed a historic milestone of INR 1,500 crores. Total collection from all the business amounted to INR 1,546 crore in this quarter. Of this, about INR 1,392 crores were contributed by real estate businesses, marking it the highest ever quarterly achievement as well as -- in our operating history. This was possible due to increased sales and also progress in project development in all ongoing projects, leading to higher billing and collection.
We generated net operating cash flow of INR 327 crores, which was 68% higher than Q1 '24. CapEx also -- we have invested in CapEx close to INR 44.5 crores, was higher due to start of construction of a recent launched project. During the quarter, we have invested INR 161 crore in land in line with our growth focus. This is our 15th consecutive quarter of debt reduction. We reduced our net debt by INR 74 crores in the quarter and now our debt equity is 0.47.
Looking ahead, for our real estate -- our residential real estate business, we have an estimated margin cash flow of INR 16,200 crores to be realized for sale and market expense. Of this, INR 9,994 crore is expected to come from our ongoing projects and balance, INR 6,210 crore from our forthcoming projects.
On the P&L side, our total income during the quarter was INR 670 crores with EBITDA of INR 85.4 crores with a margin of 12.7%. Real estate income from property development was from the handover of the residential units was INR 334.7 crore. In this quarter, revenue recognition was low on account of fewer handover due to delay in OC in some of the projects. And during the quarter, we have spent a lot of money on sales and marketing on current sales and -- which is also taken into account of -- in our P&L. For the quarter, we have recorded a net profit of INR 6.4 crores.
Before closing, I will just touch upon the rights issue. So as you are aware, recently, we have raised INR 2,000 crore through capital market. We have issued 1.21 million shares at the rate INR 1651 per share. And the rights issue was subscribed 1.39x. With this -- this rights issue will help us in securing new opportunity in new markets as well as it will strengthen our existing operation.
Once again, I thank you for -- all for your participation. We can open the call for question-and-answer session.
[Operator Instructions] The first question is from the line of Puneet from HSBC Mutual Fund.
And congrats on great numbers. My first question is with respect to the comments, Jagadish, that you made that given that you will have high-ticket price launches, the sales would be moderate. How should one think about bookings in the light of this comment? Should one think that last year's run rate would be where you would end up this year? Or you expect a pickup there?
Thank you, Puneet. The -- what we expect from a sales point of view is both from the current inventory that we have and also proposed launches that we are planning to do in the -- subsequently during the financial year. So in my earlier call, I had mentioned that in this year, we would be targeting a sale of at least about INR 8,500 crores. And that's what we would continue to aim for.
It's not that the inventory is only with that high-ticket size units, but also it comprises of the other units. Those would be, of course, be a little bit moderate, but the rest of the inventory that we have would seems to be having good traction. So I believe with the current inventory that we have, which is diverse across locations and also with the new strong pipeline that we are seeing, we should be able to achieve what we have set out for.
Understood. That's helpful. And similarly, your comment on revenue recognition, which you said will come in a little lagged manner. Given that you are guiding for almost 5 million square feet of completions, can I assume it will be more towards third and fourth quarter?
Yes, Puneet, ideally, it should be coming from Q2 itself -- and wherein we had received a significant number of OCs post Q1. One of the reasons for the delay in Q1's revenue recognition, the OC matter, is also because of the elections that have happened and wherein a lot of government functions and machinery are focused towards the conducting of the elections and hence, there have been some delays.
And post that, we have seen that there is a significant improvement in the time line for getting this. So if everything works well, we should be able to start seeing those from Q2 itself.
Okay. That's helpful. And one question on the accounting side. When I look at your balance sheet, the inventory reported has gone up almost INR 1,200 crore. But on the other side, if I look at the spend on land payment and construction costs, et cetera, that's less than INR 1,200 crores. So how is that adding up?
