KOLTE-PATIL DEVELOPERS LTD (KOLTEPATIL) Q2 FY23 Earnings Concall Transcript

KOLTE-PATIL DEVELOPERS LTD (NSE:KOLTEPATIL) Q2 FY23 Earnings Concall dated Nov. 10, 2022

Corporate Participants:

Rahul Talele — Group Chief Executive Officer

Unidentified Speaker —

Analysts:

Shiv Muttoo — Adfactors — Analyst

Himanshu Upadhyay — Oaktree Capital — Analyst

Shreyans Mehta — Equirus — Analyst

Parikshit Kandpal — HDFC Securities — Analyst

Rajat Setiya — ithought PMS — Analyst

Dhwanil Desai — Turtle Capital — Analyst

Alpesh Thacker — Antique Stock Broking Limited — Analyst

Rohit Balakrishnan — ithought PMS — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Kolte-Patil Limited Q2 and H1 FY ’23 Earnings Conference Call. As a reminder, all participant lines will be in a 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. Shiv Muttoo from Adfactors. Thank you, and over to you, sir.

Shiv Muttoo — Adfactors — Analyst

Thank you, Melissa. Good evening, everyone, and thank you for joining us on the Q2 FY ’23 Results Conference Call of Kolte-Patil Developers Limited. We have with us today Rahul Talele, Group CEO; Dipti Rajput [Phonetic], Vice President, Investor Relations; and Pawan Lohiya, Head of Finance.

Before we begin, I would like to state that some of the statements in today’s discussion may be forward-looking in nature and may involve certain risks and uncertainties. A detailed statement in this regard is available on the Q2 and H1 FY ’23 results presentation that has been sent out earlier.

I would now like to invite Mr. Rahul Talele to begin the proceedings of this call. Over to you, Rahul.

Rahul Talele —

Thank you, Shiv. Good evening, and a very warm welcome to everyone present on this call. Thank you for joining us today to discuss the operating and financial performance of Kolte-Patil Developers for Q2 and H1 FY ’23.

I would like to begin by sharing with you our cues and takeaways on the real estate environment, followed by a discussion on the second quarter performance and the way forward. Dipti will take — Dipti will then take you through the key financial highlights, following which we will be happy to answer any questions that you may have. It is encouraging to observe the revival in the housing market across key geographies and demand segments. Despite the rising mortgage rates, housing demand remains buoyant with growing preference for leading real estate brands that have emerged stronger and are attracting a greater share of customer engagement.

Strong balance sheet and access to liquidity is another differentiator supporting growth, this virtuous cycle has further accelerated over the recent past, with preference for larger homes based on emerging flexible hybrid work engagement offered by employers.

Coming to the operating performance, during the first half of the financial year, we reported sales value of INR812 crores, making a year-on-year growth of 20%. Corresponding sales volume expanded by 9% to 1.17 million square feet. For Q2, sales revenue was INR367 crores and volumes stood at 0.56 million square feet. Importantly, realizations continued to improve during H1 FY ’23, up by 10% year-on-year, driven by contribution from across projects. Strong execution capabilities demonstrated by our teams across projects translated into form collection that improved in H1 by 34% year-on-year to INR878 crores. Q2 collections were higher by 8% year-on-year.

Our business diversification strategy remains on track with projects outside Pune contributing 27% of sales value during H1 FY ’23. While we see accelerating momentum on key operating aspects of the business in the second half of the year, Q2 has been slower due to some shifts in scheduled launch timelines that are likely to be announced over the next few weeks. Those, of course, of the rest of the current — through the course of the rest of the current financial year.

As indicated earlier, existing projects, our judicious business development initiatives and scheduled launches that have an aggregate top line potential of approximately INR7,710 crores are on track. Over the years, we have outperformed in this second half compared to first and we expect to continue on the same trend in FY ’23. Overall, we continue with a target of 25% to 30% sales value growth in the current financial year and are building traction from the medium and long-term perspectives as well. Here, I would like to share that we have received all the required approvals for our residential projects Sukh Niwas in Khar, Mumbai, and are ready to launch in coming days.

For most of the priority launches mentioned in our [Phonetic] presentation that we have mentioned in our presentation, we have received most of the key approvals, including environmental clearance and are in the final leg of receiving pending approvals. At KPDL, we believe prudent investment and strategic partnership have enabled us to deliver on our growth plan. In a recent development, company through its wholly owned subsidiary Sampada Realities Private Limited has entered into an agreement with Planet Smart City for strategic land monetization of a portion of its project Little Earth at Kiwale, Pune for INR78 crores for joint development of 0.65 million square feet.

The agreement with Planet takes place through an SPV, which is owned by Planet and KPDL in the ratio 83% and 17% respectively. This said, land parcel is a part of KPDL’s recent acquisition of Sampada Realities that has residential development potential of 2.5 million square feet. This is the third project we have undertaken under our residential development platform with Planet Smart City, following the previously launched joint initiatives at Universe at Life Republic and Three Jewels both in Pune.

