Mahindra Lifespace Developers Limited (NSE: MAHLIFE) Q4 2025 Earnings Call dated Apr. 28, 2025
Corporate Participants:
Sriram Kumar — Vice President, FP&A Costing and Investor Relations
Amit Kumar Sinha — Managing Director and Chief Executive Officer
Avinash Bapat — Chief Finance Officer
Vimalendra Singh — Chief Business Officer
Analysts:
Parikshit Kandpal — Analyst
Rahul Jain — Analyst
Pritesh Sheth — Analyst
Unidentified Participant
Presentation:
Sriram Kumar — Vice President, FP&A Costing and Investor Relations
Hi. Are you able to hear me? Yeah. Great. Thanks everyone. Thanks for coming. I officially welcome everyone to our Q4 and FY25 earnings update meet. This is the first time actually we are meeting in person post Covid so it’s. It’s good to see it everyone live and have a face to face meeting. And at the outset I would like to thank for everyone thank everyone for participating in the event. So maybe I’ll quickly start with to break the ice, a video of ours, a recent marketing effort of ours and then I’ll hand it over to Amit for the business discussion. It I welcome Avit to present about the strategic updates. This is the cursor to move the slide.
Amit Kumar Sinha — Managing Director and Chief Executive Officer
Can you hear me back there? Just raise your hand if you can hear me. Right. Very good. Any of you bought at Vista? I think Shriram bought, so at least he bought in phase one. So I’ll go through the rest of the presentation. We got the presentation out Saturday morning. Right. This is something we have done differently so that you have a full glimpse of the things we are doing at Mahindra lifespaces. So I’ll quickly cover that and then we’ll have a Q and A and I’ll ask Avinash for you to come and share a little bit more about the the financials very quickly and then we’ll have the Q and A. Maybe I’ll use this Spike is working. I can use this. Right. I think this slide should be familiar to many of you. We had a variant of this slide about our ambition to really be meaningful in the residential space and also capitalize on the IC business. So in essence a strong bold mission to build our business to a relevant 8 to 10,000 crore in pre sales which will require us to build something like 45,000 crores of GDV. And it’s built on six building blocks. First is the choices that we make on our portfolio. Some of them are listed in terms of cities, in terms of segments, in terms of exiting, affordable segment or sunsetting that part BD has been an area of focus for us. So that’s something we really need to make sure we get the flow of the deals to pick and choose the right one that makes sense for us. Focus on the customer experience right from pre purchase to waiting to possession, project execution, getting the first time right mentality there. Icnic, as you know there is a huge amount of land parcel that we have. We’re not investing to acquire new locations but we have to monetize and bring to market what we already have. And then finally something that I’m really passionate about is how when we run the business it needs to be done in a very thoughtful, robust, financially sound way in terms of IRRs, in terms of how we deliver on the timelines and how do we measure our capital allocation. So those are the six building blocks of our strategy. And to do little bit of clarity in terms of strategic. Choices. The first and foremost was cities. It was. It’s. It’s a tough decision for us to focus on just three cities. But I think I’ve spoken to many of you. Why. Why not ncr? Even though we have a very marquee project that’s going on in ncr it’s not that we will not go back to NCR but we feel that the depth in markets is more important the breadth of portfolio that we have. What that meant is we have exited Nagpur, we were in Hyderabad which we exited and ncr. For the time being we will pull back in terms of new project till we attain a threshold market share in the three key markets, Mumbai, Pune and Bangalore we have focus on premium. Premium defined as more than 1 crore to 10 crores in NCR and Mumbai that’s 10 crore market is a threshold for luxury. But in other markets like Mumbai and Pune and Bangalore 1 to 5 crores is mid premium and premium. So that’s what we want to focus on. Affordable hasn’t done well for us. And that’s what something we want to sunset over a period of time. We have to fulfill our customer commitments which will do that over a period of time. You see the products sizes. I think we are really focusing on sizable project. A key example was the Bhandup deal that we did. It was one of the largest and many of us really were worried can we do this kind of a deal and then can we actually execute on the deal. So at least we had done the first part. Not only us but our competitors were also quite surprised that we could do such a deal. It took us 19 months to close that. But finally we are able to get something like this in our bag. And then we are doing outright land purchases, JDA Society redevelopment. We are not yet venturing into sra. Maybe in future high risk, high reward business. But we will see if we can execute well on these deal that I already have, that we already have. Then we look at SRA and deprioritize for now as you saw SRA affordable pure commercial retailer malls. For the time being those are the guardrail that we have for us to build the business. To build a business you need to have a strong track record. And as we look back on what we have achieved we were very small. FY20 is not far away but we had 670 crores of pre sales in this financial year. We finished with 2,804 and I was having some discussions with a few. We could have done more if you wanted to but we also want to maintain a pricing discipline to make sure that at the end, those projects are rewarding. From an IRR perspective, GDV was just under 1000 crores in FY20. This year alone was 80. The previous year which was my first year we did 4400 crores. So we are significantly scaling in the GDV aspect. Free cash flow as you know is after all expenses, all construction spend is a key indicator of health of the company. Given the accounting issue that we have to abide by. If you have very strong cash flow it helps you build a strong foundation for the firm. It went through almost 5x over the five years and then we have been able to do that by keeping a keen eye on our net debt which is slightly higher but nothing in compared to the X5X2X18X that you see on the other dimensions. So we have been able to be fiscally prudent in our balance sheet. We finished this financial year at point in terms of our debt to equity ratio GDV. Let’s talk about GDV. FY17 to 23 we added 10,000 crore worth of GDV. So six years we did that that much of GDV and in two years we have added 39,000 crore. This includes the 18,000 of this year. It includes the 4,400. It also includes the Thane land parcel, three land parcel actually which we already had in our portfolio but they were not ready from an approval point of view. So we have pushed a lot in the last few years to get the approvals and in case of Thane, which is very large, 7500 there are three kinds of approvals needed. First one was 63 one exit which is