Well, that is mainly owing to the fact that whenever we convert any of our land opportunity into a project, particularly in the joint development, right? So we would have to take it -- take which is the -- follow the gross accounting method wherein the construction cost of -- pertaining to the land owner gets into both sides of the balance sheet. .
Okay. Understood. That's helpful. And lastly, if you can also talk about the bump in realizations that we are seeing on the GIFT City, Hyderabad. Is it more the nature of product? Or is it that the realizations in those cities have gone up to such level?
Well, in GIFT City, we have seen -- GIFT City project is in Gandhinagar. And there, we had 3 projects, first one being Dream Heights. Right from -- and we started the project in 2017. We have started -- had been seeing steady increase in the realization. And probably, you would have noticed in some of the recent land auctions also, there is a great interest in GIFT City. And hence, there is a significant demand there.
And in the past 4 to 5 years, particularly, we have seen increase in the realization from earlier INR 6,500 to close to about INR 10,000. So the new project that we launched was at a -- is it about INR 12,000? And we are seeing decent traction, not that it's necessarily going to continue at the same pace as Q1 because Q1 has a slight increase because of the new launch. But from here on, it will be a steady progress. But we are seeing a very good demand response for both -- for this project, too.
So the project type has not changed, just the realization, which used to be INR 8,800 a square feet has gone up to INR 12,300. So that's how one should...
One is the price per square feet, the realization. And second, even the unit -- the kind -- nature of the project also has slightly deferred from our first project. Our first project was, in fact, only 1-bedroom and a 2-bedroom units. Second one had a mix of both 2-bedroom and 3-bedroom. And this one, we're catering to the slightly luxury product. And this one is largely a 3- and a 4-bedroom. So the product configuration also changed as the GIFT City progressed from where it was about 7 to 8 years ago.
[Operator Instructions] The next question is from the line of Dhruvesh Sanghvi from Prospero Tree.
Congrats for the great quarters, Jagadish ji and Yogesh ji.
Thank you, Dhruvesh.
So just to understand, Sobha share versus JD share. So if you see the cash flow, last year, we paid approximately INR 1,000 crores to JD partners. But when we see in the 1 million square feet size, I mean it doesn't look like there is any meaningful JD partner share. So how do we reconcile this? Like will this come down materially in the future because 95% or maybe 98% of our sales are probably our own and -- versus the JD area? How should I read this?
So, well, that's -- we have to look at both a little differently, Dhruvesh. One is the cash flow. Cash flow, of course, last year, JD share cash flow was slightly higher owing to payouts for some of our partners, which we accelerated and paid them out during -- which are ongoing, continuing projects. While this quarter, it's -- that has normalized and that's where you're seeing slightly lower JD payments now.
Coming to the overall inventory that you -- if you're referring to the inventory that we have or sales that you're referring to, then it would be slightly different. And the remaining inventory that we have, about 18-odd million square feet that we plan to launch in forthcoming projects, that will be JD -- overall Sobha share would be about in the range of 76% to 80%.
Okay. So -- I mean there's a meaningful JD number there as well is what you are saying, okay. The second piece is when we see the gross debt, it has remained nearly INR 2,000 crores for last 5 quarters, and we are in a very healthy shape. So is it like we are preparing for the so-called new cities of Mumbai and Noida. And once the deal is complete, we have to pay some big numbers out there? Or the prepayment laws don't allow you to pay early out of the existing debt? How does this number is to be seen?
This is completely technical. It's nothing to do with -- linked to any strategic direction that we are taking. The technical thing is it's clearly -- it's the -- we are just following through with what the RERA method of deploying our capital. So we had got good collections from previous 2 years of sales and also billing that we have done with good progress on our sites.
While for -- in joint development projects, we can probably, allot -- or refer to joint development payments and take some of the cash out from these RERA accounts. But for own land projects, it's far lower than we can take out. So hence, the -- what the number that you are seeing in terms of the cash that's lying in the books, that will be largely towards -- in the RERA accounts.