In addition to further our business development agenda, we have received an approval from the Board today for issuing redeemable, nonconvertible debentures on a private placement basis aggregating up to INR2,065 crores. KPDL continues to benefit from the buoyant housing demand, especially in the post RERA-led consolidation world. Strong brand recall, best-in-class living space and strong execution capabilities position us well in our ability to drive growth, deliver on targets and create long-term value.

With that, I now hand over the proceedings of this call to Dipti, which is a new — who is a new joinee as a IR head with us to provide a financial overview.

Unidentified Speaker —

Thank you, Rahul. Good evening, everybody. I will now briefly take you through our financial performance for the quarter and half year ended September 30, 2022. Based on the CCN-based accounting, in Q2 FY ’23, we reported revenues of INR123 crores. And for H1 FY ’23 revenue stood at INR323 crores. Our EBITDA for the quarter and half year stood at negative INR5.6 crores and INR41.3 crores respectively. During the quarter, we reported a loss to the tune of INR8.8 crores and for H1 FY ’23 as profit and after that, post RERA [indecipherable] interest stood at INR12.4 crores.

Here, I would like to remind you that recognition of revenue and profits are dependent on the timing of the project completion based on statutory accounting guidelines. Our net debt to equity stands at 0.26 as on September 30, 2022. The liquidity in our business operations remained strong. Operating cash flow for H1 ’23 stood at INR192 crores. We expect to report improved performance across operational and financial parameters for the remainder of the year. We remain committed to enhancing sales performance, timely execution and generating strong cash flows, which will continue to drive PL performance over time.

On that note, I conclude my opening remarks and request the moderator to open the line for Q&A.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] We have the first question from the line of Himanshu Upadhyay from Oaktree Capital. Please go ahead.

Himanshu Upadhyay — Oaktree Capital — Analyst

Yeah. Hi, good evening, Rahul. Am I audible?

Rahul Talele —

Yes. Good evening, Himanshu.

Himanshu Upadhyay — Oaktree Capital — Analyst

So I had a question on the sales performance, okay. So see, we in last four years, we see the business development, a lot of activity has happened. Nearly 8 million square feet of new projects we would have added. But in terms of launches, it has been pretty slow, okay. We have come to a situation that whatever is ongoing and unsold that is equivalent to only one-half of saleable inventory, okay. So — and we had multiple projects to launch, and we see delays in many of those projects. What could have been done better on launches? And what is the urgency on that side? Because there is a window when you do a pretty good sales and traction and we would be one of the very few real estate companies whose sales volume-wise is down Y-o-Y and we peaked around Q3 FY ’22. After that, every quarter, volume has been coming off for last four quarters. So any thoughts on that or what went wrong? And how are we improving the situation?

Rahul Talele —

Thanks, Himanshu. See, because of the delay in the certain set of approvals, the all launches — planned launches of Q2 are getting postponed to Q3 and Q4. We have mentioned in our investor presentation as well, there are priority launches of around INR7,700 crores worth potential. So out of these 13 launches for 11 projects, we have already received the environment clearance, which is the most time-consuming and key approval for the launch. And now the smaller approvals or local-level approvals are in process. So though we accept that there is a delay in the launches, but we are confident at the same time that these projects will get launched in this financial year itself.

Out of that, we are planning to launch a Phase 1 of close to INR4,000-odd crores, more than INR4,000-odd crores. And yes, we do agree the sustenance inventory is depleting and hence we are focusing on the priority launches and these launches are certain now and you will see the announcement very soon in next few weeks and next few months.

Himanshu Upadhyay — Oaktree Capital — Analyst

And what is the level of groundwork or preparation on the ground in terms of channel partners and everything? So if we are able to launch — because the festival season in the third quarter is already over. But in terms of traction and groundwork, how prepared are we that we can at least cross last year’s benchmark and have some volume growth on that word? Any thoughts on that?

Rahul Talele —

So Himanshu, see, we utilize this time positively to work on the backend of the operation. So let it be the readiness at the site in terms of the show flat or in terms of the marketing collateral, having the meetings, discussions with the channel partners, giving the training sessions to the internal team as well as the extended team as well as taking the advantage of the technology when we are talking about volumes. So we are well-placed in most of the aspects to get the benefit of a good launch momentum once we launch these projects.

Himanshu Upadhyay — Oaktree Capital — Analyst

And see, these launches of INR6,000 crores or nearly INR7,000 crores, we are expecting from Q3 of FY ’22 in the prior slide. But do you think the prices have increased and we would have better margins in these projects? Or do you think the inflation would take away whatever margin improvement can be there in the launches what we had planned earlier?

