Mahindra Lifespace Developers Limited (NSE: MAHLIFE) Q1 2026 Earnings Call dated Jul. 28, 2025
Corporate Participants:
Unidentified Speaker
Sriram Kumar — Financial Planning and Analysis, Costing and Investor Relations
Amit Kumar Sinha — Managing Director and Chief Executive Officer
Avinash Bapat — Chief Financial Officer
Vimalendra Singh — Chief Business Officer
Vikram Goel — Chief Business Officer
Sumit Kasat — Head, Investor Relations
Amit Sinha — Managing Director, Chief Executive Officer
Analysts:
Unidentified Participant
Parikshit Kandpal — Analyst
Biplab Debbarma — Analyst
Udit Gajiwala — Analyst
Akash Bansal — Analyst
Rishab — Analyst
Presentation:
Sriram Kumar — Financial Planning and Analysis, Costing and Investor Relations
Hi, good evening everyone. A very warm welcome. We are here to discuss about our Q1 FY26 earnings update. @ the outset I would like to thank everyone for participating with us. We have Mr. Amit Sinha, MD and CEO Mr. Vimlendra Singh, CBO Presidential. Mr. Vikram Goyal, CBO Industrial. And Mr. Abinash Bhapet, CFO. So it’s been a good quarter for us and key highlights, you know, include some of the GDV and the and the launches we had on the raisee side and a strong lead activity on the ICNIC business. And also the rights issue we just completed during the quarter like last time.
We will start with a presentation and you know, followed by Q and A. And I would like to welcome Amit to start the presentation.
Amit Kumar Sinha — Managing Director and Chief Executive Officer
Oh okay.
Sriram Kumar — Financial Planning and Analysis, Costing and Investor Relations
You can use a mic.
Amit Kumar Sinha — Managing Director and Chief Executive Officer
See this will not work.
Sriram Kumar — Financial Planning and Analysis, Costing and Investor Relations
Yeah, mic.
Amit Kumar Sinha — Managing Director and Chief Executive Officer
I’ll use the mic. Okay. Hello guys, can you hear me at the back Y? I’ll go through briskly but thanks again for joining. I think we shared this slide last time around. So I think there’s not much that has changed in terms of our strategy, our aspiration and our plan to achieve a target of 10,000 crore. Last time we had shown the path to 10,000 crore by FY30. And that’s captured in these six boxes. In terms of the choices that we are making, the kind of effort we are putting into the BD engine. A lot of deals come our way now and fortunately for us we are many times first port of call for many deals.
Customer experience continues to be a priority not only at Mahindra Lifespaces but at Mahindra Group. We take that very seriously. We are doing many things on the design front but also in terms of the overall customer experience through the life cycle. Project execution is where everything comes together. We have very, very, I would say disciplined tracking of our project pipeline. The projects that are being executed as well as the project that are being launched. IC is a key area for us. We have Chief Business Officer Vikram Goel who joined us very recently joining this meeting for the first time.
Right. And that’s an area we are also looking to expand given the momentum that we have seen in the last few months. And all of this comes together with a very solid financial discipline that we have in terms of tracking the IRRs of our project capital allocation between across our projects, choosing the right set of deals that are capital efficient and suitable for us to pursue the right set of growth metrics. And then we are. You know we talked about funding last Time around. Fortunately for us, the rights issue has been quite well received and we already deployed some of the capital received already.
So all of this is part of our strategy. So not much change. I just wanted to recap for, for us, I think you may, you may know most of this but from our point of view, a one page summary of the real estate market demand continues to be healthy. Wherever we have been able to launch projects, we have not had any problem in terms of selling. Obviously recent RBI repo rate has given us some tailwinds, but that tailwind is only ensuring the extension of the healthy demand that we have seen in the past several years.
Inventory overhang has come down. It’s slightly higher than the last quarter data that we received. It used to be between 12 and 13 months, it’s around 14 months. But overall this level of inventory overhang is something which we consider quite healthy for the industry. One of the challenge that we have seen is the number of launches have come down for multiple reasons. Right. And I wish this problem wasn’t there. If this problem wasn’t there, the absorption would have been higher for many of the developers. Right. And developers like us who are, who have a portfolio that is growing.
The EC issue, some of the other approval delays are slowing the growth that we initially envisaged. But our hope is with some of the efforts underway by the Creda, Redco, etc, some of these issues will get resolved and we should be able to get the launches back on track. A lot of GDV has been added by us and many other players. You’ll see that come through in the next few months. The recent launches I think have have been quite well received. Even we’ve been tracking some of our peers have done good launches. But interestingly the mix is shifted more towards premium, even luxury.
So that indicates there is a healthy price increase. But if you do like for like I think the price increase is balanced compared to what we had seen in the past two to three years where the price increase for like to like inventory was much higher but now it’s not like to lack inventory. You will see much more of a mix shift that is happening. As we have more launches that come through, you’ll be able to compare what the actual price increase is. There are specific market, I think there are three or four market that we carefully track.
MMR Pune have fewer launches. So in terms of the units launch you’ll see probably a flatness or de growth but in terms of pricing they have done well. And again the mix shift is I would remind on that in terms of NCR and Bengaluru they continue to witness both volume and pricing. The inventory overhang for the 4 market that we carefully look at is between 9 to 16. So overall healthy portfolio anytime it crosses 24, 28, 30 is something then we need to to worry about. From a slowdown perspective the right hand side shows you how the market is changing.
Last quarter when we shared this data the Affordable segment was 10% in terms of value so volume was roughly 2% less than, less than 2%. But in terms of value it is now significant. The affordable segment continues to degrow and the segment that we play which is middle segment, 65% mid premium premium continues to be quite a key part of the segment and has done well not slowing down like affordable, not growing the way luxury has been. But I think we are glad to be participating in segment which is the largest talk about the raw material.
I think last financial year as you know was a watershed year for us where we were able to add a lot of gdv. We maintain a significant, we have maintained momentum in this quarter one to our society redevelopment Lokhandwala 2 actually Lokhandwala 12 was acquired in quarter four of last financial year and the society two more societies actually came to us and they wanted to be part of the same cluster. So we added that roughly this location which is a very marquee location. Our total that Project Lokhandwala 1 and 2 together would be somewhere around 2300-2500 crore.