And lastly, if I can squeeze one. In general, I'm referring to the magazine article, which generally talk about the slightly longer-term vision of India by the Menons. And there, Mumbai look to be predominant number, but the quoted time period was looking very low in terms of in 3, 5 years, we will be here or there. If you can just throw some light on what practically we can achieve in Mumbai considering that your first project may start from 1.5 or 2 years hence, as you indicated at the start. So some time lines in terms of when will Mumbai presales really start in a proper way?
Dhruvesh, while the intent of the promoter and the senior leadership is to expand and grow to new cities, and like I mentioned in my opening comments Mumbai being one of them, Noida being one of them. The -- we are still taking baby steps in these cities. And it's very difficult to comment about the time lines immediately, but probably by the next call or so, we'll be more clear in terms of how we would like to progress from here. So it's slightly early right now.
The next question is from the line of Parvez from Nuvama Wealth.
Congratulations for a great set of numbers. So a couple of questions from my side. First, I think in the previous con call, you had said that we're targeting over 9 million square foot of launches this year. Does that target remain? Or is there a chance that it may be missed?
You're right, the last con call, I had mentioned 9 million square feet. And even in this opening comments also, I have referred to the 3 million that we have already done in the first quarter and remaining 3 quarters, we should be able to do at least 6 million.
There is an upside potential to this definitely. But this is the number that we think we can surely do. As the time progresses and we get far more confidence on the timing of the remaining launches, we will definitely revise this number.
So what would be the GDV of these 9 million square feet launches, I mean, rough figure?
At an average of current about INR 11,000, I think we can take about -- total, 9 million will be about in the range of INR 10,000 crores.
And second, I mean, we have obviously stepped up our land-related CapEx. This quarter, in terms of the project we had started going up last year as well. So going ahead now, do we have a target in mind regarding what is the quantum of policy in 1 million square feet or GDV terms that we are targeting for adding? I think, annual reports say that we have won a couple of auctions in Greater Noida, also JD in Gurgaon. So just wanted to get your views, what is our, let's say, target on the land development side?
Yes. Parvez, we do not have a clear yearly target for adding GDV. The reason is twofold. One, I think we have enough in the pipeline for us, fortunately, and which you can see in the inventory itself, you have about 18 million currently and about 9 million already we have as unsold inventory. So that's 27 million square feet.
On top of it, we have additional pipeline of significant -- from our existing land bank and also what we have done as deals in the previous couple of years. So hence, we think that there is enough inventory with us.
On top of it, the current market seems to be very -- on the upper side. And with the capital that we have and the cash flow that we are generating, we will see opportunities, and we will -- the capital allocation for us is very strictly in terms of the financial returns, too, and we'll be deploying based on opportunities that we would receive. And I'm not a big fan of putting targets for GDV on a yearly or a quarterly basis.
The next question is from the line of Biplab Debbarma from Antique Stockbroking.
So sir, my first question is on your EBITDA margin -- reported EBITDA margin that has been low for a while. So sir, what do you -- what would be the projected margin for FY '25 and '26 based on the revenue recognition that is estimated? And by when do you think we can cross EBITDA margin -- reported EBITDA margin [indiscernible]?
We are -- we do understand the concern of the lower EBITDA margins. Like I have mentioned, this is purely because of -- earlier, in the previous financial year, it is got to do with the cost overruns in our projects in contracts and -- contractual projects and in real estate projects post COVID. But going forward, we are very optimistic of the margins, particularly in the sales that we have done in FY '23, '24 and first quarter of '25. We would be -- our gross margins should be -- EBITDA margins at project level should be more than 30%.
So hence, they would recover as we recognize these revenues in the coming years. So -- and while we are -- a lot of fixed costs that we are absorbing today are at a slightly higher level in terms of sales. So both combination of the lower margin recognition of the previous years and higher cost base in terms of fixed costs, both contributing to lower EBITDA margins right now.
