DLF Ltd (NSE: DLF) Q4 FY23 earnings concall dated May. 13, 2023
Corporate Participants:
Vivek Anand — Chief Financial Officer
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
Aakash Ohri — Executive Director – DLF Home Developers Ltd
Sriram Khattar — Managing Director – DLF Rental Business
Analysts:
Saurabh Kumar — JPMorgan Chase & Co. — Analyst
Pritesh Sheth — Motilal Oswal Financial Services Ltd — Analyst
Kunal Lakhan — CLSA — Analyst
Abhinav Sinha — Jefferies LLC — Analyst
Sameer Baisiwala — Morgan Stanley — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to DLF Limited Q4 and FY23 Earnings Conference call.
We have with us today on the call Mr. Ashok Tyagi, Wholetime Director and CEO, DLF Limited; Mr. Vivek Anand, Group CFO; Mr. Sriram Khattar, MD Rental business; Mr. Aakash Ohri, Chief Business Officer and Group Executive Director.
As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Vivek Anand. Thank you, and over to you, sir.
Vivek Anand — Chief Financial Officer
Yeah. Thank you, Shehzad. Thank you. Audible, clear?
Operator
Yes sir. Your audio is clear to me.
Vivek Anand — Chief Financial Officer
Wonderful, good. So good morning and welcome to DLF Limited quarter four and financial year ’23 earnings webcast. Thank you for joining us on a Saturday. We are very happy to announce our business which delivered record performance across all key parameters.
We’ll start with the highlights of the business, financial highlights for quarter four financial year ’23 DLF Limited consolidated. Consolidated revenue stood at INR1,576 crores, gross margin at 57%, EBITDA stood at INR518 crores, net profit at INR581 crores, reflecting year-on-year growth of 40%. Financial highlights for financial year ’23 DLF Limited consolidated. Consolidated revenue stood at INR6,012 crores, gross margin at 57%, EBITDA stood at INR2,043 crores, net profit at INR2,053 crores, reflecting year-on-year growth of 36%.
The Board of Directors have recommended a dividend of INR4 per share, subject to approval of the shareholders.
During last quarter, our Residential business delivered a record performance by clocking new sales bookings of INR8,458 crores, reflecting a year-on-year growth of 210%. Cumulative new launches for the fiscal were around 10 million square feet and new sales stood at INR15,058 crores, which is again a record number for annual sales bookings. These figures obviously are on account of overwhelming response for the Arbour Project which created a new benchmark in residential sales by setting a record of being entirely sold during the pre-formal launch phase garnering new sales booking of INR8,000 plus crores. This strong response led to the preponement of a significant portion of Arbour sales that we had actually planned to release for the forthcoming quarters, approximately INR4,000 crores. The success of this product stands as a testament of the immense faith that our customers have reposed towards our brand and a strong endorsement towards an aspirational lifestyle.
The strong business performance led to a healthy surplus cash generation, enabling significant strengthening of our balance sheet. Consequently, our net debt now stands reduced to INR721 crores, one of the lowest levels. Further to this strong performance, our credit rating was upgraded to CRISIL AA Stable outlook and ICRA AA Stable outlook during the year.
Our offerings across multiple geographies continued to be the preferred choice of customers, enabling healthy growth in our business. The residential upcycle along with rising demand for luxury segment enthusiast [Phonetic] us to remain committed towards scaling up our new offerings. We continue to follow a calibrated approach to bring new products across multiple markets, while simultaneously ensuring timely execution of our launch products. In line with this strategy, we have outlined our planned launches for financial year ’24 in the analyst presentation. We are planning to launch around 11 million square feet with a sales potential of almost INR19,700 [Phonetic] crores this fiscal and in addition, have a launch inventory of around INR7,400 crores. This gives us a potential of almost INR27,000 crores worth of products. Given the fact that it takes a good amount of time to procure approvals and project readiness, we do expect the timing of these launches will follow a similar phasing as in financial year ’23, which means you will see a significant portion of new launches towards the second half.
I’ll now move to the financial highlights for financial year ’23 of DLF Cyber City Developers Limited consolidated results. Rental income grew to INR3,967 crores, a year-on-year growth of 19%; consolidated revenue of INR5,419 crores, reflecting a 19% year-on-year growth; EBITDA at INR4,148 crores, year-on-year growth of 19%; net profit of INR1,429 crores, reflecting year-on-year growth of 43%. The recovery across the office segment remains gradual on account of continued global macro-headwinds, while such headwinds continue to impact decision-making in the short-term, we believe that India will continue to be the preferred destination for global captives and large occupiers. The occupancy of our existing portfolio remained steady, however, we are witnessing healthy demand traction for our newer developments indicating a clear shift by large occupiers towards quality workplaces, offering enhanced safety, engaging experience, and an integrated sustainable ecosystem.
With this backdrop, we continue to invest in our new developments across DLF Downtown, Gurugram and Chennai and are implementing asset enhancement strategies across our existing portfolio as well. Our retail business continues to operate at high occupancy levels and deliver healthy growth. Footfall levels are now reaching the pre-pandemic level, with consumption trends showing buoyancy. We expect sustained momentum for quality retail destinations and hence continue our expansion plans in this segment across multiple markets. We continue to work extensively towards our upcoming retail destination, Mall of India at Gurugram for which planning is in advanced stages.