So pretty large project for us. Mulund is a new addition, new location for us. It’s close to Bhandup as a location so we are going to be quite strong, hopefully dominant in that micro market. And then Navrat 2 is a location. We had acquired Navrat 1 in quarter four of last financial year. Navrat 1 is equal size, roughly 9 acres of parcel. So 9 plus 8 odds. So roughly 16 and a half 17 acres of Navrut 1 and 2. They are contiguous to each other so it gives us pretty very nice chunk of land just before very close to the airport which is a market.
Market is very well established. So we wanted to pursue that. This transaction had just happened so it will be again a very exciting project for us in Bangalore. We’re going to combine them into one project which allows us to get the efficiencies, one clubhouse, one set of infrastructure, STP etc. So that’s how we have closed this deal NAVRAT 2. We, you know we have a good pipeline again we are looking at all the deals from a very rigorous financial point of view, expecting that the price increase will not continue the way we have seen and the cost escalations are going to be there given supply, demand dynamics and many other issues.
So that’s the GDV edition and I think you shared this slide with the changes in blue not captured. So it just allows us to increase the land bank, the GDV bank that we right now hold. So it is now up to 41,000 crore. We will continue to look for good deals and 45,000 crore is not the end of our business development effort. It is just a marker. And as we get good deals our focus is to make sure that these deals get converted into launches and sales at the earliest. So the work is it will be ongoing work for us as we look at these deals, the deal addition momentum beyond what you see on this page.
I think this was a question that was asked last what is our launch pipeline? So we wanted to capture the effort that are underway. Obviously 449 crores is a small number compared to what we want to achieve in the macro scheme of things. But if you see the launches that we have planned where the effort is underway for approvals, each one of them is under approval right now. So the design part etc. Is done many months back. So as a reference Hope Farm is Olympic deal which is roughly 2000 crore. Bhandoop phase one would be around 3000 crore.
Citadel phase three is roughly 3000 crore. Mahalakshmi is 1700 crore. So if you total up all the things that we are planning to launch, I think this is in excess of 7,000, 8,000 thousand crore. We’ll decide what phasing what would be part of RERA depending on the the micro market response we get. Like. Like we may decide to do it in two phases, right? Similarly we are discussing whether Hope farm should be 2,000 crore, one phase or two phases. So we those things, those decisions will take after we have done the initial set of approvals before the final RERA application.
But the volume of inventory that will come online would be healthy for us. Sorry. And just to reiterate a point that I made earlier. Selling is not a problem for us. GDV problem we have solved. Now we are trying to solve the launch problem and I wish we didn’t have the EC issue which is holding up quite a bit of inventory in Mumbai. And in case of, in case of Bangalore we actually delayed a little bit so that we could launch some of the bigger project Navrut 1 and 2. So we delayed Navrut 1 effort so that we can combine Navrat 1 and 2, even Alembic.
There was some issue with respect to road widening. So we said let’s resolve that before we launch it rather than create issues later later on. So we are taking the right call in terms of when to launch, how to launch and hopefully some of the efforts that are underway in terms of approval, in terms of ECE clearances, they will get resolved. So launch is not. The sale is not a problem. And this is New Haven. Bengaluru was In, I think 50 to 60% inventory was sold in 30 days. We could have sold 100%. But we wanted to balance velocity with profitability.
And that’s why we are holding back some inventory. This is next to Mahindra Zen. Mahindra Zen has the first five acre plot. This one is another two and a half, three acre plot. And then there is one more plot that we are looking at nearby so it becomes a nicer project. So Mahindra Zen did very well last year and so did New Haven Marina 64. This is the Navy our first redevelopment project that we have done. What we found is while we are doing a lot of redevelopment projects and winning them while it’s. While they are capital efficient, they are time inefficient.
What that means is we will not be able to launch those projects in one year. It will be 18 months to 24 months. Even if you take the cluster redevelopment policies, it will take 18 months to 24. We have learned a lot with Navy launches. In fact, Navy had three plots and we had to do three RERAs. Two RERAs have come. The third RERA we are still waiting on even though we have launched. So there is a three times the effort that has gone in just for Navy Marina 64. And these are some of the learning that we have for future launches.
And we have corrected some of our processes, some of the processes that are required for us to get approval, the capability required, the team required to make sure that we learn from these experiences and address them in future. Citadel Towel L I think a small inventory in terms of value, but response was very positive. Again close to a sellout situation, right? Vimlendra, you know, if you wanted to sell out everything, we could do that. This already you have sold 60, 70%, right? Let me play a small video. Is there? Can you go ahead?
Unidentified Speaker
[Video Presentation]
Amit Kumar Sinha — Managing Director and Chief Executive Officer
Great. So this is. This is Marina 64. We have launched two. Two plots so far. The third plot is RERA. Will need to wait for the EC resolution I think. But by the way this. The person who was the presenter is actually one of our employees. So now we are developing our own influencers as employees within the company. So let me just cover this. So I showed this slide last time and I think the two project that we have added Mulun and Navrat when we did the meeting in April. By the time Lokhandwala 2 had already been included.
So we added Mulund and Navrat. So that’s part of FY28 plan. But our goal would be to actually accelerate as much as possible. But at least we are building up the gaps that existed at the time. When we shared this with you, many of you asked us and we also have gotten feedback from some of the other meetings at M and M level is that why don’t we give a short term guidance? I think you know we still have to get the approval machine going and solve this issue. One or two and we’ll be able to give you a lot more guidance.
But I think our as you see the CAGR is 28%. So we are looking forward to having a growth of 25 to 30% every year. Some year it will be higher, some quarter it will be lower. But I think as we build this is a. It’s a very critical year for us. If we are able to deliver 2830 in a actually higher number it makes it easier for us to make sure that what we say is what we deliver. So I just want to hold that but at least give you some kind of directional answer in terms of how we are thinking over short term.