Rahul Talele —

So Himanshu, I’ll try to answer into two parts. The first part is for all those projects which we have acquired like Baner or Kiwale or Tathawade, for this project or for that matter, Mumbai projects, whatever the price we have underwritten at the time of acquisition, we are bettering in terms of the pricing over there and particularly for our own land bank. So let me give you a example of Life Republic. So we have increased the price to the tune of 7% to 10% in last one year, and certainly, we are confident that these projects will get launched at a premium rate as compared to earlier sustenance inventory. So certainly, that will add up to the volumes — add up to the better margin.

And in terms of the commodity price impact, so we have already absorbed that price impact in all of our ongoing projects. For new projects, we are increasing our APR, just to give you a example, Baner project, we have underwritten at INR7,500 crores and now we are planning to launch that at INR8,500 crores. And my cost impact is to the tune of INR100 crores to INR150 crores for that project. So we are taking the advantage of the positivity in the industry, positivity in the customers’ mind, at the same time, we are completely addressing the cost impact till date.

Himanshu Upadhyay — Oaktree Capital — Analyst

Okay, I’ll join back in the queue and hope we have a much better second half than what we’re seeing in the first half at least on the sales side.

Rahul Talele —

Yes, certainly. We are confident, Himanshu, on that.

Himanshu Upadhyay — Oaktree Capital — Analyst

Yeah, thank you.

Operator

Thank you. We have the next question from the line of Shreyans Mehta from Equirus. Please go ahead.

Shreyans Mehta — Equirus — Analyst

Thanks for the opportunity. Sir, my question pertains to the guidance we still continue to maintain the 25%, 30% growth guidance despite the muted [Phonetic] so just wanted to understand, what is giving you the confidence? I agree, that we might be launching a couple of projects in the second half. But given the way things are panning out, do you actually foresee that we’ll be able to achieve that? That’s my first question.

Second, in terms of the slide wherein we have lined up the key priority launches, can you give some flavor as to the key big projects which you are targeting probably in third quarter and fourth quarter?

And my last question pertains to the deal which we did with Planet Smart. So just wanted to understand the rationale behind doing this deal? Why are we not doing it on our own? And why are we going it via Planet Smart?

Rahul Talele —

Okay. So, Shreyans, we are getting a good response in Q3. And we are confident that we’ll get the same or rather better response in our all new launches. So we are confident in terms of getting the volumes through new launches. I mean see, though we have launched a very limited new inventory in the last two, three quarters.

But we could off-load 30% to 45%, 50% of the inventory in the launch quarter two — in the three to six months. So we are confident of achieving a better numbers certainly in the second half of this financial year. So regarding the priority launches, see, out of this, we are confident that all these projects will get launched in next maximum — I mean, the outer limit is maximum four to five months and the latest limit is next 15 days, so a few projects will come in Q3 itself and the spillover will be there in the early part of Q4.

And to answer your third part of the question regarding the Planet Smart city, see, as a part of group, we strongly believe to achieve the financial closure as early as possible in the project. At the same time, it is not just a financial partnership. It is beyond that. So they are bringing a value in terms of some strategic tie-ups, in terms of some technology innovation. So we want to take advantage out of that. At the same time, we are getting on cash-neutral point of view in the beginning of the project itself. So whatever from a cash flow perspective we have invested in the project, we are getting paid back through this deal. So IRR — so on the other perspective, IRR for this deal will look significantly higher.

Shreyans Mehta — Equirus — Analyst

Got it. Got it. Sir, and can you just give some color on the structure? So right now, we would be doing 0.65, and the balance will also come via this or probably we would be doing it on our own?

Rahul Talele —

No. See simultaneously, we are going to develop two projects. One project will be through Planet, and the other project, the rest of the part will be independent by Kolte-Patil. So development will be simultaneous development and the product offering will be a little different.

Shreyans Mehta — Equirus — Analyst

Got it. So sir, wouldn’t it be — I mean, I believe wouldn’t it be unfair, because we will be competing within our projects?

Rahul Talele —

So Shreyans, that is what I said. So the amenities and that kind of the internal specifications for the Planet projects will be different and the subsequent phases that we are planning to launch on our own, the specification, the sizes will be different.

Shreyans Mehta — Equirus — Analyst

Got it. Got it. Got it. Sir, and my last, just a follow-up is, how would the Planet Smart deal be, I mean, in terms of structure, so right now we have sold the land and the land will move from our books to that JV. And the responsibility of the sales will be shared 50/50 or how will the economics work?

Rahul Talele —

So economics is 83% of Planet and 17% of Kolte-Patil. And the sales will be — I mean everything will be pro-rated distributed.

Shreyans Mehta — Equirus — Analyst

So 17% of topline or profitability?

Rahul Talele —

17% of profit.

Shreyans Mehta — Equirus — Analyst

Okay, okay. Got it, got it. That is from my side. Thank you and all the best.

Operator

Thank you. We have the next question from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.

Parikshit Kandpal — HDFC Securities — Analyst

Hi, Rahul ji. Congratulations on a decent performance. So I would assume, sir, this first half sales is all largely sustenance sales, no majorly launches?

Rahul Talele —

Sorry, Parikshit, can you please repeat?