achieved. Second one is getting it in our zone. That process is on. And third one is RERA related approval which will start after we get the second one. So I think we are making progress. So that is a huge amount of land bank that we right now have which gives us the confidence and comfort to scale our business in a systematic way. We shared this data so I will not dwell too much. 70 to 80% of land that is required to reach our 8 to 10,000 aspiration is already with us. Which is a big change because in the past when I joined the analyst call roughly one and a half years back, the question that I used to get asked is you don’t have enough GDV and we would do. We at times could be desperate to do deals and we may end up doing the deals which are not really meeting our thresholds. I think we have really past that point. We are at a point where if the deal does not meet our higher thresholds, we increase our thresholds higher. We will not do the deal. We have seen probably 300 deals just in last 12 months, Vimlendra. Is here. The BD team works really hard and we clearly say no or yes at the first stage. We don’t waste each other’s time. But the more important thing is many times we are the first port of call for receiving new deals. And many of the IPCs, other brokers, other participants in the market, they say this is the. You are the first client. We are showing this deal which is a sea change from where we were probably two years back. This just lays out how that 39,000 actually stacks up. Some is current inventory from the current phases which is like Vista and all is there. Then you have future phases of current projects. The pipeline projects. We classified them pre FY24. FY24, FY24 we already launched IV left. So that has been subtracted. Then FY25 means we have. We have Lokhandwala deal that we have announced in April. That is also captured there. And then there are other key projects that are three projects that I mentioned. Pune, Sorry, Thane, Pink and Murud. Those are all captured. We have been very conservative with each of the GDVs. We are not trying to give you the max possible. We are trying to give you a realistic number for each of those. So 70 to 80% of required land is with us right now for us to achieve our aspirations. When you have the GDV, your ability to scale up becomes possible. So the first phase F22, F25 was roughly 4x. It includes the IC business as well. And then from 3 to 99 which was this financial year to 10,000 is a similar 3x scale up. As you can see, IC business will stay flat. Because we’re not investing to acquire new land parcels. What we have is something that we want to capitalize on if we want to bring them to market. But the biggest growth is in the residential. From 2,800 to 9,500. In the past we talked about 8 to 10k. In FY28 we’ve taken it to 2 year hence. I think Parikshit, you had a point that heavy delayed. But we said you see 8000 as the 1 bookshelf book end of the shelf. Why don’t we get to 10,000 and say hey, let’s take another two years to actually get there. When you become bigger, you know 10 to 12% growth is not uncommon. So they are given a path to 10,000 crore. Our sales mix is also changing the affordable. We have a lot of commitments. We have Palgar, Kalyan, some in Chennai. That will all get done over the next few years. Some phases will take some time and that’s why by F28, F29, all of those commitments would be over. So our mix in F30 will have zero affordable and we don’t have plans to participate in any more affordable for the time being. Premium projects which are pre affordable. Are very different in terms of the return profile. The error profile are also going to be a smaller part. So this is going to be the new set of project that we have acquired. And I’m hoping the kind of conservative modeling that we have done for each of the project takes into account all the ups and downs that are, that are, that are going to be taking place in the industry in the next five years. Because we are already seeing the industry slowing down, especially on the luxury side. So when that happens, you know, your errors get diluted because the time gets extended, the velocity changes, the pricing increase does not come through. But you have done rigorous scenario analysis to say that hey, what we say is something that we should be able to deliver in 60, 70% of the scenario. The right hand side shows you the critical change. Hunt, kill and eat was our philosophy in the past. You hunt in the same year, you know, you kill same in the year and eat from that, you know, launch. But what happens is when you have a slew of launches that have happened over a period of time, they accumulate. So for us the sustenance sale will become very important. You would have done 10 launches and each launch, even if you choose, 500 crore is a 5000 crore, right? On a sustained basis. And that is the profile of business that you will see changing by FY30. This is a slide that we had a lot of debate how much to share and what not to share. But at least given this is an important update for all us to share with you transparently. We thought why don’t we show you everything that we have except for one thing that is not at the top of some of the the columns. And you can extrapolate, you can take a simple cagr. But this is the plan that we have from 2800 how we want to grow to 9500 of residential business. And for each year in the new launches we put the top five project and sustain the top five project for that year. So this is the buildup that we have. And interestingly, if you see FY28 has two new project, new project one, new project two and then FY29 has new project three and then 30 has four and five. These are the gaps that we have right now based on where we stand. Even though GDV is there, but not all GDV of Bhandoop or Thane can happen in two years, three years, four years. You need the flow of projects to actually give you the sales in that current year. You also question why Thane Phase 1 in FY28 while we saying that approval 2 is almost there, but fingers crossed we should have it. But the Thane metro station would be ready by that time. So from a social infrastructure point of view, you get a better pricing realization by waiting 6 to 12 months. So we have that in mind. We also are carefully watching the Boribali Thane. Tunnel construct that is also supposed to finish by that time. And if waiting six months gives me a 10% price increase is something I will take any day for Thane. So those are the the reasons we have put them in FY28 for the timing. If reasons allow us, if there are good news, we can move it up front. But at least from a land bank point of view that land would be ready with us sooner than later. So this is our buildup that you have. We will not take our foot away from the GDV addition like in 18,000. 