So it’s not going to be hey, we will not be able to achieve this but some year it’s going to be less, some year it’s going to be more. That’s why we have been a little bit shy of giving. But at least internally we started to discuss why not we shoot between 4,500 to 5,000 crore in the next financial year. Right? So not this financial year but the next financial year. So we are at 2804 in FY25. So FY27 can we actually get to 45 to maybe 5000 crore? Right. That’s a good number for us to show momentum and the raw material as you see is already existing with us.
It’s just a question of time passage where we are able to convert that. I think for us IC business has been one of the biggest contributor in terms of profitability. This year also started very well. Q1 tends to be slow but this year started very well. We have done good amount of business both in Chennai as well as Jaipur. Obviously we are running out of land in Chennai and OC2A I’ll show on the next slide is something that we are launching very soon. The last stages of approval are awaited. That’s with Sumitomo. But as you can see we are not at least we are getting good leasing.
Leasing is actually perpetual sales. In this case we are getting good momentum. But the more important point I am trying to would like to highlight is if you see the bottom data premium per acre there is a significant increase in the pricing and that’s something that is helping us increase the importance of IC business to our overall business portfolio. In fact, ever since Vikram has come in we have got so many inquiries from different state government, different nodal agencies is to partner with them to replicate and create another Mahindra World City Chennai or Mahindra World City Jaipur where it’s or even origin which is just an integrated cluster, industrial cluster, not an integrated city.
So there is a lot of lot of demand and we are carefully evaluating each of them. If there is a good revenue model and the revenue sharing model then we would be very interested. As you know, in all of these locations the land acquisition tends to be one of the Most painful part. And that’s where we want to make sure that when we sign up with another location, with another government ideally or another partner, we have clarity on who how will the land acquisition process work and what would be the revenue sharing arrangement so that we actually help contribute to bottom line from this business.
And this is like you know, Jaipur is fully operational, is going, is already contributing significantly. Mahindra World City Chennai has some amount of land left which we are trying to sell out at the highest rate. Origins Chennai is practically done. There is one lawsuit going on that we will try to resolve settle in this financial year. Hopefully that will give us additional land which could come at a good, good pricing. And OC2A and 2B. 2A approval process is on. 2B will kick off very soon after we finish the land acquisition. So that is an area origins Chennai 1 is already filled with a lot of global MNCs many Japanese clients.
Sumitu is a partner. They have a strong business development effort going on in the home country and that ultimately brings us many clients. And similarly OC2A even though we don’t have the approval, we already have Mous and Lois from three potential customers. So that’s already is ready for action. Origins Ahmedabad is is a location where we had there are issues in terms of the location attractiveness. But now we see a lot of inquiries coming. So we are putting dedicated effort on the business development side to ensure that that site is ready for business at the earliest.
And frankly we were waiting for an anchor client which can take at least 25 to 5050 acres of land. But given the momentum that we are seeing in Gujarat, we feel soon enough Origins will be able to attract the first anchor client. Origins Pune is actually an ambitious plan. You’re seeing the first phase of our land aggregation target. But hopefully it will be much bigger than that. The land aggregation is underway and we’ll hopefully be able to finish that effort at least for phase one very soon. It’ll take at least nine months, but at least we are pushing that nine months to 12 months but we are accelerating that.
IC business importance seen as the final line that you see at the bottom. If you look at the overall land bank that we have, it can give us revenue of 5000 to 6000 crore our share and similarly packed potential of 1500 crore. Obviously it will be spread across 8 to 10 years. But at least this has given us a good amount of profitability over the years. So that’s a quick summary of the business. We’ll cover more in our In a Q and A.
I’ll hand over to Avinash for the financial part.
Avinash Bapat — Chief Financial Officer
Thanks Amit. Am I audible out there?
Amit Kumar Sinha — Managing Director and Chief Executive Officer
Yeah.
Avinash Bapat — Chief Financial Officer
Great. Thank you. So some of it is a repeat of what Amit talked about earlier. We saw residential sales or pre sales to be at very close to 450 crores. 45049 crores to be precise. It shows that it is lower than last year. But you know this industry more than us where launches also determine a lot of what happens on the Pre sale side. ICA revenues there’s a handsome growth of about 16% over previous year. Same time period, 120 crores is what we got there. And Amit alluded to the 3500 crores GDV addition which is over and above what we have done to date.
That takes us to about 41,000 crores of GDV cumulatively added over a period of time. Very good land bank overall collections have been very steady. If you look at, you know, close to about 500 crores of consistent collections. That helps us from overall perspective gives us good operating cash flow, allows us to further invest more into Land bank acquisition and things like that. You are aware of the rights issue that got concluded in the month of June. Our objective was twofold in order to raise the money. 1500 crores was raised and about 1000 crores is what was earmarked towards repayment of some of the existing debt. So I’m glad to say that as of today we are pretty much long term debt free.
Having said that, the cash balance is much higher as compared to the gross debt. That allows us to have a net debt debt to equity ratio which is negative. If you look at Q1 of FY26, we are at minus 0.23 and basically the cash is surplus. We are ready to deploy a little bit more into what we have planned for from a acquisitions perspective. Last but not the least, as Amit mentioned earlier, we have seen repo rate cuts and some of these things helping us even with whatever little debt that is left. We’ve been able to pare down the cost of debt as well.
There are some commercial papers kind of opportunities which we are exploring that gives us very healthy. They are coming at a very healthy interest rate. Our average cost has come down as compared to previous quarter. It is at about 8.12, 8.12 now and as compared to 8.6 that was earlier. This is a little bit more detail in terms of the segment performance. I’ve talked about this earlier as to this is what we call as management accounts. How we do this is. This is assuming the fact that while we have a lot of joint ventures and associates, assuming all of them were say our subsidiaries, we would have actually consolidated them line by line.
Index typically allows us to only take the share of profits from JVs and Associates. But if that were not the case because we are pretty much operating those entities on our own. So we break them into residential projects as well as ic. And if you look at what has come out there is that we are at residential plus. I see total sales of about 569 crores as compared to 1121 earlier. But as you come down the EBITDA has actually gone up from 27 crores to 46 crores vis a vis last year. First quarter of last year and if I look at Pat that is up from 13 crores.