Parikshit Kandpal — HDFC Securities — Analyst

Sir, I was saying for this first half, we did not — the sales which we have done is largely all sustenance sales, right? There were no major new launches.

Rahul Talele —

That’s correct, Parikshit.

Parikshit Kandpal — HDFC Securities — Analyst

So second half, as we are planning to launch about, so this INR4,000 crores which you said, this you are going to bring in phases or this will be like opened altogether? Put together forward [Phonetic]?

Rahul Talele —

So, the total potential of my approved inventory will be INR7,700 crores. Out of that, around INR4,000 crores will be launched immediately.

Parikshit Kandpal — HDFC Securities — Analyst

So this will be launched and open for sale? So you’re saying close to about INR4,000 crores will be open for sale. And typically, during the period — how much sales we do during the launch period and how much we target? Is it like 25%, 30%? So how do we do — before we increase the prices, so what is our target of life selling?

Rahul Talele —

So let me try to explain. So for affordable and MIG product, like a Life Republic, so over there, we try to push maximum inventory during the first six months of the launch, so in the range of 40% to 60% inventory. And for the premium projects like maybe Baner, Pimple Nilakh, so our target is to achieve at least 30% to 40% inventory in first three to four months.

Parikshit Kandpal — HDFC Securities — Analyst

So that means in the second half, depending on the timing, sir you could book anywhere from INR1,500 crores to INR2,000 crores of sales?

Rahul Talele —

Yes.

Parikshit Kandpal — HDFC Securities — Analyst

If we want to happen [Phonetic]. So incrementally, second half, you’re looking to do almost like INR1,500 crores of sales?

Rahul Talele —

That’s correct.

Parikshit Kandpal — HDFC Securities — Analyst

Got it, got it.

Rahul Talele —

So maybe around INR1,200 crores from this new launch inventory and around INR300 crores from the sustenance inventory.

Parikshit Kandpal — HDFC Securities — Analyst

So you’re in second half targeting over and above the first of about INR1,500 crores, including INR1,200 crores of new and INR300 crores of sustaining sales?

Rahul Talele —

That’s correct.

Parikshit Kandpal — HDFC Securities — Analyst

Okay. That was helpful. The second question is on business development. So a large part of the pipeline you said is already like — so all the INR7,000 crores that you said, INR7,000 crores, INR7,500 crores, all approvals are in place right now, right?

Rahul Talele —

Yes, yes. Most of the approvals are already in place for this INR7,000 crores worth inventory. The key approval is the environment clearance. So, we have received the environmental clearances for all projects, except Pimple Nilakh.

Parikshit Kandpal — HDFC Securities — Analyst

After EC comes in, typically, how much time do you think our balance approvals will take before you go to launch?

Rahul Talele —

So post-EC, it is a journey of maximum 45 to 60 days. So already, we have applied in a couple of projects. We have applied for RERA and a couple of projects we have applied for local level approval, and what I’m talking about is the next few weeks to next few months.

Parikshit Kandpal — HDFC Securities — Analyst

So out of this INR4,000 crores.

Rahul Talele —

Suddenly see, considering so much of projects are getting launched, so someone asked me, I mean, Himanshu asked me in the past a few minutes back. So we are planning our launches accordingly so that we can get the maximum traction at the individual project with the same set of internal stakeholders or team.

Parikshit Kandpal — HDFC Securities — Analyst

So how this inventory will be filled. So in the fourth quarter, you said, INR4,000 crores which you plan to open further. But out of the INR4,000 crores how much will be open in the third quarter and how much in the fourth quarter?

Rahul Talele —

So around INR1,500 crores to INR2,000 crores in this quarter itself and the remaining will be spilled over into next quarter.

Parikshit Kandpal — HDFC Securities — Analyst

Got it, sir.And just on the business development side, I think a large part of the pipeline is now almost having almost of the — a large part of the approval, which as we see, is already done. So just over the next six months to 12 months, how do you emphasize the business development pipeline building out total [Indecipherable] follow on that.

Rahul Talele —

So currently, at this moment, when we are speaking, so around nine advanced level of deals we are working upon. So out of that, six deals are in Pune and three deals are in Mumbai. Apart from that, we are working on one deal at Bangalore as well. So this will get closed out.

See, we have, as I mentioned in earlier calls also, we have very stringent due diligent process. But we are confident to close the significant work inventory worth new projects in the next few quarters. So that is to the tune of INR6,000 crores to INR7,000-odd crores. And that is one of the reasons that we have monetized this strategy from — we have strategically monetized our small portion of land in Kiwale. And we have taken the enabling resolution from the Board as well, to raise further INR200 crores. So that will be deployed for the business development activities. And on top of that, when I was referring to a moving sustenance inventory, my sustenance inventory is giving us a good collection to the tune of 80%, 90% immediately. So that was the intent, so that all this free cash flows can be utilized to get invested for this new business development opportunities.