12,000 was 12,400 is actually roughly 6,000 is coming from other projects. Our belief is that if you want to build a sustainable business, 5 to 10,000 crore of GDV every year would be required for us to keep the engine running as we March towards our 10,000 aspiration. In fact, internally we have been talking about 1 lakh crore, 1 lakh 10,000 crore of GDV that we need to be thinking because we have to think beyond FY30. We have to think about 35 and 40. And this is a business. Once you lock in your land parcel it allows you to actually benefit from it over a long, long period of time. I have seen that some of our peers have done really well. They have done it much earlier in time. We have to do it in this, in this time frame. So we are actively looking to prepare our balance sheet to prepare our aspiration to achieve that. Do we make money and how do we make sure that we are moving in that direction? So we did this for ourselves to understand what is the IRR of the project that we have ongoing by vintage. So you see the first bucket has projects up to FY18, six projects cumulatively 3000 crores plus minus little bit. The IRR that we are seeing because of delays, construction, the way they were designed Covid is at 3%. There are six projects launched between 19 and 21. 2500 crore sales, 10% IRR F22. We didn’t launch much but 1000 crore, 10% again 4000 in F23. That’s where we started to pick up momentum. 21% and F24, 5000 crore is at 26%. So you can see that there is an improvement in the irr. Obviously one is mechanical because you have low duration, you have not lost time. So automatically you will see the IRR enhancement. But also we changed a few things in terms of how we to the costing. We have a dedicated costing center of excellence which has come up in the last two years to make sure that we are not ultra aggressive on the cost. We are conservative on the cost. What that means is we are accounting for more cost in our business case in IRR than we were doing in the past. That gives us cushion to absorb. Let us say shocks in the commodities. It allows us to absorb any kind of rate change in the labor side by state. All those are very healthy things to keep in your kitty because that can affect your business case significantly. So once you are conservative and then you do your IRR target for the deal, then at least you don’t have a downside. You hopefully have some upside. That’s how we done the, the IRR analysis and we’ve gone back for each of these projects to say what’s the true irr given all the adjustment that we need to do. Similarly, you can see the affordable and premium clearly. It’s a reason for you to pursue premium projects. Affordable, they are tough from a customer experience. But also financially it doesn’t give us, it doesn’t cover our cost of equity. So that’s something that we need to watch out for and we’ve taken account in our strategy going forward. This is, we try to really hide a few things. These are 23 projects. You know, I think you can guess some of them already. But I just want to highlight two things from this page. One is the rigor that we have. We’re tracking how is, how was, how was the performance of sales in internal discussion, let’s say by six months. These are March 24, September 24, December 24, March 24. We’re tracking that on a quarterly basis every time we share with the board. Also, how are the cost changing, how is PBT changing, how is the PBT percentage and how is irr? There are a few other dimensions that we have. We have not share that. But if you see the blue part at the bottom of the screen, our current portfolio IRR is close to 16%. So including the 3% and including the 26%, if you were to take a snapshot of all our projects, that’s 16% which is healthy, right? Which is healthy. But it has to get healthier for us to absorb the cyclicality of this industry. And that’s where we are moving in our efforts in our project execution. I think this slide is a little bit work in progress. It has the total operating cash flow net of all expenses that we’ll generate from the project. But it has three project which are missing. Thane, Pink, Jaipur and Murud. And we were just doing back of the envelope that 10,550 will become 13,000 if we were to bring all of them to market in the stipulated time frame. So the current project, 39,000 crore worth of GDV that you see has a potential to give us roughly 13,000 crore of operating cash flow as we stand today. It’s a estimate. Estimates will change based on the pricing velocity, not velocity as much but if you, if you look at selling more at a lower price versus delaying it, it has an impact on your. Sales as well as the costing. Costing has been redone for most of the project. But you know there are changes that happen in the industry. Approvals, TDRs and many other things. IC business not to be forgotten. If you’ve seen our financials, IC is a big contributor for our profitability. Right. And it will continue to play that role. The land was acquired 20 years back, 15 years back. That’s giving us the the results. We also have marquee partnership. Jaipur is with Rajasthan government. Chennai is with Tamil Nadu government. Origins 1 and 2 is with Sumitomo Origins. Pune is completely with us right now and origins. Ahmedabad is with ifc. Pune is something that we are putting a lot of effort to bring contiguity and connectivity to make sure we are able to market it at the earliest. We had 63 issue which has already been resolved. Interestingly, this business, even if we don’t acquire new locations, we call this strategy as en strategy. Existing land parcel, land location and new land parcels to address the contiguity en we will put money behind it. We will not do nn new location, new land parcels, we will not do anything. Despite that. The size that we have has the ability to give us 1500 crore worth of PAT our share because we have partners. So if you take out their share we have the ability to get roughly 1500 crore. So that’s the kind of potential that this business has, you know, to make sure that that comes through sooner than later. But the more you wait on land, your profitability goes up. So you always have to balance lower price now versus wait a year or two and get slightly higher price. That’s the balancing act that we have in our IC business Balance sheet. You know, having the Mahindra legacy, we are always very conservative, right? The point 34, 2.39 is something that is one of the lowest in the industry. Many of our peers are very high. And as we go through with the rights issue, the immediate thing is we’ll cut down this long term debt as much as possible and keep a lot of money remaining for us to fund our growth aspiration. And if you need to go back to get debt, we will do that. All our GDV acquisitions if you’ve seen are very capital efficient JDA society. Redevelopment outright is a fair percentage but that’s something we have done consciously. And then finally, you know, you saw the middle part of the video. I think we are doing a lot to pursue our customers aggressively. This premiumization journey that we are going through is something that resonates very well. With our customers. And then our employees are quite excited. We have a new office. We have a lot of culture of work hard, play hard. We had a cricket tournament recently. Second time, 400. More than 50% of our colleagues actually participated. So work hard, play hard. Culture starts from office but ends in the playground. So that’s it from our side. Let me hand over to Avinash.