We continue to remain a positive outlook for both our businesses and remain committed to delivering consistent and profitable growth by bringing quality new offerings across multiple markets. We believe that our business, backed by a strong balance sheet and healthy cash flows remains well-poised to deliver across all parameters.
Right. With this, I end here and we are now open for questions and answers. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Saurabh Kumar from JPMorgan. Please go ahead.
Saurabh Kumar — JPMorgan Chase & Co. — Analyst
Hi team. So thanks for this, and after this quarter, I don’t think that there are many questions, but let me still try. So two on the office side, two on resi side. So on the residential part, one is, how would you think about your sales guidance for next year after the INR15,000 crores sales this year and should we assume the similar 60%, 65% sell-through velocity that you’ve achieved this year.
Secondly, specifically in terms of Arbour, why would you not hold onto inventory? The product is so good, was there some issues on the taxes being better into this financial year, which led you to this decision. And on the office side, basically, what will be the mix of the SEZ, non-SEZ in the portfolio? Are you seeing some pressure on the SEZ side there? And on the retail side, you’ve said that the malls will double in the next four, five years. What are these products. So a bunch of questions. Thanks.
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
So Saurabh, good morning. On the guidance piece for next year, that’s a tricky one, frankly. Because I know you are possibly leading us down a slippery path. So the way we look at it, we try to be very balanced about it. I think in some sense and I’ll Aakash and Vivek to chip in. I think the Q1 and Q2 are really linked to each other. In all fairness, our estimation and our plan on Arbour was very transparently that it’s a INR8,000 crores launch. We will possibly do between INR3,000 crores to INR3,500 crores in Q4 and the balance across in Q2 of the next fiscal. I think as — and I will request Aakash to chip in. I think even Aakash with all his decades of experience was overwhelmed by the sheer quantum of response that the product generated. I think almost 3,500 checks for 1100 apartments, etc, so really we upped the ante, Saurabh, as you know that customers normally — the developers declare pre-sales on application, we said we will declare pre-sales only if you are able to collect the first 30-day instalment of 10%, that means people have actually paid up INR75 lakhs each, and they all have signed the agreement to sales which is under RERA. Even that threshold was met 100%. So really frankly we had no option, but I mean, I don’t think we had any rationale or frankly almost any logistical opportunity for us to actually defer Arbour sale across two or three quarters. I mean it all came in one quarter, I think it’s obviously a delight. It’s also, in all fairness, left a lot of our own friends and acquaintances unhappy who could not get their allotment and that’s fine.
But really [Foreign Speech] I would say that our normalized sales for this year should really have been in the range of INR10,000 crores to INR11,000 crores, but it just happened to be INR15,000 crores because this INR4,000 preponement happened. So we’ll still keep our head guided and we’ll say that next year, we should still be looking at sales guidance of INR11,000 crores to INR12,000 crores, but again, given the fact that we have two or three very interesting products lined up next year, could there be a positive surprise? Of course. But I’d say, from a guidance standpoint, we still say INR11,000 crores to INR12,000 crores is the guidance.
Vivek Anand — Chief Financial Officer
Absolutely. I think just to add, Saurabh, I think this year we’ve launched 10 million square feet of products, adding up to almost a sales potential of INR15,000 crores. I think we’ve got a very good response from the market. And considering that, we’ve increased our launch pipeline to 11 million square feet for the current financial year, adding up to a sales potential of close to INR20,000 crores, right? So I think our ambition is very clear, to really grow from here. There is no doubt about that. But having said that, as Mr. Tyagi explained, from a guidance point of view, it will be INR11,000 crores to INR12,000 crores, which we believe is achievable and we will certainly try our best to really beat that estimate.
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
Aakash, on Arbour specifically.
Aakash Ohri — Executive Director – DLF Home Developers Ltd
Yeah. Saurabh, on Arbour, let me just also come in. Now, you asked a question about was this done for any tax benefits and all. Let me tell you, I was in the thick of things then, short of being lensed and kind of taking a call on certain things on the ground, there was literally, there was nothing one could do. It was such a pleasure, ladies and gentlemen, after a long time to see this Tsunami of owners and prospects and CPs, and partners, throng and swarming the place. I have some videos, which I’d like to share separately whenever there is a chance, but let me tell you, when we started to buildup, the buildup started well, it was a pent-up demand for a DLF Group Housing product in Gurgaon, a lot of work, seeding had been done, as you know, compliance related post-RERA only we can get down to doing stuff. So we immediately dispatch teams all over the world. We did a lot of work internally. A lot of good responses from the corporates. But at that point in time, we had a choice. You’re right absolutely and to what Mr. Tyagi mentioned and we deliberated, I think not once but 10 times, on this issue where things kept happening. We had a choice, Saurabh, to push it to Q1 and make more money. Definitely, and let me tell you how much more money, about at least a INR1,000 crores more could have been done.