Those will surely recover as we start recognizing more revenue based on the completion of the projects. And that, we should start seeing the better margins from -- even from next quarter. But I would say that steadily, it could improve from next financial year.
Okay. Great. Second question is on your venturing into new geographies,, Mumbai and Noida. And welcome to Mumbai, sir. And just wanting to know these projects, so what kind of -- these are JDA projects? And I mean, from the 1 million square feet, what will be the total size in Mumbai and in Noida?
Thank you for the invite -- hello, am I audible, Biplab?
Yes, sir. Yes, sir, you're audible.
Sorry -- so thank you for the invite to Mumbai. We are, like I said, taking very baby types right now, and it's very difficult for us to give a clear time line or what we are planning to do. We ourselves are in a significant learning mode. So as we -- as things progress, we'll be able to give you clear commentary or indication towards what we are planning to do there. And that, you will definitely find in the subsequent interactions with us.
The next question is from the line of [ Pritesh Sheth ] from Motilal Oswal.
Firstly, just a clarification whether -- Sobha Altus has any contribution for the quarter? Or most of that sales that happen will come in Q2? .
The Sobha Altus also was launched in Q1 of this year. And a small contribution from that also is available. It was launched towards the end of the quarter. So it's a small contribution. It's not very large.
Got it. And second, on your product strategy, since you agreed to the fact that all these premium projects with higher ticket size will have a moderate kind of sales. So firstly, trying to understand why these premium projects, whether the location demands that or the land cost that we have paid or the terms that we have agreed with JD partners need to have a premium project in that location so as to earn a good margins? So just a broad comment on that.
And if you can just quantify, the balance 6 million square feet in this year or the 19 million square feet that we have in the forthcoming pipeline, what would be the mix of mid-income versus premium projects?
Good question, Pritesh. This is -- it gives me an opportunity to respond to why we have chosen to do this. Firstly, the choice of the project is -- the positioning of the project and the mix of the configuration of the units is not necessarily driven only by financial sense, but also from the location of the project, the kind of bylaws that we have owing what kind of audience that we would like to expect to cater to. So we, as a company, also have a vision to create landmark spaces and phenomenal projects catering to a higher ticket size customers as well. So it is a coincidence that all of these projects have come together.
We always had some small mix of such projects in our portfolio. But most of these projects have come through in the last couple of quarters, that's largely a coincidence. But each project has a well thought-out plan as why we have done that. And for example, the Aranya, which the golf course project, and the size of the unit and the design project is completely in sync with the fact that it is a one of its kind in NCR and in India.
And the row houses that we have done in Bangalore also, it's in a fantastic location and the kind of the land, the availability of the -- scale of the land and the kind of product that we wanted to do in terms of row houses. has been one of our dreams to develop such a project towards this side of the town.
So considering those, we have been designing these projects for a few years, and they have all been launched together, that's sort of a coincidence. But rest of the projects is on a typical mix of our 3 and 4 -- 2, 3 and 4 bedrooms, the remaining 17 million -- close to 18 million square feet.
Okay. I mean any breakup you can give in terms of whether it will largely tilted towards mid income or it's balanced between both the categories?
So -- well, the remaining 18 million square feet, it's designed again to -- largely skewed towards our typical product, which is -- and all of these are apartment projects. So largely, they will be in our bread-and-butter category of average size of 1,800 to 2,000 square feet.
Perfect. That's very helpful. Second question on the rights issue that we have had. I just wanted to check how much did promoter additionally contributed to rights which are not unsubscribed by the existing investors? And if you can quantify that number, I mean, over and above their current holding, how much they would have put in that rights issue?
Well, like Yogesh has mentioned in his -- the overall rights issue was oversubscribed by 1.4x. And the promoter's share of -- share in the whole -- share has gone up by about 0.5%.
The next question is from the line of Abhinav Sinha from Jefferies India Private Limited.
Jagadish, a quick question on rights issue, itself. So when are we expecting the remainder of the money to be drawn in?