Avinash Bapat — Chief Finance Officer
Okay, so you all seen the result. They have already come out in the, you know, public domain on the stock exchange. We thought we will give you a sneak peak of how we look at, you know, our financials. Because as you all know, the accounting guidelines that, you know, dictate the way accounts are cast for the real estate industry are very tricky. It doesn’t really reflect what’s kind of happening on the ground. So we thought we’ll just give you a kind of small walk down, maybe just couple of slides as to how we look at it. And then of course we’ll leave it open for questions. So, sorry. That’s the next one. Green? Yeah. This one? Yeah. Okay, so I’ll actually not dwell too much onto this slide. This is exactly as per how it is cast in Indes. It shows that the income from operations is about 372 crores versus 200 crores. It is following the completion contract method. It is not really reflecting exactly how things are going on the ground. What we’ve done, and this is the balance sheet. It shows a healthy net worth of about very close to 1900 crores. But quickly, let’s spend some time on this slide. So what we’ve done here is that we’ve not changed the main principle of what Inda follows, which is completed contract method. However, this we in our internal parallel call as full consolidation or management consolidation. Okay, so what that means is that typically you would see an income statement whereby there would be a certain profit attributable to joint ventures and associates and all that. Now if you look at it holistically, these are all entities which we are running the business on the ground. We are controlling them from an operations perspective. So we call them full console, which means that everything is consolidated at the line by line level. And then we have a small line there at the bottom which calls, you know, which talks about minority interest. Okay, so if you look at this, we can say that in F25 we’ve sold 3.18 million square foot in residential segment and 2 point versus 2.47. Last year we sold 85 acres in the IC business against 119 acres last year. But if you can see the revenue line or income from operations line, they’ve actually given us a higher revenue. 495 crores versus 470 crores last year. So that’s about you know, 5 to 6% growth. If you look at the total income, you know we were at about 1000 crores last year going up to 1400 crores. 4446 is the total for FY25. What is interesting is what’s happening on the EBITDA line as well as what is happening on the PBT line. So while the income has grown by about 18% we’ve seen about a 26 to 27% jump on the PBT side or on the EBITDA side which actually reflects health. One small point Amit alluded to earlier and that’s kind of reflected here on the earlier slide you saw that the IC business has got potential to generate about 1500 crores of PAT over the next 8 to 10 years. If you see what it is doing Today, the last two years, 124 crores and 126 crores is the PAT that is generated from the IC business. So the wealth or the importance of IC business is this. It gives a steady path over a longer term period. Whereas the residential business has tremendous potential to grow. And with the growth and with how we complete our projects will come the income and the profitability that is associated with this. So that’s how we look at our business. There are enough disclaimers there but we thought, you know, we can share with you exactly what our internal matrices are. Well and last but not the least, these are the highlights of how things have happened in the last year. Pretty much about 20% growth in residential pre sales. IC revenues have grown by about 5%. We’ve already talked about GDV, that’s about 4x as compared to last year. What has driven our cash flows is the very strong, very healthy collections. We saw in the earlier slide that our net debt to equity ratio is about 0.39. Still very healthy. So at a point in time if we really need some strategic debt we can always raise that. 0.39 goes well with our overall guideline. We don’t want to really over leverage, don’t want to go beyond 0.6 or something like that. So that’s how we kept it under control. And of course you know, strong operating cash flows. The key highlight is that highest ever 832 crores is what we have. Overall operating cash flows mainly led by these residential collections, which has grown about 30%. Cost of debt has been well under control. We try to do maximum in terms of short term versus long term, any commercial paper issuances. We get pretty good rates there. Overall, we’ve kept. It under nine and that helps our overall cause. So pretty much that’s it from me. We’ll leave it open for questions and then take it forward. Thank you.
Amit Kumar Sinha — Managing Director and Chief Executive Officer
So hopefully you got a glimpse of the business, how we are trying to build it and a glimpse of the commercials of past financial year. So love to address any and every question that you have. So over to you. I think we’ll have the mics go around if there are any questions and then we’ll try to address them. You can direct it to any of us or we’ll find the best person from our side.
Questions and Answers:
Parikshit Kandpal
Hi Amit. Thanks for the presentation. So my first question is on the rights issue. So what are the timelines of the rights issue and how do you intend to deploy this for growth? So what will be the strategy on deploying this? Whether you’ll do outright purchases like in mmr? This year you’re largely done through the JDA route. So what will be the strategy for mmr Pune and Bangalore in terms of allocation of this capital?
Amit Kumar Sinha
First part you want to answer?
Avinash Bapat
Sure. This, this is audible now. Yeah. Okay. So short answer to your question actually is that when? Well, as early as possible. Okay. To be very honest, actually we had some internal deliberations and we thought let us first actually declare, you know, our annual results. We didn’t really want to go to the market with nine month numbers and then the investing community can have a, you know, a good impression or a bad impression about what happens on the results front. We thought let’s, let’s go formally with everything on the cards and then go through with the rights issue. So my short answer is very soon. You know, we haven’t yet exactly decided the exact dates and all that, but you should hear something very soon. Deployment of funds. Yeah, I thought you are taking that.
Amit Kumar Sinha
I think we have roughly 900 crores of long term debt and with this 1,500 crore, I think it will help us to be prudent about reducing that. As much as possible. So that’s our first from a deal point of view we don’t have an allocation that we will put this much money towards outright. This much towards Pune, this much towards Bombay and Bangalore. I think we have done a lot in Mumbai to be honest in terms of the deal pipeline. So our focus is lot more bringing that GDV into market through sales approval. So we have got enough right now even in Bangalore we have a couple of marquee projects that are coming up. So we’re not in a rush to put more money in Bangalore because we got next three, four, five projects lined up. Pune is something that we think. We almost closed two deals last financial year but for one reason or the other either we didn’t feel comfortable or didn’t work out with the other party. So those didn’t happen. So I think Pune will need some some focus for this financial year. But at the end we look at this as a pool of money that’s available to the best project that we have. And if there is an outstanding project opportunity that comes in Bangalore, funds will go there. Right? And good thing is everything rolls up to Vimlendra so he’s able to actually prioritize. Hey, here are my top five projects and there are different stage of term sheet and due diligence and first come, first serve. But it has to meet our financial discipline and we also have support from the group in terms of hey, if this 500, 600 crore which is net of debt payment, if that is exhausted we will be able to go to the market and raise debt again if need be. Because our debt to equity at that time would be zero, practically zero. So we have the opportunity but we run a very tight process with the corporate to make sure that we are getting the best deal. Divya is here. We get the best deal on the debt side so that we are always maximizing the financial returns from any investment that we do.
Parikshit Kandpal
My second question is on the GDV addition, you have done phenomenally well last year and the year before that. So now the question is that sales effort now goes into it and to queue these deals and get it on the ground up and running and sales and do sales on that. So in terms of channel partners in terms of execution capabilities on the supply chain side. So how has been the ramp up there Given that we have slew of launches coming up in this year and the year after that we move towards the 10,000 crore target. So how are you building the organization, the entire channel partners network? So how has that number been now for you this year? What has been the conversions now at the site? So what kind of velocity are looking at in new launches given the current condition of the market? So how do you see all these things?