I mean as far as this Company is concerned, I think the customer’s interest and prospect’s interest has always come first and that is what we’re known for. I think we’ve demonstrated it many times. Arbour being one also, I’d tell you, where the situation kind of came in like that and we had a lot of responses that came in from people. At that point of time, to stall something which is going on at a feverish pace was, I don’t think would have been prudent, because you can’t have a customer wait for two months because this was mid-February, February 15 to be precise is when we did the brokers launch and immediately after that. So we couldn’t have asked a customer to wait for, say six weeks or eight weeks for the next batch to come when everybody else is queuing up and giving their intents, their application forms. So we could have dragged this on. But I think in the interest of the customers’ benefit first, a call was taken to do that. So I don’t think there was any. I mean there are — Mr. Tyagi and Vivek have already talked about it, but I don’t think there is any tax-related matter. But I think it’s very grateful for an opportunity like this. You should have been there to kind of live that moment with us. But I think there are no doubts, the whole world and their mothers were here. It was a big endorsement to the DLF brand. I think that’s all I’d like to say. But the celebrations here have been very muted, Mr. Tyagi’s strict instructions. So I don’t even know whether to celebrate or take your compliments.
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
Gratitude is the [Speech Overlap].
Aakash Ohri — Executive Director – DLF Home Developers Ltd
Yes.
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
Go ahead, Sriram.
Sriram Khattar — Managing Director – DLF Rental Business
So moving on to the rental portfolio, Saurabh, your question was SEZ versus non-SEZ. I think a breakup is about in terms of rentals, about 30% odd is SEZ and about 67% to 70% is non-SEZ. And this is the offices part, the retail itself is about 22%. So in the overall rental income, the SEZ in terms of rental income falls to below 20%, 22%, 20% odd. Now SEZ is a little concern in the market because of the sunset clause. In our portfolio, our SEZ has maintained vacancy of about 15% odd, whereas our vacancy in the non-SEZ portfolio has dropped down to only 6% and which is I think a very healthy sign and the combined vacancy is about 10%.
Now, while this is happening, we have been advocating and socializing through the CII and the NAREIT Co. and the Asia-Pac Real Estate Association, with the Ministry of Finance, Department of Revenue, and with the Commerce Ministry and I am given to understand that they are in the final stage of amending the SEZ Act rules, which is within the power of the Commerce Minister, which will extend the building wise de-notification to a floor-wise de-notification. I also understand that the Ministry of Commerce is going to lean on the development commissioners to ease the speed at which the de-notification is allowed.
So there is little pain, I would say for the next few months, but I don’t see it lasting for long. Now this will have two impacts; one very positive impact, and one slight negative impact. The positive impact is that it will bring very high-quality real estate to the market with the ability to lease and developers who have these developments in good locations and have credibility will do well. Marginally, especially, in say Hyderabad there’ll be a subdued rentals for about two, three quarters before some of the stock gets absorbed. So whilst there is a temporary blip, but I believe it’s very, very temporary and once the Ministry of Commerce comes out with the new guidelines, I think we will do well.
In terms of our budgeting etc, we have been cautious for the next year and we are going with the assumption that SEZ vacancy will remain by and large similar, it will improve by 100 basis points to 200 basis points.
On the mall space, yes, doubling is very much on the cards. If you have seen the analyst presentations, 2 million worth of retail is under — about 1.5 million of retail is under construction in the books of DLF. We’ve got the Avenue Mall, Goa which construction is going on full swing and the two high-street shopping centers, one in DLF 5 and the other near DLF Midtown, the construction is in full swing and our plan for Mall of India, Gurgaon has now reached at quite an advanced stage and I dare say that when we meet next time, we’ll probably share the news with you that construction has either commenced or is about to commence. So if you take about 2.6 million Downtown — sorry, Mall of India, Gurgaon and you take the existing developments that are happening, the total automatically is roughly double of where we stand today at between 4 million square feet, 4.5 million square feet.
Now one more point on the expansion, I would like to share that in the Vasant Kunj complex where we have two malls, the Promenade and the Emporio, the total size of these malls is about 800,000 square feet, slightly below 800,000 square feet and we have the potential FIR to do and other 500,000 square feet in that complex and that’s right in the center of town. Unlike some of our competitors, we have yet not utilized this FIR and we plan to — we are also sort of going through a master planning of those sites, but we plan to take it up after the construction at Mall of India has commenced and has stabilized. Similarly, at DLF Avenue in Saket, we have the ability to construct another 200,000 square feet of GLA, which we shall do at a later day because, as you know, we’ve just elevated DLF Avenue about two, 2.5 years back and we would let it go for some time before we take up that GLA.
Saurabh Kumar — JPMorgan Chase & Co. — Analyst
Thank you, sir. Thank you for the detailed response. I’ll come back in the queue. I have a few more, but thank you.
Operator
Thank you. The next question is from the line of Pritesh Sheth from Motilal Oswal. Please go ahead.
Pritesh Sheth — Motilal Oswal Financial Services Ltd — Analyst
Yeah. Thanks for the opportunity and good morning to everyone. Firstly, congratulations on a great year, and congratulations surpassing everyone to be the largest developer in residential this year.