Abhinav, we -- in the rights issue, we had taken a provision for doing it into 2 tranches, additional tranches. As we deploy this capital and start seeing utilization of these funds, we will take a call in another 3 months to choose the timing of that, whether it's going to be 1 tranche or 2 tranches. We have a time of -- 18 months -- we have time of about 18 months to make a choice there.
Right. But hopefully, this year, all of it can come?
That is quite possible. That's quite possible. And like I said, it's too early. We just finished the first tranche. So we will be able to take a call in another 3 to 4 months.
Sure. We -- I actually had a few questions on the NCR market. So firstly, Gurgaon, we have heard that there has been some slowdown, et cetera. So just wanted to have a broader take from you also on the overall market.
And secondly, again, the remaining area that you have in Gurgaon now to be launched, what is the time line for those launches as well?
The -- in Gurgaon market, see, firstly, the projects that we have currently, they are catering to the upper end of the market. Hence, it's very difficult for me to comment on the rest of the market. Rest of the market seems to be reasonably strong, and the higher ticket size market also seems to be steady. And we, like you know, we cater to the end user customers and there seems to be a very good interest for those end users in -- continues to be the interest in our products.
So from that point of view, I don't see a large concern. And the remaining inventory that we have, a couple of more projects that we would like to launch, that, we should be doing it in another 9 to 12 months.
Okay. Jagadish, how much of inventory do you have in Bangalore now? And in the next 1 or 2 quarters, are we looking at some big ticket launch there?
Yes, of course. We -- in Bangalore itself, we have about 3.5 million square feet. And we would probably launch -- out of the 18 million, we will have over 11 million from Bangalore itself.
No, but in the next 1 or 2 quarters, because sales seems to have sort of slowed there now?
Yes. Largely, the new launches that will happen in this financial year will -- large launches will be from Bangalore.
Okay. And sir, finally, if is it possible to comment on the Greater Noida land auction, where you seem to have won something?
Yes. That's a small land that we have participated in and won. It's about 3.44 acres, and we think that we can develop about 0.65 million to 0.7 million square feet. So it's a -- from an overall potential point of view, Noida, Greater Noida seems to be getting better over the years. And hence, we have been looking at evaluating the market for quite some time. And we thought this is a good opportunity where we're getting clean land from the government, and wherein the ability for us to get approvals and launch the project are pretty straightforward. So hence, we think that this is a good opportunity for us to experiment in a new market and also we -- I think the economics also works for us.
The next question is from the line of [ Siddhant ] from Goodwill Industries.
My first question was regarding the acquisition cost of land. We have been hearing from a lot of other developed -- other listed developers that the cost of acquiring lands in hot markets like Bombay and NCR has shot up. So what kind of IRR are we expecting on these projects? And how do we not make the mistake of buying land at the top of the cycle and then being stuck with it for a long time?
Good question, [ Siddhant ]. The -- you're absolutely right that like -- the product prices have almost gone up quite -- gone up in the last couple of years. Similarly, the land prices also have caught up, particularly in the last 9 to 12 months. Hence, it needs to -- we need to be far more calculative and cautious in terms of doing new deals. And that's where I think our play comes into strength because we do already have a good pipeline of new launches and we have a good capital base.
So our ability to choose the transactions that we -- where we think that it is financially makes sense and strategically also, it helps us. So we will be able to capture those opportunities without the burden of having any high debt and having a good capital base for us to invest. So from that perspective, we are far better positioned in this market than what we were before in probably 2 years ago.
Okay. The second question regarding the rights issue. So as of date, we would be net debt free?
Well, we have drawn -- the first tranche is about INR 1,000 crores. And hence, post that, we -- like you have seen our net debt currently is at about INR 1,200 crores. And post the rights, it will be slightly -- that net debt probably would be about INR 300 crores.
Okay. That's fair. And the last question. You stopped -- this quarter, you did not give the presales number at the start of the quarter. Was it the new regular practice? Or was it a one-off?