Amit Kumar Sinha
You want to answer that?
Vimalendra Singh
I think. Thanks. Thanks, Parikshit. So let me address this question point wise. First is in terms of the sales capacity, right. I think like the business development deals where there are financial guardrails, we have to ensure that we meet those financial. Guardrails. In terms of capacity building, it’s very easy to build capacity. But then, but then if, suppose you don’t have enough projects on a particular line, right. What do you do with the X6 capacity? So it’s a very dynamic process where you, where you, where you build capacity at right time in a way that you know, people are completely engaged in the sales process. So as of today I think we are very well capacitized. We have, we can take care of all the projects that we spoke about and which was, which was shown and then at right time, obviously we will add capacity depending upon which project is going to come at what time. So not a worry there. In terms of channel partners, I think we have a dedicated channel partner team. So let me just explain that business briefly to all of you. Within the channel partners we have got effectively three sourcing verticals. Right. One is your retail channel partners which are all the people on the ground in a particular micro market. You have institutional channel partners, what we call as the larger players, 500 member team, 300 member team. So they work at a very different scale. What we have also started last year is we’ve got something called as rest of India business because the markets that we focus on like Mumbai, Pune and Bangalore have people say from ncr, people from Jaipur, people from Madhya Pradesh who are also interested in investing in these cities for various reasons. Right. So the third one is the rest of India model or the channel partners model. Happy to share that. You know, in terms of distribution, we are one of the biggest in all the cities that we are operating in. We have a very, very dedicated channel partner team across these three sourcing verticals. It’s effectively like a wealth management or a private banking model where you have X number of customers allocated to a particular relationship manager and that relationship manager has to nurture that relationship. And the objective being, hey, if a channel partner has a customer, he should think about Mahindra Life Spaces because his relationship has been effectively managed by this particular person. I guess that’s where you need to have that share of mind which is very important. That’s how we are approaching this in a very meticulous way. And we are happy where we are. We have, I will not get into the number but a significant number of channel partners who are already empanelled with us. And the engagement is around the clock with them.
Parikshit Kandpal
On the execution side, supply chain construction teams and the capacities there, moving to reputed contractors. Focus on quality. So how are we tackling this? Because this has been one of the major issues in the sector.
Amit Kumar Sinha
That’s a great question. I think the two parts internally how we scaling up and then externally how we are thinking of the right partners on internal side. We we have significantly enhanced our procurement team. Procurement and contracts team. It’s we’ve hired somebody from another. Very respected peer who individual who had done well and then he rebuilt the team. And I think the key part in our procurement contracts is how do you actually have enough control, cost focus but also have agility because cost will allow you to bring negotiation etc to bring your cost down. But if you’re not agile you lose time and it affects your IRR because used to take six months to award a contract. So what we are trying to do is build that system as well as mindset in our procurement and contracts team. Working with Sudarshan who is sitting here to make sure that his needs at the site are very well addressed. So that kind of internal capability building is happening. Procurement is one key area at each site. We have a very strong local head. For example in Pune we have a very strong guy who came from Capacite, he runs all the four project in Bangalore. We have another gentleman who came from here a few years back. He’s one of our stars in terms of delivering before time. So we have Chennai, somebody else, we have Mumbai, we have somebody else. So we are building that and then below them we have the next level of people, we call them dhban that’s been built over a period of time. Almost 80 of them who are part of our next level of leadership as number two to each one of them. So that’s something that we have really worked towards. We have brought down our. This industry has an attrition of 30 to 35%. Our attrition is less than 20%. Why? Because we are investing in our people, talent development, the right kind of opportunity rotation, many of these things. We have done an industry leading training program with Imam Dabad, you know which is 30 people went from our mid level team with SPGAN locally 60 people attended it last year. So it’s lot of investment in our people to make sure that the right people who have the right set of capabilities stay with us. So that’s on the execution internal side. Externally it’s a balancing act. I think many of the projects we have some cushion and that’s why when we have higher velocity it improves the irr. It gives us a little bit of cushion to actually go to better contractors. Now we are creating that cushion and working with our projects to say hey if you can’t go all the way to one, can you do to 1.5 like you know somewhere better than tier two or tier three. But at least who’s got very good, very good strength in people. The sourcing of people on the projects at the site and also compliances which for Mahindra is a very big thing. Safety and other compliances. So it takes that adds little bit of cost, 10% sometimes. And for us to absorb that, we have to be very careful and thoughtful. So we are, we are almost there in terms of creating budget in each of these projects. But that’s something which I would say is a balancing act for each and every project.
Parikshit Kandpal
And just last question to Avinash. Avinash, you showed us that slide on. Casting of the financials which you do internally. So was it POCM accounting or is it just.
Avinash Bapat
No, it is not pocm. It is still completed contracts but at a full console level as we call it, which is everything consolidated line by line.
Parikshit Kandpal
So even associates are consolidated. So the question is now on the next year I think we’ve been the past saying that we’ll move to the path of profitability even on CCM basis on the residential business. So when do you see the light of the day and is there any thought of like moving towards more like POCM based accounting which other Bombay developers are following now? I mean they’ve moved to because it is a more correct representation of your current profitability. So how are the thoughts there?
Avinash Bapat
Yes, good question Parikshit. So you’re right. Few of the developers have kind of not changed or have moved to this. There are a few who are contemplating about how do we do it. In our case as well, we are contemplating taking a you know, conscious call through our advisors, our auditors, our you know, bankers, etc. As to how do we actually transition to that kind of methodology as we do that. Obviously new guidances, new guidelines are also coming up. Indes would maybe allow, maybe not allow. So we’ll consciously look at it. We are working on it. In the meantime we are thinking of how do we kind of bring out more to you if there is a way where we can cast our accounts in know percentage completion method and if that can be displayed to the, you know, public maybe we can try to do that in the interim. So those are the things that we are all working on. Let’s see how we progress on that.
Parikshit Kandpal
Okay. And any deliveries for this year like FY26, how much do you think you can deliver in terms of area or in terms of revenues approximately? Some ballpark since there on the resi business. Some major deliveries coming up.