My first question is again on Arbour and this is with regards to pricing, rather than the demand. So what’s the strategy here because since our last Investor Day last year, it came across that we are very optimistic on the pricing part, while in Arbour, we started probably at lower rate than the market was expecting and we have sold at around INR17,800 per square feet. I am not trying to criticize, but just wanted to understand the strategy from hereon. Were we trying to suppress the price increase that was happening in Gurgaon and potentially would have impacted the affordability in the future? So just wanted to understand your thoughts on that.
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
So as far as Arbour is concerned, again, with this particular thing as I said, it’s been great learning. So, as far as the price points are concerned, we deliberated, it went back and forth. See when you’re sourcing leads and when you are setting up a certain agenda, you should always set it up at a higher price point, because to build it from a ground-up story, there are more disappointments than anything else, because everybody has to plan their budgets. So when you’re doing something like that, you would always, because even your numbers aren’t finalized and all that, so you are kind of sussing the market out, but you always put it out in a way as transparent as possible and say you’re going to be were about a certain number. So that’s what we did. But with regard to — see, what happens is there are two things here. If you have seen projects where other developers have launched a month after when the collections begin, that’s when it actually gives you the real picture of what the demand is, and that’s when most of the cancellations on all that happen. So that speculation is something, and then there is hardcore people back it up with money. So that’s one.
With regard to Arbour again, in terms of price strategy, that area, let me tell you, we are still about — at least about maybe 20%, 25% if not more, higher than that what that golf course extension area demanded or traded at that point in time. So to be fair, I think we could have, to your point, gone up to maybe 40%, 50%, but I think sometimes sales is more important and to create that certain amount of hype and actual test out the market is more important than just playing around with price points. So I think that’s where it was. As it stands in the golf course extension, I can talk about February 14, I don’t think there was any trade that was happening beyond INR14,000, irrespective of what people were saying. They would start, launch a product at INR17,000 and then discount it by INR3,000, INR4,000. So really, I don’t see the prices went beyond that. So therefore for us to come on to launch something at INR18,000 was, for that area, was a new benchmark. And please understand there is a clear distinction between golf course or DLF 5 or Golf Course Road versus that. So yet we launched, I thought the pricing was pretty aggressive, at INR18,000. Now that you look at it in retrospect, yes, could you have done better, I’m sure we could have done more, but I think we will do much more in future. So that’s okay. But I think — I hope I’ve been able to explain that to you.
Aakash Ohri — Executive Director – DLF Home Developers Ltd
And also for the relatively new micro-market in retrospect, it wasn’t a bad idea to leave some mark-up for the customers also. I mean, it also sort of fizzed them that they’re almost making a certain mark-up within 90 days of buying.
Vivek Anand — Chief Financial Officer
And also just to add, as Aakash rightly said that in that micro-market our pricing is almost 15% higher than the market. I would also like to also add on the quality of sales, right. See, pricing cannot be just put that in isolation, right. So if you really look at the quality of sales, we’ve been able to not only sell the entire [Technical Issues] in three months, but we’ve able to actually collect 10% within first 30 days. We’ve been able to sign agreements with all 1,134 customers in the first 30 days and we are happy to share that our end-user estimation is higher than 55%. So I think you have to really look at everything in totality and not just one element of sales, which is pricing.
Pritesh Sheth — Motilal Oswal Financial Services Ltd — Analyst
Sure. That’s very clear and thanks for raising that end-user point. So off-late, I’ve seen company marketing its project in Singapore, Dubai, so we have started this obviously NRI marketing as well, would have been prevalent earlier as well, but what’s the strategy there? I mean would those demand would still be considered as end-user demand, considering that they are really NRI investors and they would all settle there? So your strategy on that?
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
So NRIs contributed to about 20% of the business and we have, thankfully, we have an NRI who returned from Singapore, Mr. Sriram Khattar. He invested at DLF property and lived in that. So we have millions of examples like this, see, NRI’s — I’ll tell you something, this constituency, we were not aggressively targeting after having done that maybe previously when I remember, when I used to learn golf and other businesses, they welcome us with open arms and all that, and it was a great relationship. After that, we kind of stepped back from that market, my colleagues who were kind of running it earlier. So when I saw opportunity right now over the last one year specifically, where there was constant and consistent feedbacks and demand from the NRI market saying that by the time they get prepped up, it’s sold. They never get the inventory, they never, so I tried it out in a project called Grove in Q3 when we spoke about, I tried it out in the Valley Gardens in Panchkula, which you all are aware of, and this time we went a little more aggressive. Our NRI contributions have been almost 14%, 15%, if I look at INR15,000 crores, but actually they started, if I look at the INR10,000 crores guidance we’d given, it’s almost 20%.