Well, this one was owing to the -- we were in the middle of the rights issue. And hence, we were advised to combine it with our quarterly results. And hence, we have taken that approach. We will continue with our operational updates in the next quarter.
The next question is from the line of Pavas Pethia from Aditya Birla Mutual Fund.
Sir, I just want you to understand what is the land bank post this forthcoming project for 19 million square feet? If you could give us some color, region specific color on the land bank we have?
Like I mentioned, Pavas, we do expect to have projects beyond this 18 million square feet to the tune of 25 million to 30 million square feet. And that will be largely from our existing land bank and also the recent -- some of the recent projects that we signed up.
So this 25 million, 30 million square feet, post that, we don't have any additional land bank? Or...
We do have, and those are still in stages where we cannot clearly say that those can come into a development stage. We do have and we are working towards it. And as and when those also come in, we'll definitely add to the pipeline of projects.
Okay, sir. But some color about which are the regions where this is kind of more -- whether it's Bangalore heavy, whether it's -- what else is there...
From our current land bank point of view, Pavas, it's entirely Bangalore. Although we do have lands in Tamil Nadu and Kerala. But majority of them, we do think that we will need to consolidate and probably do projects like plotted development or we do -- or we use it for some other purposes or other asset class or we do sell -- monetize those land parcels. So that's largely the current view.
And if there are any changes in the location dynamics and as we continue to invest in making those -- consolidate those. If there are any other change in dynamics of the particular micro market, we will obviously relook at development potential there.
Sure. Sir, the reason for not putting it across, is it not contiguous land? Or is it some regulatory issue?
No, it's not at all a regulatory issue. It's more to do with the continuity, more to do with the current location and its dynamics where we think that the development potential is not as high as it should be. Because our main focus is the development of residential spaces, which is, again, built up areas. And these locations are not yet there for that.
The next question is from the line of Himanshu Upadhyay from BugleRock Capital Private Limited.
My question was on Bombay. Are we -- what type of projects we are looking and capital allocation you are thinking? And how are you thinking about your differentiation in this particular market versus other players? And some of those broad [indiscernible] can help us in the market for how you are thinking or approaching the market?
Himanshu, the approach towards Bombay is similar to our approach to any new city that we have gone in. And we have got a lot of learnings from as we enter a new city. We -- like I mentioned earlier, we are still in very -- in a learning stage right now and our ability to give a full-fledged commentary or outlook or strategy in terms of what we are going to do is a little bit premature. So hence, I would like to reserve it for probably a few months later.
Having said that, there are several -- Mumbai being a very large market, be constituting about 35% to 40% of the overall top line cities in the country, there would be a lot of opportunities. And we think that there would be a small space for players like us as well. It has to fit in our model of development, model of our financial metrics. So considering -- and the opportunities that are presented in Mumbai are several types, unlike in many other cities. And the geography itself is far and widespread, core Mumbai, Thane and Navi Mumbai.
So it's a large market where our understanding is very preliminary, although -- so hence, it's very important for us to focus on specific types of developments and locations currently. We are trying to wrap our head around it. And as we can start focusing on certain opportunities, we'll be able to get a far better understanding and make up our own plans to go about it. That's one.
Second is we do -- of course, apart from Mumbai itself, we do find a lot of opportunities in our existing operational cities. So Mumbai is just one market, and we are looking at it from a very long-term view. It's not that we are just taking the capital that we have and allocating a large chunk of that to Mumbai. It's one another city where it's -- in fact, if the priority is right, then we would do far more -- allocate far more capital to our existing locations than to new cities in Mumbai for 2 reasons: one, it's still we are learning about it, and we would like to enter it with a lower and capital-efficient manner. And second, like we are witnessing, the market is also still evolving, and we are not very sure if it's at the top end of the market or there is still room for us to grow. So considering all that, we would take a measured calls on how we go about in Mumbai.