Avinash Bapat
Good question. I can’t tell you the exact number but we have quite a few, you know, sizable deliveries planned in this year. A couple of projects which we’ve started in you know about four or five years ago are going to see you know completion. This particular year we talked about two marquee projects. Amit talked about luminaire in the past we were talking about Eden. So some of these will see coming completion during this year. I can share some more. I’m talking about marquee project.
Amit Kumar Sinha
So five plus one plus three that’s our OC five large projects. One which plotted which we are awaiting approval to even launch which is in Jaipur but it takes nine months to and then three on the affordable side. So that’s the nine on the OC side. You know, in the past, we the reason Avinash is not sharing the numbers because it’s dependent on the approval. We can do our job well, but as you know, this industry has some challenges.
Rahul Jain
Hi sir, Rahul Jain from Lara Capital. So, couple of questions. So first one is on your Andheri Lokanwala projects, I mean that micro market, we are seeing a lot of aggressive bidding by most of the grade A players. I mean, when I say aggressive both in terms of the rental coffers corpus offered along with the area offered, I think, plus, you know, in all practical terms, nearly half of Lokhanwala today is either under redevelopment or, you know, in negotiation. So you will probably see a lot of supply coming in that particular micro market. So having said that and on your slide, if I see the average realization that you are looking at for that particular micro market, it’s actually very similar to your Mahal Lakshmi project. And plus if I look at a near ready possession inventory, it comes to around at least 10, 15% premium. So, you know, I just want to understand, you know, is that project going to be relatively margin and irr dilutive relative to other projects that we have acquired? That’s my first.
Vimalendra Singh
Thank you for. A couple of other friends have also asked this question. So I’ll tell you fundamentally, as Amit said, when we look at any project, I mean obviously the financial guardrails have to be met. So there’s no emotion because you know, I like the area or it’s a great area and you know, we would love to do that. If the financial guardrails are not met, we will not go ahead and we have said no to many, many, many projects. Now coming specifically to Lokhandwala, you know, it’s under cluster redevelopment and if some of you may be aware, so It’s a very specific 33, 9 policy under cluster redevelopment, you know, there are certain, you know, benefits available to a developer right now within the financial guardrails. Some developers may choose to pass on those benefits to the residents, some may not choose to pass the benefits to the residents. I’ll give you just one example so that there is abundant clarity on this topic. If you’re doing a cluster redevelopment which is more than 10,000 square meters, there’s a certain FSI which comes by default. It’s not dependent on an individual approval, but it is a part of the policy itself, right? Similarly, if it is more than 20,000 square meters, you know, the FSI that you get actually goes up. So as a, as a developer, what we do, hey, I can say it comes to me, I’ll just keep it or I’ll say it’s anyway a partnership joint development. As long as my financial guardrails are met, I’ll pass on that extra to the society, they are very happy. Then what happens is your, your speed to launch in a redevelopment project where you are actually truly partnering with the residents is actually significantly faster. And that’s what makes a lot of the difference. Again, on the financial side, So I think all the societies that we have signed a great relationship, all very happy. We are working very aggressively for the DA and eventually the design and then the, and the vacation. Right. So I can, I can tell you very confidently that, that the financial guardrails are there. We have been very transparent, open, and we have actually used the policy very, very correctly and prudently. And that is the reason we have the ability. And as you rightly said, various other developers have also pitched around the same numbers. But I guess that’s where a brand also plays out. That’s where the relationship with the society also plays out practically every weekend. You know, many a times myself and the teams are there with the society members talking to them and getting this home. So absolutely, we are very, very comfortable and we look forward to making a very marquee project there. Second, you spoke about the pricing. Again, it’s all the function of the financials. Right. As Amit said a while back, when we look at a business case, we don’t, we don’t work on the business case thinking that hey, today these numbers are relevant and what happens three years down the line, four years down the line, there could be some cost pressure, there could be oversupply. Right. There is a, there are certain assumptions on the prices which are done. If you, if you actually do that well, then you are, you are in a completely safe zone, safe space with respect to A delivering the financials, B, delivering the project. So very confident, very comfortable on both the execution and the financials.
Rahul Jain
Okay, thank you sir. And second one on Bhandu, I mean, it’s a very sizable project. So essentially what is the base case scenario that you’re looking at in terms of monetization? Obviously the depth of the market is still building there, you know, so both from a base case angle as well as the worst case angle.
Amit Kumar Sinha
Can you clarify what do you mean by base case?
Rahul Jain
Monetization that you’re building over a period of time.
Amit Kumar Sinha
Like in terms of years and.
Rahul Jain
Yeah, right, that’s going into IRR.
Amit Kumar Sinha
You know, this is 6.4 million square foot of saleable area right now. We have done the design. We also got the first stage of approval for i2R, so that’s also already done. We are now finishing the design and then doing through the approval process. It will have 3,000 plus apartments. It will have a good size commercial space. If you’ve been to Gurgaon Horizon center, that kind of a, you know, complex we’re trying to create, it will be, you know, as our CMO chief marketing officer is the urban forest. You know, marquee club, amazing set of facilities, retail. All those things are going to be part of this 37 acre allows you to do so many things right. We have been conservative in our base case. Let’s say if it is 12,000 crore, let’s assume eight to nine years to sell out that. But that’s not our aspiration, right? Construction could be a few years longer because the last phase will take some more time. I think we will maximize IRR given it’s with a partner. We will look at the best interest of both the partners. For our partner the cash is very important, right? They will want to maximize the cash. You know, for us cash plus IRR is important. So we will do the right thing in terms of adjusting the velocity price point. But at the end this allows us to create a very successful marquee project which will have a premiumness attached to it. And I think we will. The base case is a starting point for financial. But in real world we’ll adjust the the business conditions.
Rahul Jain
Thank you.
Pritesh Sheth
Hi Pritesh from Access Capital. Just couple of questions. First continuing on Bando. So in general as per your assessment what’s the market size there or you know by going there are we going to create a, or create a whole new market for that ecosystem and gain some share out of the neighboring markets around that?