So that is the market which is ready, that is a market which is wanting good real estate investments to make, and for the future, I mean I’ve seen so many NRIs come back and want to settle in areas, which are fully provided for security, safety, each aspect that they look at, green — sustainable, I think that’s what DLF stands for. So there is a — I am seeing a tremendous demand from that market. I’ve have been making those statements, I don’t know whether you got a chance to read them, but whether it’s the Middle East, US is giving us one of — US is one of our biggest markets and then of course you’ve got Southeast Asia. So I think this time, there was a concerted plan from Q1 to target the NRIs. It’s upon a lot of book-through and this year again we will continue the trend. But NRIs have — what I think right now is, they always love to invest and they’ve been — other than the Indian markets where they lost money previously, they kind of spent their money or wanted to invest all over the world, other than India. I’m seeing that trend change over the last year, year and a half and very heartening to know that and they’re going to be continuing to see that in those markets. Because they’re very precise, they know what they want. There are no hassles, [Indecipherable] those countries they work, the payments come out on time, the agreements are done, either they are own or they are not, so it’s a very clear and clean system of working with the NRIs.
Vivek Anand — Chief Financial Officer
And Pritesh one more thing, you mentioned about end users. So please appreciate anybody who is buying INR8 crores property in most cases, it could be his second property, it may not be his first property. When we say end user, we are looking at people who are looking to buy this property and holding it for a very long-term versus short-term investors who will buy, pay 20%, flip it over, which used to be the overwhelming trend say till about seven, eight years back. These are people who are buying the property as a serious investment decision either for staying or for renting as a second property or whatever, but were not looking to flip it over the short to medium term, that’s what end-user really mean. Because you mentioned that if companies in Singapore, how can we get end user, so I am just clarifying that.
Pritesh Sheth — Motilal Oswal Financial Services Ltd — Analyst
Got it. Thanks for the clarification. And one last question on the launch pipeline for next year, it really looks too good. I’ve seen like around 4 million square feet, 4.5 million square feet of projects being added this year. If I adjust the second phase of Arbour, so would like to know what are those projects that we have added to our pipeline. Probably Crest II is one, but apart from that.
Sriram Khattar — Managing Director – DLF Rental Business
Okay. The estimate for the current year is 11 million square feet. So let me start with luxury. Luxury, we have given an estimate of close to 5 million square feet of which we will have a residential housing coming up in DLF 5, that will be close to 3.5 million square feet, plus another residential housing coming up in Pune, that’s probably luxury. I’ll move to premium, which is approximately 5 million square feet which includes DLF City, Garden City Floors and resident housing in New Gurugram. Then we have projected some SCO commercial in Tri-city, Panipat and New Gurgaon. And finally, it’s Noida IT park and data center. So those are broadly the projects and the locations, which are part of this 11 million square feet for the current fiscal.
Pritesh Sheth — Motilal Oswal Financial Services Ltd — Analyst
Sure. Your voice cracked up a bit in between, so if I got it correctly, there is a Chennai project which is planned in premium and is —
Sriram Khattar — Managing Director – DLF Rental Business
Chennai is a luxury product.
Pritesh Sheth — Motilal Oswal Financial Services Ltd — Analyst
Okay. Luxury project and there is a residential housing in New Gurgaon that was going to be a high-rise project, right?
Sriram Khattar — Managing Director – DLF Rental Business
Yeah, that’s correct.
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
It could be a mid to high rise, it won’t be independent floors, but it could be mid to high rise. Let’s see where exactly the building finally settles at.
Pritesh Sheth — Motilal Oswal Financial Services Ltd — Analyst
Got it, thanks. Thanks for the very detailed answer, and I’ll jump back. Thank you.
Operator
Thank you. The next question is a text question from the line of Biplab Debbarma from Antique Stock Broking. As per news report, Cognizant is cutting back on 11 million square feet in office space in order to save cost. Cognizant is one of the top clients, is Cognizant vacating DLF offices too? Would it be a new trend?
Sriram Khattar — Managing Director – DLF Rental Business
Well, let me answer this question at a little broader level before I come specifically to Cognizant. See, after the COVID, there are two, three things that have got established. One is that India’s digital backbone is very strong. Two, India has a compelling case for cost competitiveness in terms of English-speaking young techies on one side and global quality real estate at a fraction of a cost on the other. So the long-term trend does not change at all. The other is that, we in DLF, and my brethren in the industry are also seeing a shift from third-party IT service providers that too who have been very extensive in their approach and not focused on one side, the trend moving to global capability centers, which are much more stronger and much more sort of sticky. Now, Cognizant has had a bad run, and in our portfolio, they have given up over the years about 30%, 35% space, primarily in Chennai compared to what I understand, about 60% space in some of the other buildings that they occupy. Does it impact us? Till now, no. Will it impact us in future? Yes, there will be a marginal impact of five, six months before we lease the place again. And please understand that as and when say Cognizant vacates, our mark-to-market rentals are about 18%, 20%, 25% higher depending on the location compared to the existing rentals.
Aakash Ohri — Executive Director – DLF Home Developers Ltd
Again just to reiterate what Sriram said, I think a medium-term trend you will see is a declining over time share of the third-party IT ITES providers with respect to the captive DCCs. That I think is just a trend that’s just here and you can’t deny that.