It’s almost a 4x jump driven to some extent by the other income that we have. If you look at that line that’s gone up from 29 crores to 110 crores mainly on account of some optimization on debt front that we’ve done in this particular quarter. So overall a healthy beginning to the fiscal year. Last year, full year was a consolidated path of about 61 crores. This time quarter one itself is about 51 crores. So that’s the benchmark to look at. Interestingly Amit talked about realization per acre and if you look at the line which talks about IC and ic the area sold or the acres leased is very close to last year 18.7.
But that has given 120 crores of income as compared to 103 crores of last year. So that is what is reflected in the lease rate per acre or premium per acre that we receive. So that is interesting to note. Well this is how the P and L gets cast when we look at it from a consolidated perspective. But as per the IND as method, well this is in public domain now. The column to look at is Q1FY26. We started with operating revenues of 32 crores and then other income of 41 crores got added. And then as you go forward you look at the share of net profit from JVs and Associates.
That’s about 98 crores. So that is what is helping the overall bottom line to about 51 crores in Q1. And of course like I said, much better than what we did Q1 of last year which was 13 crores. The balance sheet shows a healthy trend. If we look at borrowings it has basically come down over a period of time we have been able to pare down the debt. The borrowings is reflected in both financial liabilities as well as borrowings at the top. The line that talks about financial liabilities is down from 918 crores to 214 crores which is mainly a result of what happened on account of rights issue.
The inventories and the reserves continue to be healthy. The cash position as you see is very strong. 238 crores has gone up to 747 crores which is what is what talked about earlier. That’s why the net debt to equity ratio is negative. So overall a healthy balance sheet and allows us to consolidate and grow further. That’s it.
Questions and Answers:
Sriram Kumar
I will now request Amit, Bimlendra Vikram and Avinash to take the stage to address any questions. Hi yeah whoever has a question raise here. Hi Pariksha.
Parikshit Kandpal
So my first question is on the launches. So this quarter you have New Haven and Citadel. So just wanted to understand out of the 449crores of pre sales what is the contribution of these two launches?
Sriram Kumar
Yeah, New Haven would be roughly around 125 to 130 crores. On this Citadel tower L was launched towards the end so probably not not reflected in the 449 crore number.
Parikshit Kandpal
So almost 420 crores of sustained sales this quarter.
Sriram Kumar
320.
Parikshit Kandpal
320. Sorry 320. Just on the launch pipeline now. So how has been the response to Marina project and when do you think that you can launch the entire project which is a thousand crore GDV. So how’s the split in Q2? So I understand that 6 because you have launched it towards the end of the quarter but this is not reflected in the pre sales. So so how do you think the Q2 will pan out here and what inventory is getting opened and also going into the other quarters Q3 and Q4. So what is your plan for Alembic and Mahalashmi which are bigger launches? So do you think that you will now do single phase launches or again you’ll split it up? Because the business development has gone up significantly over the years now. So I think sizing wise how do you think now going ahead ?
Amit Kumar Sinha
Do you want to answer Marina 64 and then we’ll.
Vimalendra Singh
Take so for Marina 64 as Amit mentioned, you know it’s essentially a project with three different independent plots essentially. So think of it like three different projects where three different reras and we’ve already got rera for plot C for plot B anytime plot A. Unfortunately there’s an industry wide issue which is related to EC as you are aware. Right. And a lot of the development in Mumbai are unfortunately impacted by that and hopefully we should get the resolution soon. The hearing is happening in the Supreme Court in a very fast way. But let me talk to you about plot C because that’s where we are collecting the EUIs.
Effectively we have more number of checks than the number of units. So in a very euphoric way or in a good way I can tell you that it’s completely sold out. But of course it will get logged in in the coming month and coming couple of months. So fabulous response. I think there’s a lot of interest even for plotty which is stuck. But if I have to measure by the number of walk ins at the site and you should take this opportunity to visit the sales gallery on the weekend it’s choco blocked. So we’re very glad with the response we have received.
Parikshit Kandpal
And on Alembic. And.
Amit Kumar Sinha
I think that’s a discussion discussion we are having among ourselves. So I think our goal is to maximize profits which will mean that we have to balance velocity. But there is a lot of momentum in the market right now and we already have like the locations we have chosen. We already have a people kind of reaching out saying that when are you launching? When are you launching? Right. My sense is we’ll go halfway, will not do like a full sellout. We’ll not do a typical 50% target. We’ll go a little bit more. We’ll get RERA for the most project mostly and we’ll balance what we want to achieve.
But the construction etc would be full project at a time. So we will control will not target 50% will not go all the way say 100%, maybe 70% so that we keep the remaining 30% for later years to sell.
Parikshit Kandpal
But on the opening of the sales like 2000 crores Alembic. So do you think you can open it one shot or how are you thinking about that? Velocity I understand will depend on what is open. But how are you thinking about sizing the project during the launch?
Amit Kumar Sinha
Yeah and that’s exactly the discussion. You know you could have the same radar. We could say say hey we launch phase two three months later or six months later. But that micro market should be able to absorb and that’s the discussion we are going to finalize as we as we are doing the micro market assessment. So our goal would be to do more than what we have typically Done. But let’s make sure that the market is able to absorb us
Parikshit Kandpal
On business development. In the past we have seen that it has been more back ended. The second half seems to be pretty strong. But here like first, first quarter itself we have like given what you used to do annually earlier so 3 and a half to 4000 crores. So for the rest of the year how did, how does the BD pipeline look like? And do you think that it’s right now, right to think that from here on this number could now start looking or doubling up like close to about 10,000 plus on annualized basis given that we have cash and a stronger balance sheet.
Vimalendra Singh
So I’ll take that Amit, A very specific number we have never given. Right. And in fact when we did 18,100 crores last year we spoke about it. We have already done three and a half thousand crores. As we speak we have multiple transactions at different stages where we are evaluating and obviously before we take a call on any single opportunity, BD opportunity. The most important thing we internally discuss as a team is the financial discipline in the financial threshold. I mean a particular location, micro market opportunity may be very attractive. But if it doesn’t pass the internal test of financial threshold we actually don’t pursue it.