Vimalendra Singh
Thank you. Thank you. So let me. And this is this market data is almost say six to nine months back when we had done our detailed bandup as a micro market plus the fringes of Mulund because it is also a captive market. On an average yearly numbers they actually sell 5,000 units a year. Right. So that gives you a sense of how large the market is. Right? That’s one. A lot of the development has happened towards say the Pawai side, they have happened towards the Mulun side. Right. So Bhandrip to that extent frankly has not really seen a spurt in development. Now this particular location that we have and I’ll encourage you if you get time to go and see there’s Bandup station right behind. There’s a metro station right on the road and this is one of the best locations. One of the last piece of land which is so large and what we can deliver there is amazing. What we will be delivering there is quite amazing. Right. So with respect to market, with respect to the absorption, we are absolutely not worried there. It is also a function of what kind of product you are bringing. Because it’s more like there will be commercial, there will be retail, there are residential. Plus the best is the connectivity. You know, whether you want to take Metro or you want to take up auto or a cab or a local train, I think you are there. One more thing, since it is in the public domain the east west connectivity. Is actually next to our plot. You know if you have to take from the highway, if you have to go towards that LBs road, right. Today there’s a BMC has already started constructing because you have handed over that land. They’ve already started constructing the flyover. So by the time you know our face is ready, that flyover will be ready. Phase one is ready. So that will further add to that particular location. So all in all it’s. It’s going to be a great story there.
Pritesh Sheth
Sure sounds interesting. Second on, you know we have already transitioned from a journey of being an affordable player to mid income. Largely now getting into premium locations like Lokhandwala Malakshmi. You know, for us what in general changes like you know, still focusing on product and that will naturally drive the customers to us or we have to do something different to be. To call us as a premium brand.
Amit Kumar Sinha
Yeah, it’s a great question and I think it’s not an easy one. Let me just tell you because many times I’ve been called the CEO of Mahindra Affordable Housing by people that don’t know, right. And those who know Mahindra very well. So you know, and I keep reminding them even today I had given an interview, they were saying Mahindra Life Sciences. So I think we have to do a better job of getting our brand understood. Right. And that’s why I think we have Abhimanyu sitting at the back chair. He’s our chief marketing officer. He spent how many years at the corporate Abhimanyu? Three years. Right. He helped Mahindra create the brand that exists especially on the auto side. Right. The perception that we have and we got him specially to Mahindra lifespaces to make sure that we create a significant amount of brand appeal which is in line with the Mahindra brand image. Right. As you can see Mahindra, if you look at Mahindra is known for SUVs, right. Not for small cars, not for luxury cars. And I’m sure we have tried both. We haven’t even tried two wheelers and it has not been very successful. Two wheeler and small cars are like affordable, right? Small tickets are a different kind of customer segment. Luxury is a very different customer segment. So I think we have to do a lot to first change the brand perception. And I think you saw the video at the start. I think we’re trying to be a little bit cool, a little bit different, you know, to create that brand appeal. So that’s the first part that we are doing. The second part is our overall customer experience, right? When you come from affordable, when you deal with an affordable customer segment versus a premium customer segment, the kind of touch point, the kind of, the way you interact with them, they all needs a lot of training. Even the collateral, even the gift that you give changes. Significantly. Right. The role of technology becomes extremely important. So Vimal Vimalendra has been driving that. Right. You know, the kind of sales people, how they dress, how they interact, what kind of script they have. And there is outbound call center, I think I would not say we have arrived at that. But we have some time, right? We have some time. And I’ve seen tremendous response to Vista. We change in the last. Before we launched Vista, we completely changed that project. There were no 4 BHKs in Vista. We’ve unfortunately and fortunately Supreme Court had this RG issue. We had six months. So we actually changed the design and got four BHK up spect our clubhouse and everything. And then we taught our teams to how to sell this to the right customer segment. It’s a work in progress. We will get there. Right. It’s a 25,000, 27,000 Lokhandwala and Mahalakshmi is 50,000 product. Right. We will actually get there as soon as those products are ready. And third part is the quality of delivery. Right. The finishing, like finishing is extremely important. Right. If you look at the kind of specs that we provide in our project, the kind of. I was at, was it Pune? When I said, okay, we have the concrete blocks, right. I said, show me how much strength it can. So it is a M30 block. So you put pressure on that and it breaks beyond a point. And it should have stopped at 30, but we made it so strong. It was 44. Right. That means the quality of cement and steel and concrete and everything that is 50% stronger than what is supposed to be there. So it’s very safe, very comfortable. But by the time you do all these things, you may not have enough money left for tiles and replacing those, you know, those cracks in the marble. Right. And that’s why you have to balance like what is visible to the customer. That creates a feeling of a up spec product. And I think that’s why we’re doing very well now in terms of budgeting for it and making sure it gets delivered and solved for the customer. So those are the three things we are trying to do to shift from an affordable to a, you know, a more premium experience for our customers.
Pritesh Sheth
Sure. And just one last on the irrs, I think it’s good to see those irrs scaling up now in general, how much does it translate into EBITDA margins or cash flow margins? Because I mean, as an analyst, how can we track that progress? That, hey, we are going right on that path, you know, so. So what should we be tracking to understand that, you know, we are on that right path of improving IRRs and improving margins.
Amit Kumar Sinha
You know, I, you know, this is one of the toughest problem that we have, right, because of this accounting. So let me have Avinash take a crack and if I need to step in, I will do.
Avinash Bapat
So first. What we do is we first arrive at the project irr. Okay. Because your debt to equity structuring and all that can have different implications. Equity IR would be different than a project ir. Irr. So we first have our initial guardrail at project irr typically over a period of time. Of course the, there is, there is good bit of correlation between a PBT margin and a IRR percentage. Okay. Of course the IRR will take into consideration the timing. So we, we have guardrails on IRR as well as, you know, a PBT margin. When we do calculate the PBT margin we also take into consideration, you know, a certain allocation towards our corporate overheads and all that. So that the cost that is getting reflected for that particular project is well, you know, well calculated, well estimated and all that. Largely that 18 to 20% band that we talked about does get maintained over projects.