Sriram Khattar — Managing Director – DLF Rental Business
Yeah. So, just to take this logic a little forward, we have had three new buildings in the last three, four years and you are aware of that. One is Cyber Park, one is Downtown 2 and 3 in Gurgaon which is 1.5 million square feet, and one is about 3.3 million square feet in Downtown Chennai. The total of these buildings put together is about 8 million, 9 million square feet. And I dare say that we don’t even have a single third-party IT service provider in these. This has been predominantly taken up by the global capability centers, and the chunks in which they take up is larger. So in these sort of 8 million, 9 million square feet, the total number of tenants are about 30 to 35. And that’s a very positive trend that we see in our portfolio. We also see that the demand that is coming up and the potential inquiries that are there are quite strong from the global capability centers rather from the third-party IT service providers who definitely take up space, but the volumes that they take-up are far lower and what moves the needle is the space taken up by the global capability centers and not by the third-party providers.
Operator
Thank you. Sir, we have one more question from the same participant. You are planning to launch 11 million square feet valued at INR20,000 crores, what would be the ticket size?
Vivek Anand — Chief Financial Officer
It ranges, it will possibly be in a range of INR2 crores to INR15 crores, I’ll say.
Operator
Thank you. The next question is a text question from the line of Parvez Qazi from Nuvama Group. Of the 2.2 MSF expected to be completed in Downtown Chennai in FY’24, how much has been pre-leased. Thank you.
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
Yeah. So Downtown Chennai is three towers, totaling to about 3.3 million square feet. We have, out of this already pre-leased about 2.8 million, 2.9 million including some bit of hard options which two very large tenants have there. And so about 400,000 square feet to 450,000 square feet is left to be leased. I think it’s been a very positive development and it’s been to about five, six tenants only and we are just now starting to plan for the — we have another 3 million to 3.2 million further to construct there and we have initiated the process of planning to start the construction of those. It will take a little time for this project to complete, say another eight odd months, and then we should commence the construction of the balance.
Operator
Thank you. The next question is an audio question from the line of Kunal Lakhan from CLSA. Please go ahead.
Kunal Lakhan — CLSA — Analyst
Hi, am I audible?
Operator
Yes sir.
Kunal Lakhan — CLSA — Analyst
Yeah. Firstly, congratulations on a great quarter. Secondly, when I look at your launch guidance of 11 million square feet versus 10 million square feet last year, considering the overall market is doing so well, and I mean even a peer group like say M3M clocked record sales this year. So the underlying demand in the market is pretty strong and we have practically sold out or like substantially sold out whatever we have launched. The 11 million square feet guidance, are we being again very cautious in terms of new launches here?
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
So A what I’d say Kunal is that I think especially when dealing with relatively premier end of the market for players like us and maybe a couple of players, others also in the country, maybe it’s also high time that the analyst community moves away from its obsession with the million square feet number. It’s a completely irrelevant metric really. We do it because you guys want it. I think we should be looking at the pre-sales value and most important, the margin that we are going to generate. I think from a margin standpoint really that we are planning to generate by new launches next year, I think we will find hopefully a very healthy clip growth over what we did this year. I can do 20 million square feet of colony in New Gurgaon, Indore and Chandigarh which will fill the, but honestly, those things won’t generate money in that format. So I think we just need to be cautious, also please appreciate that in some cases, if you calibrate your launches well, you’re obviously doing what you need to do from a sales and a margin standpoint, but there is also a price accretion happening in those markets which with a little bit of patience tends to pay off disproportionately.
Kunal Lakhan — CLSA — Analyst
Sure.
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
INR19,000 crores we are launching really, 11 million is not the metric, INR19,000 crores is the metric that you should look at.
Kunal Lakhan — CLSA — Analyst
Sure.
Sriram Khattar — Managing Director – DLF Rental Business
Also Kunal, just to add to what Mr. Tyagi said, last year our average price realization was almost INR15,000 a square feet. And this year it’s improving or increasing to almost close to INR18,000 a square feet. So I think it’s the way we see it’s more of a value game than a volume game.
Kunal Lakhan — CLSA — Analyst
Understood. Just a follow-up on your new launches, which you highlighted for ’24, I did not hear about ONE Midtown, is it scheduled for next year?
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
Yeah. So ONE Midtown is this year in fact we preponed it, Kunal, from Q2 to Q1. So you will most probably it will be end of — we planned it end of this month, so it’s going on well, ONE Midtown is the last tower [Indecipherable] is going on. So that in fact we preponed from Q2 to Q1.
Kunal Lakhan — CLSA — Analyst
Okay. So basically the luxury segment launches would have 5 million square feet, would have 3.5 million square feet of Phase 5 and then ONE Midtown and Chennai luxury.
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
ONE Midtown is a part of the inventory of 7,000.
Kunal Lakhan — CLSA — Analyst
Sure. Secondly, just again a clarification on the rental portfolio. So you did highlight that in the newer projects, what has been the contribution from the third-party IT providers, but on a overall portfolio basis, how much would be occupied by third-party IT providers and are we worried on that side?