But all I can tell you Parikshit is I think we have and I take a lot of pride in saying because of the efforts of last two years we have effectively become a first port of call for various types of deals. So we are getting JDA deals, we are getting, we are getting Greenfield opportunities, we are getting a lot of interest in the society redevelopment space. So I think things are looking very exciting is what I’ll tell you and very promising.
Parikshit Kandpal
Just the last question on Kandhiwari now we have just less than 1000 crores to go about and this is largely sustained. So how thinking about the next phase there from the parent. Are we into discussions or thought around how the next phase of monetization will start in that 90 acres plus of land.
Amit Kumar Sinha
The Kivali Eminem land. You have to ask them. I think, I think that’s something we can’t. We are, it’s a different entity altogether. We’ll obviously have the opportunity but I don’t think they have any plan that we know of. If we have, we’ll certainly share. Yeah.
Parikshit Kandpal
This one for Avinash. Avinash, what has been the cash flow generation during this quarter and how much have we invested in land during this quarter?
Avinash Bapat
So the operating cash flow has been at about very close to 200 crores, say 196 to be more precise. The overall land acquisitions is actually higher than that. It’s almost 225 odd crore.
Amit Kumar Sinha
Hello. I think I just wanted to add, if I may just touch it to your previous question to Vimlendra. I think we see little bit of, not necessarily consolidation but little bit of stress with some of the smaller developers. And as we are spending time in the market on the BD side, we are getting interesting deals where the guy who started the deal deal wants to get out and wants the next guy potentially as to actually step in. So you can call it consolidation, you can call it transfer, you can call it bailout. And we find while they may be slightly risky, they are financially very attractive from an IRR and ROI perspective.
So the more astute you are in terms of your deal pipeline and looking at which micro market you want to participate and what kind of deals gives you the best combination of cash outflow and returns that will determine which kind of deals we close. If there are deals which are very good, there is no dearth of capital that will hold our appetite from going big and doing what we did with Bhando. So I just want to highlight that the market dynamics are slightly changing and we are very aware of how that market is changing and how we should adopt ourselves without any constraints on, you know, you know really on capital allocation. We’ll, we’ll, we’ll find the capital to pursue. Right. Deals. Sorry, you were agreeing to us.
Biplab Debbarma
Yeah. Hi. Good evening everyone. So I’m Beplav Debarma from Antique Stock Working. So my first question is on the approval challenges. I mean last year also in the first half we heard lot of accrual approval challenges in Bangalore. Now not only you, other developers, Mumbai based are also saying approval challenges related to some NGT and ecosystems. So I’m just trying to understand in terms of approval challenges, what exactly is this challenge? You have gone to Supreme Court. What is the on what basis with against you? You guys who are there on the other side, is it the government or is it NGT or who and what are the key challenges in terms of approvals? It is, is it the only challenge, approval challenge you have or other challenges also?
Amit Kumar Sinha
So let me break this and I’ll request Zumlendra to jump in. I think there are the usual challenges, right? Which are khata issue or some local issues in terms of road weight, etc. Those I would call it business as usual, it delays thing but doesn’t stop. Right? But let’s take the EC issue or NGT issue, like Vimalendra to chime in. But that is doesn’t happen. It’s not part of business as usual and it’s not affected us, it’s affected the whole, all the participants in Mumbai significantly. So I’ll request Vimlinda to jump in there.
Vimalendra Singh
Yeah. So I’ll just explain this particular issue in very brief because sir, it’s quite a, quite a large case which is going on. But essentially what is happening is there was a notification from NGT National Green Tribunal. Right. And related to a different case altogether. Not, not. Not pertaining to real estate, but it was related to mining. But then they came with a very generic circular. Because of the generic circular, everything was got put on hold. Then, you know, CREDAI actually, which is a representative body for real estate developers, they actually went to the Supreme Court saying that, hey, you cannot, you know, just put a general stop.
So because of that stop, what happened is the projects which need to be assessed for EC environmental clearance were neither done at a state level nor they are being done at a central level. There are only two people who got two bodies who can do it. Either the central government does it or the state government does it. Now the circular was such that I mean neither the state was able to take it nor the center was able to take it take it. So essentially nutshell, in a very simple way we are as a body, we have told Supreme Court either allow center to do it or allow state to do it.
I think that is the issue and that is where we are hopefully, hopefully should get resolved. I think the hearing is going on as we speak and it has impacted in a big way most of the developments in Mumbai. Right. So it’s not as if it’s Mahindra Life Spaces alone. It’s pretty much every, every single developer which has got impacted because of the Sanjay Gandhi national park, which is defined as an ecologically sensitive zone. That’s, that’s a problem which we are fairly confident, you know, because there’s no other way but to resolve this. So it should happen. But it’s taken a little bit of a time. But yeah.
Biplab Debbarma
So I understand this is only restricted to Mumbai. Yes. And it is not. The decision is to who will take that decision.
Amit Kumar Sinha
Yes. Okay. You know, so first technical point, I think what Wimbledon said is very important. It used to be 100 meters from a ecologically sensitive zone. So you can do construction 100 meters away. Now that NGT Bhopal given out, it’s 5 kilometer. So from NGT which is like, like in the, in the suburb. It’s a big, you know, if you take 5 kilometer, most of the Bombay will, you know, so there are 70,000 units are stuck either before not being launched or construction is not happening. It’s not only the launch, it’s also affecting the construction. And the prayer to the, you know, beyond allowing somebody to do it is to say, hey, revert to what it was before. Because for Mumbai, it’s just not possible for us to do it.
Biplab Debbarma
So this five kilometer is a new thing.
Amit Kumar Sinha
Yes, the project falls into the. Right.
Vimalendra Singh
So what happened? Just again, you know, Sanjay Gandhi national park is very unique to Mumbai. It’s essentially an urban forest. They kept in mind the normal, you know, national parks and other things where they said 5km from the national park boundaries, you can’t do it. But unfortunately, 5 km from Mumbai is pretty much the entire Mumbai gets over on either side. So that’s, that’s a problem.