So we have confidence that this much of around INR6,000 crores to INR7,000-odd crores, what inventory will be — I mean business development what we are going to close in the next few quarters.

Parikshit Kandpal — HDFC Securities — Analyst

Next few quarters means like next six months or 12 months?

Rahul Talele —

Sorry?

Parikshit Kandpal — HDFC Securities — Analyst

So just a few quarters means six to 12 months, like maximum up to a year this will be closed?

Rahul Talele —

So in next six to 12 months.

Parikshit Kandpal — HDFC Securities — Analyst

Yes. And just to give a ballpark breakup in the three projects in Mumbai, in Pune and maybe one in Bangalore. So what is the distribution of…

Operator

Sorry to interrupt. This is the operator. Parikshit, you’ll need to adjust your — the volume from your audio.

Parikshit Kandpal — HDFC Securities — Analyst

Okay, sure. Just give me a second. I’ll just go off the speaker. Yeah, Rahul sir, I was asking you, out of the total INR6,000 crores, how much is the split between Mumbai, Pune and Bangalore?

Rahul Talele —

See, Mumbai is INR2,000 crores, Pune is around INR4,000 crores and around INR500 crores is from Bangalore.

Parikshit Kandpal — HDFC Securities — Analyst

And in terms of capital outlook, so you said INR200 crores of enabling resolution is the fund raise. So what will be the total out-go on the land acquisition in this — out of this GDV, which you will add, so how much will be the deployment towards land? On an outright basis, how much will be JV and JDs?

Rahul Talele —

So on a composite basis, we are expecting a outflow to the tune of INR450 crores to INR550 crores.

Parikshit Kandpal — HDFC Securities — Analyst

Okay. So mostly these projects are more largely on outright with all this INR6,000 crores evaluation, which will happen?

Rahul Talele —

It’s a blend of a joint venture as well as the structured outright. When I’m referring to structured outright, we generally try to take the tranche event facility by line owners so that further tranches can be — we can internally generate the free cash flows from the project itself, to the tune of that further tranches.

Parikshit Kandpal — HDFC Securities — Analyst

We are going to do a standard payment basically?

Rahul Talele —

Yes.

Parikshit Kandpal — HDFC Securities — Analyst

So this is a QIP resolution? Or is it the debt limit, which you are looking to do?

Rahul Talele —

This is our debenture resolution.

Parikshit Kandpal — HDFC Securities — Analyst

Okay, debentures. So you’re not going to raise any equity. So it’s largely — you have headroom on the balance sheet to basically take more debt because your balance sheet debt is very low, right?

Rahul Talele —

Yes.

Parikshit Kandpal — HDFC Securities — Analyst

Okay. Got it. So no new dilution when you can internally fund it partly through the internal profits and partly from debentures, issuance of debentures?

Rahul Talele —

So we are in a very advanced stage of discussion.

Parikshit Kandpal — HDFC Securities — Analyst

So if I see that, so between now and next 12 months, there’s a very strong launch pipeline, a very strong business development pipeline, so which could result in a very significant growth on the pre-sales for the next year?

Rahul Talele —

That’s correct.

Parikshit Kandpal — HDFC Securities — Analyst

So how much growth we are expecting for FY ’24 on pre-sales, sir? That’s my last question.

Rahul Talele —

So we are expecting a growth, I mean, we are maintaining that growth guideline given earlier of 25% to 30% for this financial year as well as next financial year.

Parikshit Kandpal — HDFC Securities — Analyst

Great, sir. And wish you all the best, Rahul. I look forward to these additions to our order book. Thank you and all the best.

Rahul Talele —

Thank you, Parikshit.

Operator

Thank you. We have the next question from the line of Rajat Sethia from Ithoughtpms. Please go ahead.

Rajat Setiya — ithought PMS — Analyst

Hi. Thanks for the opportunity. Sir, just one question. We were expecting to do deliveries of 3 million to 3.5 million square feet in this year, valuing around INR1,600 crores or INR1,800 crores and we were also hoping to do OCF of INR700 crores. Do you think with the first H1 that we have done, we will be able to achieve those targets?

Rahul Talele —

Yes, certainly, Rajat. So there are multiple activations or completion certificates are lined up in Q3 and Q4. So we are confident of achieving that guideline.

Rajat Setiya — ithought PMS — Analyst

Okay, sir. Thank you so much. And that was all I had. Thank you.

Operator

Thank you. We have the next question from the line of Dhwanil Desai from Turtle Capital. Please go ahead.

Dhwanil Desai — Turtle Capital — Analyst

Hi, Rohit [Phonetic]. Good evening. So the question I have is that, if you can give a little bit more granular detail about our launch pipeline? So which of the projects you think will get launched in Q3 and which will flow over into Q4 out of the priority launches and LR report?