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
I would not be able to give you a figure off-hand, but I can just say that the third-party service provider as a percentage of the total portfolio is declining. Are we concerned about that, the answer is no. The reason is that within third-party service providers, it is not that everyone is weak. There are reasonably strong players there also and to be the medium size third-party providers who do niche work, like in the area of healthcare or property management, continue to do very well. And if any hiccup happens in any sector there, in the delivery sector, the reflection of that on the portfolio is minuscule. So if one or two or three or four or five of the weaker ones leave, it does not move the needle on the portfolio as a whole.
Kunal Lakhan — CLSA — Analyst
Sure. And just a follow-up on that, what would be the March 2024 exit rental?
Vivek Anand — Chief Financial Officer
March 2024 exit renal should be in the ballpark of INR380 crores to INR400 crores, INR420 crores a month.
Kunal Lakhan — CLSA — Analyst
Okay.
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
So the exit run rate on an annualized basis will be about INR4,800 crores, INR4,900 crores.
Kunal Lakhan — CLSA — Analyst
Great. Thank you so much. And all the very best.
Operator
Thank you. The next question is a text question from the line of Mohit Agarwal from IIFL. Two questions. How is the demand for Camellias since April and changes to capital gains/loss?
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
Yeah. So Camellias demand, now as you know we are in the fag-end of it, and it’s been established, pretty well received, good references, everything going on pretty okay. In fact, the price points that you may know now have been increased to INR50,000 a BSP, Basic Sales Price for low floors eight and below, nine and 12 about INR55,000 and 14 and above INR60,000 a square foot plus TLCs and everything else, which basically takes it to about anything between INR45 crores to about INR55 crores an apartment cost. These are the regular ones and then of course the INR11,000 and all are even more. So the demand has been pretty good and we’ve been able to kind of maintain our price points also. So as far as Camellias is concerned, that’s been good. The reference to your point about capital gains, I didn’t see that much happening in Camellias at 31 and before. They have two years to invest. So probably that will be there, I don’t know, but at this point in time, we’ve got a very healthy demand for Camellias which is continuing. And the last, whatever number apartments that are left, we will focus on that also. But the price points have considerably gone up since we last spoke to almost about I think INR15,000 a square foot, which is quite a big jump. And if you all recall, 18 months back, the price was INR37,500 a square foot, which is now the same as I just mentioned, is anything between INR50,000 to INR60,000. So, that’s going on, but reference specifically about capital gains, I haven’t seen that kind of a push from that side, but yes, hopefully I mean they have the time, everybody has seen it, as and when their monies come in, hopefully, I think we are on the top recall. I think we are on the top one, two, three properties to be invested in India. So yeah.
Operator
Thank you. Sir, we have the second question from the same participant. How do you see cash flows next year? What do you plan to do with operating cash flow in FY24 now that you are nearly net debt free? Thank you.
Vivek Anand — Chief Financial Officer
Thanks Mohit for those questions. So on the cash flows, let me start with collections. So last financial year, we had a good year on the collection side, we collected INR5,300 crores of collections we had, which was almost a growth of 25%. And as I look into ’23-’24, I expect the same run rate to continue. So we expect our collections to grow 20% to 25% this year. Having said that, as you know, we are scaling up our business. So there is a significant outflow, which is happening both on the construction and the — construction including the capex side. So we expect our construction outflow to increase by almost 50% during the financial year. How do we really plan to utilize this cash? I think that’s something which is — we’ve been saying very, very clearly that our first priority is to put cash behind growth, right? And we will continue to do that. The second priority is to really continue to reward our shareholders and we’ve done that this year as you know. And the third priority is to really repay the debt, right? So I think in that sequence, we will continue to really allocate our cash what we generate year-on-year.
Operator
Thank you. The next question is an audio/video question from the line of Abhinav Sinha from Jefferies. Please go ahead.
Abhinav Sinha — Jefferies LLC — Analyst
Hi sir, congrats on the strong quarter. Just following up on the previous question on utilization of the cash. So we have a large land auction coming up in Gurgaon, any thoughts on participating in the same.
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
So as far as the land auctions in Gurgaon, I don’t know, what you are talking about is the large land auction.
Abhinav Sinha — Jefferies LLC — Analyst
HSIIDC one.
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
[Speech Overlap] The global city, in all fairness, at the price points that in Haryana is talking about, we do not believe is a matter of interest to us as of today, frankly, but HSIIDC and other Haryana bodies keep on coming up with localized auctions of interesting land parcels, some of which we do occasionally participate in. But those are frankly far small numbers. No, the global city is not something we are actively looking at right now.
Abhinav Sinha — Jefferies LLC — Analyst
Okay. Sir, second question on the PBM pipeline. So the average pricing that you sort of works out to on the luxury end is around INR25,000. Fair to believe that the Phase 5 launch of Crest II could come closer to INR30,000. Is that the right number to look at now?
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
Yeah, I wouldn’t want to speculate on that right now.
Abhinav Sinha — Jefferies LLC — Analyst
Okay, thanks a lot, and all the best.
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
Okay, but nice try.
Operator
Thank you. The next question is from the line of Sameer Baisiwala from Morgan Stanley. Please go ahead.
Sameer Baisiwala — Morgan Stanley — Analyst
Hi, thank you, and congrats on a great quarter in the year. Sir, just quick two questions. One is, do you have any more land parcels in Golf Course extension or any plans to augment over there?