And we said that there are a lot of land parcels where we need to consolidate. So the rights issue, what capital you have raised, do you think a substantial chunk can go for consolidation of those land banks and bringing it then to the market? Or you think that is a small opportunity only?
Well, that -- these land banks are largely located in peripheral locations of cities. And hence, capital required for us to consolidate is very low. That's not the primary aim of the capital raise that we have done. And also, it will be on extended period of time. So that's -- the land bank, which is in Tamil Nadu and Kerala, that we will see it only -- we will use the capital as and when we can get the right opportunities to consolidate.
The next question is from the line of Parikshit Kandpal from HDFC Bank.
Jagadish, so my first question is on the Gurgaon. There was some announcement in media that you have registered some 12 acres of JDA. So what is this land parcel, in Sector 63?
Yes, yes. We have done a collaboration with a local landowner. And this is part of our launch plan for future.
And how big is this opportunity in terms of million square feet and GDV? And whether it is a part of the presentation?
Yes, yes, it's a part. I mean, it would -- I think we can develop about close to 1.6 million square feet of area here.
And approximately, the rate here will be about INR 17,000, INR 18,000 or more than that?
Yes. At about INR 20,000 is what we believe we can do.
And is this a part of the presentation? Or is it like it will get added maybe in Q2?
No, this transaction we have completed earlier and although it's reported in media recently. So we have taken it as part of our forthcoming projects, and it's included in the -- about 18 million square feet of forthcoming projects. .
Okay. Sir, my second question is on the Hoskote land. So now Godrej has launched a project and it has done significantly, like -- phenomenal in terms of sales. So when you speak about the 20 million square feet additional pipeline, so how much -- first of all, is the Hoskote potential? Because what I understand it was the 500 to 600 acres of land, potentially with 50 million square feet of sellable area. So how much, if at all, is included in the 20 million? And when do you think you can bring it to the market? .
Our first phase that we are planning to do is in at about more than 100 acres. And that, we are -- we have started doing our master planning there. I think we should be able to start that process of getting -- submitting for approvals, et cetera, in the next 6 to 9 months. And post that, whatever time it takes for us to launch.
Is it a part of that 18 million square feet which you have like factored in? Or is it part of 20 million, which you said is the pipeline beyond that 18 million?
The current forthcoming projects, what we have declared as the projects for the next 6 to 8 quarters, it doesn't include Hoskote land.
[indiscernible]
Hello, Parikshit, your voice is not audible.
Jagadish, can you hear me?
Hello, Parikshit. Yes, Parikshit, you're breaking up -- sorry.
The next question is from the line of Puneet from HSBC Mutual Fund.
My question is, first of all, on your -- this land bank thing which you discussed. So there is Hoskote, which you talked about. There is Hosur, if you can talk of it? And there was another 34-odd acres in Kochi. Any progress there? And any thoughts of disclosing this in your presentation at some point of time?
Definitely, we would like to do that, Puneet, and we will endeavor to cover that in the subsequent quarter.
Okay. Okay. That's great. And just on your finance cost. If I look at your finance cost on the P&L basis, that has fallen Q-on-Q despite gross debt rising. But when I also look at the cost of borrowing that you report, that has gone up on a quarter-on-quarter despite the fact that your balance sheet has actually become much superior. If you can comment a bit on what's driving all these?
Thank you. Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to the management for the closing remarks.
Sorry, let me answer the question which Puneet had asked. So the -- Yogesh, can you take that one?
So the cost of debt, in fact, actually has -- our finance cost has slightly reduced from last quarter. So I'm not entirely sure what your question was, Puneet, because our overall finance cost has reduced by about INR 5-odd crores...
[indiscernible]
It has got reduced. But we'll understand the question and probably take it offline again.
Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference to the management for the closing remarks.
Thank you. I express my sincere gratitude to all the participants in the call today. I hope that we answered your question satisfactorily. So if there are any other questions, please reach out to us. Thank you and have a wonderful evening.
On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you. .