Rahul Talele —

Okay. So Baner is certainly going to get launched in Q3, likewise, Kiwale. These two projects will certainly get launched in Q3. Apart from that, Sukh Niwas, we have already received the RERA. So it is getting launched in next 15 days. Golden Pebbles, which is a Mumbai project will get launched at the last week of Q3 or early of January. And Raaga project again, will get launched in first week of — first half of January. So at LR-R13, then row houses, R16, R1D and R10D, all these projects will get launched in Q3 itself.

Dhwanil Desai — Turtle Capital — Analyst

Okay. Got it. Second question is, so you say that we have nine active BD discussions at a pretty advanced stage. But in your experience, typically, what are the showstoppers in terms of once the deal reaches that advanced stage, what are the kind of issues that can crop up? And how do you rate all the deals from some of the showstopper aspects that can kind of throw the deal away?

Rahul Talele —

So Dhwanil, see, the major hurdle is the title clearance. Apart from that, see when we are discussing on the commercial, when I’m talking about we have closed or we are in advanced stage of discussion on these nine days, so commercial discussion is already been closed. Now the due diligence happens on the three fronts. One is the revenue front. The second is, when I’m talking about the revenue, all those title-related, the title — for related things. The second is the technical due diligence regarding the various changes in DCR, various changes in the position of the properties there or not. And the third is from the complete technical perspective about the construction technology and that thing. But these three things are pretty much solvable.

The biggest challenge is the region, biggest challenge is the title. So for the title, we generally try to do the very detailed in-depth due diligence that takes in the — I mean, in terms of time, it takes two months to four, five months for us.

Dhwanil Desai — Turtle Capital — Analyst

Okay. Okay. So generally, title clearance part comes after the commercials are closed and you get into the due diligence mode and that is how it works, right? So commercials are never a challenge once you reach an advanced stage?

Rahul Talele —

No, no. When I’m talking about these deals, we have already closed on a commercial part. Now we are discussing on more rather the information is getting shared on the title and other things.

Dhwanil Desai — Turtle Capital — Analyst

Okay. Okay. Got it. And just last one. So I think for us to reach whatever target of 25%, 30% growth. And since most of the launches even in Q3 are going to be towards the end of the Q3, so not much to be sold in the Q3 in that sense. So Q4 has to be pretty large. That is what is the expectation, right?

Rahul Talele —

Dhwanil, see, we are confident of bettering our numbers in Q3 as well. And certainly, since all projects, I mean, all projects will be launched at the launch stage in Q4, Q4 will be a much better quarter as compared to Q3.

Dhwanil Desai — Turtle Capital — Analyst

Got it. Thanks. That’s it from my side. All the best.

Rahul Talele —

Thank you. Thank you, Dhwanil.

Operator

Thank you. We have the next question from the line of Alpesh Thacker from Antique Stock Broking. Please go ahead.

Alpesh Thacker — Antique Stock Broking Limited — Analyst

Thank you for taking my questions. So my first one is, given interest rate hikes and tech-side job losses that are happening, which is one of the key driving aspects of Pune housing market, how do you see the industry demand momentum shaping up going into second half and further into FY ’24?

Rahul Talele —

So Alpesh, see what we believe — yes, we do agree there is a increase in the interest rate. But at the same time, we have to see from the multiple perspective. One is the way to grow that most of the employees have seen, particularly in employees who are working into a consulting as well as the information technology side. So there is a huge amount of wage growth seen in last couple of years. Apart from that, the property prices in the last seven, eight years have not gone up more than 15%, 20%. And if you do the mathematics on these three parameters, properties, prices, the wage growth, and the interest rate, still we are at the best in terms of the affordability. So yes, we do agree people can postpone their decision or they can opt for the, maybe a compact house as compared to the earlier, their expectation.

But certainly, post-COVID demand is very strong and people — I mean, as a group, we are relying on the end user and end user demand is very strong. And we don’t see any deviation in our guideline because of this. And as a Plan B, even if the interest rate goes beyond certain limit, maybe if there is a high-500 basis point, so we have done the analysis internally, what can be the probable impact and how we can absorb that impact in order to give the fixed rate kind of arrangement to the customer for next two years.

Alpesh Thacker — Antique Stock Broking Limited — Analyst

Okay. Okay. Thanks for the detailed explanation, sir. My second question is, so how much percentage of your homebuyers would be — ballpark, would be taking home loans?

Rahul Talele —

So for MIG product, it is around 70% to 80%. And for the HIG product — 70% to 80%, and even in that, so if the property is of say INR100, people will — average loan size will be in the range of INR60 to INR70. And for the premium projects, the average loan size in terms of the value of the propertiy is lesser, maybe 50%.

Alpesh Thacker — Antique Stock Broking Limited — Analyst

Okay. Okay. And also, we have an also real estate developers with a very good balance sheet. So — and also there are growth opportunities out there that you are looking forward to. So internally, what is the comfortable hearing [Phonetic] ratio that we are okay taking up to pursue these growth opportunities?