Biplab Debbarma
That’s me. And second thing is on the projects that you’re currently doing and you’re going to do, what kind of project level EBITDA margin do you think you can achieve in these projects?
Amit Kumar Sinha
You know, the EBITDA margin is a tricky one. I think, Avinash, you can jump in because this is a business where P and L doesn’t tell the story. The way we now changed our mind in the last two years, 18 months is look at IRRs of the project and load all the overheads into the project. Some part is inventorized and some part is corporate overhead. You actually move it above the line so that you have generating enough cash to actually fund all your overheads. EBITDA is to capture the overheads, to say how much EBITDA from the project and then the overheads come in.
Right. So I think the IRR that we are shooting is now 20% plus from each project with the cost escalation with inventorization as well as the overheads being loaded onto them. And that typically is a healthy way to do the, do the accounting or at least the financial analysis for those projects.
Biplab Debbarma
The question where I’m coming from is, see, I see a lot of redevelopment projects that you have. Yeah. My understanding is that initial investment in those project is negligible.
Amit Kumar Sinha
Correct.
Biplab Debbarma
And you will sell. So it’s like without putting much money, you get good irr. But at the end of the day, how, how big, what kind of value it can create. That’s why I was asking about.
Amit Kumar Sinha
No, no, but, but what happens is you are constructing typically. So let’s Say in a hundred, let’s say you have $100, $100 revenue project. One third is land, one third is cost of construction. 15, 20, like let’s say sales, marketing or it should be, let’s say 1015. So 20% is your margin. Right. That’s where it typically is, where in society redevelopment there is no land cost per se but your cost of construction because you’re constructing typically twice the volume is 65, 35 for the sail tower and 30, 35 for the residents. Right, residents. And you give them rent, you give them corpus etc so the land cost gets replaced by additional square foot that you have to construct.
The economics works out. Absolutely. This industry is so well received. Everybody is back calculated the numbers, how much they will allow the developers to make and then that they expect the construction additional area to be awarded. So it’s very similar. But you are right, in case of society redevelopment you don’t have to put money up front. So you don’t put that 200 crore that you put for level two. It’s zero for Bulow practically little bit. But then during the construction I have to spend double the money. See IRR works out to be similar because you know the cash inflows are only one source.
We can spend more time walking you through some other details if need be.
Biplab Debbarma
Thank you sir. All the best.
Amit Kumar Sinha
Thank you.
Sriram Kumar
Thank you.
Udit Gajiwala
Good evening team. This is UDIT from yes securities. So just if you can throw some highlight in terms of the pricing that you are seeing for each of your projects or how do you see the MMR overall pricing moving from year on?
Vimalendra Singh
Okay, so I’ll talk about Mineral lifespaces, you know, prices first let me give you a very specific example about Malad, code name 64 that we have launched. We have positioned it as, as premium to the market very clearly we are, you know, we have a significant price advantage over any other deployment which is there. So that’s, that’s one. As Amit mentioned, the pricing growth actually in MMR is quite healthy still and I think the demand still remains robust. It’s just that the launches have been lower. So the volumes have been lower because of reasons beyond the control of, of a developer.
But what we are seeing is again the demand is very robust, the pricing growth continues to be very robust. And as far as we are concerned as a company we are clearly able to now, you know, you know, get a certain amount of premium in the micro market where we are operating. So all in all a good picture.
Avinash Bapat
Even in the project that we would, we had launched which is Vista. We did experience a healthy price growth. Almost over 12 to 13% over what we had loss. So like he said, pricing growth has been healthy. Quarter over quarter has been.
Amit Kumar Sinha
Are you looking for specific numbers or what?
Udit Gajiwala
General fine sir.
Amit Kumar Sinha
But if you buy from us we’ll give you exact pricing.
Udit Gajiwala
So thank you for the answer. Thank you.
Sriram Kumar
Yeah, give another one. Hello. Hello.
Akash Bansal
Hi sir. Akash from Numra. Sir, thank you for taking my question. So I just wanted to understand on your capital deployment strategy. So we have roughly 41,000 crores of project. And then we are just launching 6 to 7,000 crores. So ideally other developers, whatever they do business development, they launch in the next 12 months. So I just wanted to understand how your capital allocation strategy is working. Because a lot of this capital may be in this project. So how does the IRR work then?
Amit Kumar Sinha
Yeah, no, that’s a great question and I think. Let me just explain that. 41,000. So of the 41,000 let’s say 20 odd thousand plus minus is between two projects. One is Bandu, the other is Thane right now. And then the next I would say roughly 10,000 crore to 12,000 would be in society redevelopment. Lokhandwala this and that. So you’re talking 32,000 roughly. And then I would say another 3,000 is in Rajasthan and Murud which are longer mid to long term. It’ll take time for us to get approval. A lot of things are needed. So of the 41, you know roughly 35,000 is mid to long term.
That’s where you see a big difference between what you see as a huge pipeline. That means our midterm is very secure, right? Midterm long term is very secure. Right. Because society redevelopment, you just can’t launch it in the next 12 months. Right? And that’s why some of the other developers, you know, there’s a polarization. Some love it and some hate it. Right? Because because of this nature is time inefficient, capital efficient and depending on your brand pool and etc you are able to manage through that. But let’s talk about Bhandoop and Thane. Even if I wanted to launch 12,000 crore it will not sell.
Because that market, micro market cannot absorb 12,000 crore of inventory in one. The typically it’s a 4 to 5,000 crore market. Even if I do 1500 crore it’ll take me 8 to 10 years to a. To. To leverage or to. To sell all of Bandu. Similarly Thane, it’s end of the Gorbandar Road 8,000 crore. The price point is 15, 16, 17,000. Even if I can sell more, I don’t want to sell more. Because there is a metro station that’s coming up there. Is the tunnel work going on? It will likely be done in the next 12 in any meaningful way.