And second is in the longer term, how do you think about the retail or the mall portfolio that you are expanding?
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
I will answer the first one and defer to Sriram on the second one. So I don’t think we have an active land parcel of any sizable scale on the golf course extension road. Sorry, we have one more land parcel here in Sector 69. We also have a very major land parcel closer to the Southern Peripheral road, frankly, which actually runs into like almost a couple of 100 acres, Sameer. So I think those are clearly, I mean both of those are on the active list of planning right now, frankly. And maybe a part of it could come up in the coming fiscal. As far as what you said about are you looking at acquiring more space there? I mean, as you know because of the couple of developers on the golf course extension road who have been under some degree of stress, regulatory or financial, there have been a few land parcels which keep on coming up through the banking auction system route etc. So I mean we are at least, there are one or two parcel, which we have evinced interesting in the past, nothing has fructified yet. If something does, we will be more than happy to come and disclose. But right now as we speak, there is nothing that really frankly is looking near closure.
Sriram Khattar — Managing Director – DLF Rental Business
On the retail portfolio, at a macro level the retail in India is going to be quite robust in the years to come, because of the sheer economic growth that is taking place in the country and people moving from the middle class and from middle class into the upper middle class on one side. Two, within retail organized retail is going to do better than the retail as a whole. And the percentage of offline sales have not gone up for the last two, 2.5 years and I don’t see them going up either. So organized retail in good locations has, in our view, a very bright future and if I can hazard to take a guess on the market as a whole, retail as a portfolio in terms of growth will be equal to or better than the growth of the office’s portfolio. And that’s why we embarked on this journey of about 18 months back on doubling our retail portfolio from the present about 4.5 million to about 9 million square feet.
Sameer Baisiwala — Morgan Stanley — Analyst
So you will retain the retail portfolio within DLF or would there be plans to spin it off and to the earlier answer of Mr. Tyagi, so this couple of hundred acres of land in Southern Peripheral Road mentioned, which sector is that?
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
I know there is on 74, 76, 77. So in sub-sectors frankly.
Sameer Baisiwala — Morgan Stanley — Analyst
Got it.
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
And some of it is commercial, a large chunk of it is residential, I think it’s a combo of both resi and commercial.
Sameer Baisiwala — Morgan Stanley — Analyst
Okay, got it. And just on the retail portfolio sir.
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
So on the retail portfolio, the retail portfolio that we are developing in the DLF side frankly yes you’re right. I mean most probably we would want to transfer it to hopefully Cyber City and but as you know that is a decision that has to be taken jointly with our shareholders, GIC. So frankly right now we are developing it. Once it’s complete and leased out, so that clear cap rate based transfer price can be worked out. I think at that time we will engage with GIC on trying to transfer that. [Foreign Speech] but hopefully they will.
Vivek Anand — Chief Financial Officer
To clarify, out of the about 4.5 million to 5 million growth, 2.6 million to 3 million is within the DCCDL portfolio. What is outside the DCCDL portfolio is about 1.4 million, 1.5 million.
Sameer Baisiwala — Morgan Stanley — Analyst
Yeah. Got it. Very clear. Thank you.
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
It is like MS Dhoni, drop yourself down in the batting order.
Sameer Baisiwala — Morgan Stanley — Analyst
Yes. Next time I’ll try to do it better.
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
Maybe Dhoni like you makes a huge effect at the end also.
Sameer Baisiwala — Morgan Stanley — Analyst
Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Ashok Tyagi for closing comments. Thank you, and over to you, sir.
Ashok Kumar Tyagi — Co-Chief Executive Officer and Whole Time Director
So thank you once again, everybody, for taking your time on a Saturday and coming up and having a very nice chat.
You know, I mean, as some of you who have been with us for a long time, I think really to some degree for a long time, there were lot of business strategies that we have been trying to pursue. We had our tough times as you know through the last decade in many years, both events local to us as well as macro to the market. I mean, touchwood, it does appear that I think we are now hopefully hitting our peaks tried in the DevCo business and in the Rentco business. Rentco business, I think we hopefully run possibly with the best office and retail portfolios that exist right now. And I think our DevCo thing we are hitting a good stride now and hopefully our debt problem is conclusively behind us and the cash generation is now happening on a regular basis. So I mean we just hope that in fiscal 2024 we can sustain the gains that we have made in the last fiscal and continue strengthening ourselves on these things and the market holds up. Even the interest rate cycle, which at one time was sort of beginning to loom in as a major challenge, hopefully, if not at the peak, we are possibly closer to the peak than we have been in the last 12 months and I think at some stage in six, nine months down the line, things should begin reversing. So I think really both for India is I think on the cusp of a very major economic upswing and hopefully, the real estate sector, both offices, retail, and residential should all benefit from it.
So really with that optimism, thank you again. Thank you.
Vivek Anand — Chief Financial Officer
Thank you.
Aakash Ohri — Executive Director – DLF Home Developers Ltd
Thank you.
Sriram Khattar — Managing Director – DLF Rental Business
Thank you.
Operator
[Operator Closing Remarks]