Rahul Talele —

So Alpesh, we have already taken the approvals from Board, 4.5% debt-to-equity ratio. And yes, when we are talking about the new business development days [Phonetic], we can opt for that kind of approach in the future. So we have the three possibilities. One is, the internal accrual. Second is, the arrangement that we have done with the Planet or there are multiple such partners we do have. And the third is, the leveraging, further leveraging.

Alpesh Thacker — Antique Stock Broking Limited — Analyst

Got it, got it. That’s it from my side, and all the best for the second half. Yeah.

Rahul Talele —

And Alpesh, I would like to mention one more thing here. Since most of our projects will be at the launch stage and will get launched in the full year of the launch, and we are confident of achieving good volumes, so there will be a significant free operating cash flows because I will be spending very less and I’ll be collecting high because of the RPC flat. So that will be a addition — I mean, that will be a very strong internal accrual in next few quarters.

Alpesh Thacker — Antique Stock Broking Limited — Analyst

Okay. That’s interesting. Yeah, thanks a lot.

Operator

Thank you. We have the next question from the line of Rohit Balakrishnan from ithought PMS. Please go ahead

Rohit Balakrishnan — ithought PMS — Analyst

Hello. Am I audible?

Rahul Talele —

Yes.

Operator

I’m sorry to interrupt. Mr. Balakrishnan, please could you use the handset?

Rohit Balakrishnan — ithought PMS — Analyst

Okay. Is it better now?

Operator

Yes, sir. Thank you. Please go ahead.

Rohit Balakrishnan — ithought PMS — Analyst

Okay. So Rahul, I had a couple of questions. So I think you had indicated previously that we wanted to grow both on a reported basis — I mean, our pre-sales numbers would grow around 25%, 30%. And you said that you are still confident to achieve that in the H2. But even on a reported basis, you had mentioned previously in the calls that given it will be deliveries heavy, we also see strong growth on that side.

So I mean, given two quarters have done, have been finished, so just wanted to get your view on that. I mean, do you still stand by the fact that you — even on reported basis — I know reported basis is more backward-looking, but just to understand, are there any delays or anything on that side towards deliveries? Just wanted to understand that. That was my first question.

Rahul Talele —

Okay. Rohit, there are occupation certificates lined up in our three projects. So that will come in next three to four months and which will get, I mean, recognized in Q3, end of Q3 and Q4. Mostly in Q4, and we are confident of achieving around INR1,300 crores to INR1,500 crores of topline.

Rohit Balakrishnan — ithought PMS — Analyst

In the next couple of quarters?

Rahul Talele —

Yes. I mean, in this financial year itself.

Rohit Balakrishnan — ithought PMS — Analyst

Okay, so. Okay, got it. So this you’re saying is the residual revenue or is it going to be the total topline because I think we’ve done close to…

Rahul Talele —

Total topline. Since in real estate, we follow CCM. So if we have a total topline of the inventory wherein we get the OC.

Rohit Balakrishnan — ithought PMS — Analyst

Right, right. No, no, I was asking, sir, that the OC that are remaining to be recognized, the revenue that is going to be recognized over the next couple of quarters, that is around INR1300 crores to INR1,500 crores or you are saying that the entire year, it will be INR1,300 crores to INR1,500 crores, including the quarters that have just gone by?

Rahul Talele —

Incremental. Incremental topline.

Rohit Balakrishnan — ithought PMS — Analyst

Understood. Understood, understood. Sir, the second question was in terms of can you — I missed — even though I think you explained, we have done a deal with Planet Smart on the Kiwale. So can you just explain that, what we have done? And I — sorry, could not understand it, my line was not very clear.

Rahul Talele —

Okay. So Kiwale, this is the project in West Pune at the beginning of Mumbai-Pune Expressway. So we have acquired this ready-to-launch asset. So we have now reorganized the product mix and we are launching this project soon. So this has a potential of around 25 lakh square feet. Out of that, around 6.5 lakh square feet has been sold to this SPV, wherein the Planet is 83% and we are 17%.

Rohit Balakrishnan — ithought PMS — Analyst

Okay. Okay. Understood. Fine, sir. And the other question was, sir, in terms of pre-sales this year, assuming we do the growth, what would be the mix of Bombay versus, I mean, Bombay, Bangalore and Pune roughly? I mean you’ve held around 25%, do you think this will continue?

Rahul Talele —

So Bombay currently in H1 is 27% since there will be a launches line — since there are launches lined up of Sukh Niwas and Golden Pebble in Mumbai. So we are confident of achieving 30% to 32% coming from…

Rohit Balakrishnan — ithought PMS — Analyst

Okay.

Rahul Talele —

…Mumbai and Bangalore and rest will be from Pune and Life Republic.

Rohit Balakrishnan — ithought PMS — Analyst

Understood. Fine, sir. All the very best for the remaining months. Thank you, sir.

Rahul Talele —

Thank you.

Operator

Thank you. We have the next question from the line of Shreyans Mehta from Equirus. Please go ahead.