The pricing will go from 15,000 to. To let’s say 20,000. Because the other end of Gorbandar Road is at 25 to 30,000. So I have a natural preference to delay my first launch to slightly later. Because land is ours. It’s there. We’ll get all the approvals till I have to make the first payment so that I can maximize my PAT and IRR. So this is like the 35,000 crore worth of inventory, the 6,000. You will be seeing them launched. Alembic, is that Navrat? Is that anything that’s outright? You’ll see those launches come up in 12 months.
So we have a similar timeline in our mind. In fact when we have done some deals especially in Pune and all we’re looking for land with approvals. So the approvals with the land owner, etc. So we are able to launch them within six months. But we are creating the portfolio. This is the first time we have created such a big portfolio. The short term will have little bit of a lead time but I think in the next few 12 months you’ll see a very different set of projects which are giving a sustenance sale every year.
And then we are topping it up with new launches. Hopefully it answers your question.
Akash Bansal
Got it sir. Thank you.
Sriram Kumar
Maybe we’ll take one question on the online portal.
Amit Kumar Sinha
Yeah sure.
Sriram Kumar
So the question is, could you provide an update on execution timelines and sales traction for the upcoming projects in Mumbai and Pune?
Vimalendra Singh
So let me start with the sales traction and I think it comes to even. Parikshit, you asked about Pune also Citadel. So we actually launched one. We only had this one one BHK tower there kind of a very premium positioning and happy to share that we have sold in last three days more than 70% of the units that we had launched in that particular tower. So again what we have seen pricing significantly higher than the micro market. And without getting into the name because of our pricing, the micro market pricing also moved up. So some of the other developers actually increased the prices of their inventory.
So I think it’s going on well there in terms of execution of the projects. Again there’s a very strong internal discipline that we have in terms of every single phase, every single stage. And we spoke about IRR quite a lot. So in that particular process we track every single project through internal reviews every month in a very, very detailed way. Where we are, what are the challenges, the contractor issues, if there are any, the procurement strategies, anything and everything, right. Is very comprehensive. So as we speak today, I think we are very much tracking every single project to the timelines as per the RERA commitment.
Obviously that’s the gold standard. So we are good. We don’t see any challenge as far as, as far as the execution on the ground is concerned on the projects.
Amit Kumar Sinha
There’s a question at the back.
Rishab
Hi, this is Rishi from Access Capital. So two related questions actually. On the redevelopment side in terms of bidding, how competitive is the space and if it’s getting more competitive, what is giving us the right to win? And secondly, how are the timelines from maybe say to getting an LOI to launch?
Vimalendra Singh
Okay, so the space is fairly competitive in a sense. As Amit said, everybody is quite informed. So even when a society actually typically goes for a tender process which is a public tendering, they precisely, they appoint a project management consultant, what we call as a pmc, right. He does a lot of back ended calculations. They actually know what are the kind of concessions you’ll be able to get, what kind of fungible premiums you’ll be able to get, what is the price available in the market. Typically there will be some contractors or other people, you know, staying there so they know what is the cost of construction.
So I think it’s a very informed, you know, set of people driven by or supported by professionals. So it is competitive, it is competitive. But I think what we have seen clearly over last two years that we have, you know, got into redevelopment space, there is clear preference for branded corporate developers. So what you will see a lot of the smaller players who are not really say the corporate or don’t have a strong financial capability, balance sheet are the people who don’t even get shortlisted. So quite essentially you will see it’s only those eight, nine names which will pretty much bid in every single project.
And even there in terms of the final shortlist existing, it will be the top tier because obviously redevelopment, nobody really wants to take a chance. And, and many of the societies have burned their hands in the past where redevelopments have been stuck for what, 10 years after the LOI is done, after that 79, a process is complete but no movement. So clearly competitive space. But I think a clear bias for, for players like Mahindra lifespaces given that what we stand for, a very strong Sense of trust, very strong, you know, governance framework, transparency. I think we have, I, if I can very proudly say that we have emerged as a developer of choice for a lot of the redevelopment societies given that what as a brand we stand for.
So but yes, if, if the financials again don’t work out, we said we are not, we are not really if there’s no compelling financial reason we don’t pursue the redevelopment opportunity. So that is cast in stone. You know, it has to make financial sense for us.
Amit Kumar Sinha
I’ll add two things. I think time wise the question was loi to award and to launch. I think they’re typically six months right now from the first time there is an interest shown, there is a PMC involved takes six months and then from the time you win, you won that to the launch. Our experience is, is taken two years but now we are targeting 18 months. What happens the number of residents drives the complexity of the deal or the launch effort. And in this case you have to demolish the building for you to get rera.
So it’s little bit more stringent from that point. So it takes two years but we are targeting 18 months from that point of view. And also as Vambrindra said, there is also, there are many places we have walked away from deals if there is quid pro quo expectations or any kind of favoritism that we need to show and we walk away even after winning. So we have done that. So that’s another thing we keep in mind as we participate in this sector. Sure.
Rishab
Thank you.
Sriram Kumar
Probably we’ll take one more question online. This is for you, Amit and Vimandra. We nearly have about 32,000 crores of GDV to launch in future and we are currently at 2,800 crores heading to 10,000 crores in five years. So what’s our focus going to be more on execution or aggressively pursuing BD and how should we look at it?
Amit Kumar Sinha
I think we covered the plan actually the details of it. I think our goal is to create a company which is relevant, is doing good work in the space, creating amazing homes for our customers and in return rewarding the shareholders. Very simple. And I think even each year is a year of discovery for the next phase of the journey. Last year was for us to change the direction, the trajectory with adding a lot of GDV. I think we don’t need to do another 18, 20,000 this year. But if good deals come, we will not be shy of doing more.
We will do healthy GDV that makes financial sense And I think that discipline process will continue for us as long as the irr the returns are attractive. We will look at those deals. Right? The execution, I think there are three parts of execution. Can we launch it, can we construct it and can we deliver it? Right. Those three part, I think our focus on construction and delivery is already there. That’s point. Vimlendra mentioned a lot of very stringent. We are roughly 16,000 crore worth of projects under construction. So they are all going through a very rigorous execution.