Shreyans Mehta — Equirus — Analyst

Yeah. Thanks for the follow-up. Sir, I was just referring to your previous presentation, wherein we had lined up a plotted development in the LR project, where in this presentation, it has been removed. So any particular reason for it?

Rahul Talele —

No. See, if you have seen the LR presentation, we have added the row houses. So we are confident that we’ll be getting a good response in our row houses. And the per acre realization in row houses is much, much better as compared to a plotted development. Hence, we are — simultaneously, we are taking the approvals of slotting at township as well. So we have received the environmental clearances for plotting as well as township, but we want to see the progress in this row house sale if we get a good response all year. So we’ll convert that plotting also into a offset for a better cash flow realization.

Shreyans Mehta — Equirus — Analyst

Got it. Got it, got it. Sure. And secondly, the question pertains again to, say for example, if we do 25%, 30% this year and you’ll be closing anywhere between, say around INR2,000 crores to INR2,200-odd crores. And again, we are talking about 30% growth. So just wanted to understand for that — for us to achieve that number, we need to have a BD pipeline or a pipeline of roughly around INR12,000, INR13,000-odd crores, of which some would be coming from the existing phases and inventory. So how would the balance — how do you address the balance?

Rahul Talele —

So Shreyans, if you see there is a current sustenance inventory of around one million square feet. On top of that, we are launching this 11 million square feet. We are taking accrual for this around 11 million square feet. So in total, in next three to four months, we’ll be having a sanction of close to INR8,500 crores work inventory.

On top of that, when we are discussing about the business development opportunity, simultaneously, we are finalizing our plans wherever we are confident of concluding the deal soon. And we are planning to apply to the various authorities, particularly for the environmental clearance so that by the time we close the deal, that deal or that project will be launch-ready. So we are confident, so around INR8,500 crores worth inventory, if you see, INR2,100 crores, INR2,200-odd crores, INR2,300 crores of pre-sales number this year, maybe around the same set of growth next year, so close to INR3,000 crores and maybe INR4,000 crores. So we have given a guideline earlier. In the next three years, we want to achieve a pre-sales number of INR8,000 crores to INR9,000 crores.

So that is very much possible for existing inventory itself. On top of that, we are very aggressively trying to close the business development deals. So that will be — I mean that will make our task pretty easier. And once we have the good amount of inventory, we can command a better price realization, we can command — we can come up with a better premium product offering.

Shreyans Mehta — Equirus — Analyst

Got it. And sir, just if you could highlight the existing BD pipeline where we are negotiating in case of a few major projects and in terms of GDV or potential, anything on that front?

Rahul Talele —

So see, out of six projects in Pune, around two projects are outright, one is structured outright and registrar joint development projects in Pune as well as in Mumbai.

Shreyans Mehta — Equirus — Analyst

Got it. And in terms of any number potential GDV?

Rahul Talele —

Number potential GDV. Sir, GDV is INR6,000 crores.

Shreyans Mehta — Equirus — Analyst

Okay. INR6,000 crores. Got it, got it.

Yes.

Got it. That’s it from my side. Thank you.

Operator

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

Parikshit Kandpal — HDFC Securities — Analyst

Yeah. Hello. Thanks for the follow-up.

Operator

Mr. Kandpal, I’m sorry to interrupt. The audio is not clear, sir, if you could use the handset.

Parikshit Kandpal — HDFC Securities — Analyst

Yeah. So my question is this year, how much is the total area you’re looking to deliver in terms of million square feet?

Rahul Talele —

This year, around 2.5 million to 3 million square feet.

Parikshit Kandpal — HDFC Securities — Analyst

And you said the topline will be — so in the first half, we have done INR320 crores. So you think that second half we’ll do about INR1,300 crores to INR1,500 crores?

Rahul Talele —

That’s correct.

Parikshit Kandpal — HDFC Securities — Analyst

So total for the year, it could be anywhere from INR1,600 crores to INR1,800 crores, INR1,900 crores revenue?

Rahul Talele —

INR1,500 crores to INR1,800 crores.

Parikshit Kandpal — HDFC Securities — Analyst

And EBITDA margins here will be like 20%-plus in that range or 20% to 25% on this project?

Rahul Talele —

Yes, yes. Yes.

Parikshit Kandpal — HDFC Securities — Analyst

And partly this will come in third quarter and large part will come in fourth quarter, right? So both quarter will be very heavy?

Rahul Talele —

Yes. Last part will come in fourth quarter.

Parikshit Kandpal — HDFC Securities — Analyst

Okay. Okay, sir. Thank you, sir. I just wanted to recheck.

Operator

Thank you. [Operator Instructions]. As there are no further questions from participants, I now hand the conference over to the management for closing comments. Please go ahead.

Management, please go ahead with your closing comments.

Rahul Talele —

Thank you for your participation on this call and your continued support. If you have any further questions, please feel free to reach Dipti Rajput at KPDL. Thank you very much.

Operator

Thank you, members of the management. Ladies and gentlemen, on behalf of Kolte-Patil, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.