Next time we will have our head of projects also join the meeting. But that’s something that we are really doing now. The question is how do we convert the GDV into launches. And I think that’s where if you have bigger portfolio and then you have one EC issue or NGT issue. I think Parikshit, you were mentioning another developer example. It’s 10%, 20%, 30% for us it’s right now 50, 60%. Right. Which affecting us in two years that will also become less than 25% an issue which is not a business as usual and that’s easier for us to manage.
So our goal is to create a healthy business, healthy portfolio of projects. And I think we will, we are prioritizing this year launches, hoping the NGT and EC issue gets resolved. But after that, you know, there’s not going to be any slowdown at least in the business as usual scenario. Project focus continues. I think that’s bread and butter for us. And that will, that will always be there.
Sriram Kumar
Thanks Amin. Yeah.
Parikshit Kandpal
So how do you see the momentum there? I mean 18 acres we have sold lease this quarter. But how do you see the demand there? And given the slowdown which we are seeing currently in the economy, how is the leasing market and the manufacturing side of it playing out on the ground? So your deal pipeline inquiries, how are they building up?
Vikram Goel
Thanks. But we’re not seeing any, any, any decline in the inquiries. I think inquiries are very, very good and they’re healthy and they’re building up. You have to look at maybe a few factors, right? One is, you know, in India the overall consumption comes from the domestic consumption which is very, very high. It’s always aided by a lot of geopolitics which is happening, which is only positive in nature for us is what I believe. Second, you have to look at, you know, when we showed, when Amit showed the presentation, it only looked at, you know, the projects we have presently with us and the land inventory which we have which is just waiting for approvals.
And I think I’ve been mentioned that for us the challenge is not demand. The challenge is, you know, how sooner we get the land to be able to sort of monetize in terms of approvals and aggregation in Pune and couple of locations. What we also not captured like Amit mentioned was that we are also being approached by various state governments and other bodies who are saying that we want to work with you. Right. So you know, that’s another sort of potential positive upside which is available there. So just to answer your question, the pipeline is fairly healthy and fairly confident in terms of what we need to deliver this year.
Parikshit Kandpal
And on this Sumitomo transaction, I mean the understanding that you will expand with them and get M Japan’s MNCs into India. So is there any separate pathway choosing towards business development on the IC business side or like it will happen in the expansion in the existing origins. And are you looking at blinds beyond that and developing new industrial parks?
Amit Kumar Sinha
Let me take that. But either way I’m glad you asked Viktor Vikram a question. He was feeling left out. So I think with Sumithoma it’s a very deep relationship. And Vikram and I were there in Japan two weeks back meeting their leadership team. I think there are two potential areas of growth as we are seeing. First is where we already have the land or we are jointly pursuing land aggregations. So origins Chennai 1 is where we started origins Chennai 2A where we signed in November. Origins 2B we have already signed in MoU. So they will expand with us.
They’re also looking at our other parcels of land in Pune and Ahmedabad for potential partnership there. And we’ll find out when and how the shape of that partnership is finalized. Depends on land aggregation. It depends on the like the approval etc. So all that is undergoing. So they will come with us on our existing land asset. That’s the first first partnership. Second is we are jointly discussing other opportunities and Chennai Tamil Nadu is something we have seen tremendous results. So we had the opportunity, they actually had the opportunity to host the Tamil Nadu industry minister last week or week before I also joined remotely and we discussed a range of areas of cooperation based on Sumito’s interest and Mahindra’s interest.
And we said are there bigger land parcels that Tamil Nadu can offer to us where we can Sumitomas jointly pursue them? Similarly, there are opportunities being offered to us in other states that Vikram touched upon. So there is how do we participate where you already have land that is already underway and that will only expand. We are also looking at other opportunities where Sumithuma and us can actually jointly pursue other opportunity new novel opportunities and that is also with NICDC if you know it’s with some of the other PSUs opportunities specific to Rare Earth magnet There are very specific area but too early for us to be talking about them.
But if they take it forward we’ll be happy to share more details.
Parikshit Kandpal
Just the last question on the NCR market. I know last time you said that there’s still some time away we have withdrawn from that market but given that the strength still is very strong underlying strength is strong especially on the Noida side where you can get good land parcels on auction. So any thought I mean how in distant future you are looking at again start off with a pilot project there and then look at ramping up over the years.
Amit Kumar Sinha
I think let’s take this year to make sure that we strengthen ourselves we evaluate the decision next year potentially and I think my sense is you would NCR is my home market. That’s what I used to to live. I know that market well lived there 15 years. I love to have operation there But I also feel from business perspective going deep in any market is much more valuable than broad but at the right time we will look at that and I think we have seen the successes of some of our peers. There are not many credible developers that are in ncr.
There are very few and if we go there we will hope hopefully be able to get good attention from our customers. But let’s strengthen ourselves here before we jump to another market.
Parikshit Kandpal
Thank you.
Sriram Kumar
Thanks everyone. There are no questions. We’ll conclude the meeting.
Amit Kumar Sinha
I had a question for the I think we tried to do this last time physical and this one is also physical is the right frequency quarterly. Should we do one every six months? Any thoughts from the colleagues here?
Parikshit Kandpal
So half yearly should be fine because. Yeah. Because things do take time for change. Quarter to quarter it doesn’t change much.
Amit Kumar Sinha
Any other thoughts? We love to meet. I know but I think. But we’ll.
Biplab Debbarma
Half yearly or whenever. I mean some interaction, physical interaction is desirable.
Amit Kumar Sinha
Yeah.
Biplab Debbarma
You have other things to do.
Amit Kumar Sinha
But no, no. We think should we do every quarter or should we do H1H2 every quarter?
Biplab Debbarma
I think as he rightly pointed out maybe a little bit for you all for him once in a while is good. Half yearly is excellent.
Amit Kumar Sinha
Okay. Okay, got it.
Biplab Debbarma
I really enjoyed it.
Amit Kumar Sinha
So. No no, thank you. We also enjoyed.
Biplab Debbarma
Thank you.
Amit Kumar Sinha
With that we can conclude. Right?
Biplab Debbarma
Yeah. Thank you so much. Thanks.
Amit Kumar Sinha
Thank you.
Biplab Debbarma
Have a good evening.
Sriram Kumar
Thank you.