Pritesh Sheth
That’s on the PVT margins. 80, 20%.
Sriram Kumar
That’s correct. PBT. Maybe we’ll take one or two questions. Amit, from the the online part. So one question is on the demand environment. How is that shaping up in our key markets like Mumbai, Pune, Bangalore amid the macroeconomic uncertainties. And Vimlendra, to you, any thoughts on how we should think about our pricing strategy for the upcoming year?
Amit Kumar Sinha
Why do you take both?
Vimalendra Singh
So if you, if you look at numbers, say the, let’s, let’s stick to the calendar number. Calendar year number FY24. Even, even in calendar year 24 the overall market has grown. The residential market which is measured in the top seven cities has actually grown compared to calendar year 23. Right. So from, and I’d like to share our own example, right. What we see on the ground, we had this Vista Phase 2 launch and then we had this Ivy Lush Phase 2 launch in the last quarter. And in the Vista Phase 2 launch we practically had less than 30 days actually after we got RERA and but let me give you one statistic which is not there in the public domain. You know we had 4,000 people who walked in in 30 days at our Vista site. 1,000 potential customers who walked in right now that should give you a insight into that. The demand remains robust and this is on the back of a healthy price increase that we did compared to what we launched in phase one. And we have seen this across all of our projects. Let it be plotted in Chennai. Let it be our Bangalore project. Let it be sustenance, sales. So frankly we are fairly confident and fairly comfortable and the market is. Is actually very, very steady. So, you know, we have not seen that yo yo movement and the markets in which we operate are fundamentally have been very stable. Very. Now, if you look at, if you just peel the onion a little bit and if you go to say a market like Pune in the last quarter of the financial year, yes, there was, there was a decrease in the number of units sold. Even in Mumbai there was a slight softening, but it was because predominantly because there were not enough launches because of, you know, which is good. I, I think I, I always tell that, you know, people should have all the approvals in place and you know, sometimes the regulators take us x amount of time to approve. There’s a scrutiny which is happening at reravel is significantly more. There have been, you know, these certain EC issues but by and large the market has held steady. It is fairly robust and we continue to be very, very optimistic about the growth journey because all the parameters indicate, and our own experience on the ground indicate that the demand continues to be very strong. One more statistic I want to share. If you look at the inventory overhang, which is kind of a gold standard in the market at a pan India level, the inventory overhang in these markets is still 13.4 months, which is very, very healthy. Even if it remains like this, we are all very confident that a lot of the developers and the sector can bring in a lot of the inventory in the market will still get absorbed. So not worried on the demand side, I think we need to be able to bring it to the market. Right, that’s one. The second part of the question is on the pricing strategy. On the pricing strategy. Right. Again, I can share my example and some of the examples that we have seen from the competitors as well. As I said, in March we launched Vista Phase 2, we launched Ivy Lush Phase 2 and both had a healthy price increase. Now, at least as Mahindra lifespaces we were able to sell the units at a higher price. But internally what we are seeing and in the market what we are seeing is will the prices in terms of increase, will it continue like what we had seen in the last four years? Probably not. Probably not. And I think that is where a certain degree of moderation will happen. Last four years were great for the sector across the board. There will be a certain amount of moderation as far as the price rise is concerned. But on the demand side, I think the general consensus is it’s strong, it will continue to be strong. So for us, you know, two parameters that we look at, you know, I think all of you must have guessed very clearly. It is IRR and. And the pat right or pvt we can say in this, in this case. And both are very important for us. And many a times it’s a very dynamic balance. It’s a very delicate balance because hey, if you sell everything fast, yes, you can do that, reduce the price and sell it. But is that the right strategy? Probably not. So you need to be always be able to create a right balance between how much you sell upfront and how much you hold back because obviously you will have a price realization over a period of time. And we need to be able to balance both and we are very conscious of this at any point of time, how much inventory we open and how much inventory we sell in the market. So we’ll continue to be mindful of that.
Sriram Kumar
One more online and then we come back here. One more question. There are a few questions bunched up primarily on launches. One on New Haven, you know, update on how that is progressing. And on Thane and Bandu. Bandu I think we talked about, we can just.
Vimalendra Singh
Thane also we have spoken about, but on new events. A project which it’s in Bangalore adjacent to our existing project, a small one if you look at the overall size, but happy to share that. We have, we have sold very well. You know, I have a CFO so he can tell the numbers if he allows me, but we have sold very, very well and at a very healthy price increase compared to the adjacent project. So again, both these indicators tell me the market is fairly, fairly robust. And so that’s all I can say. It’s done very, very well.
Sriram Kumar
There’s also pink and Navy as well if you just want to quickly update.
Vimalendra Singh
So Navy. I can talk about Navy. We hope to launch because it’s a redevelopment project, our first redevelopment project. And redevelopment has a certain amount of timeline attached to it before we can launch because Obviously there’s a DA there’s a design, right? You go through the 79A process, the entire P AAA which needs to be done with every single customer, right. A certain degree of handholding. Then there is vacationing which needs to be done. Then there is a demolition CC and then rera. Happy to share with all of you that the entire site has been vacated. Now I think we are significantly ahead and we hope to be able to launch Navy this quarter itself. So all on track as far as that is concerned. Pink. We are working through the regulatory approvals very, very closely. In fact, Amit himself has met very senior officials in Rajasthan government to expedite the approval process. And we remain very optimistic. Hopefully sooner than later. We should be able to share some positive news on that front as well.
Amit Kumar Sinha
We come back here for questions.
Sriram Kumar
Yeah.
Amit Kumar Sinha
Yep.
Vimalendra Singh
Yes.
Parikshit Kandpal
New business development, which you did last year and prior to that, what has been the embedded margin, EBITDA margin in the new BD? So how is the trend changed? So by 24, 25, what kind of margins we are carrying a bit? EBITDA margins I’m talking about.
Avinash Bapat
So I’ll answer it this way. Parikshit. So one, in the past we had some guardrails. What we did is a kind of, I wouldn’t use the word revamp, but we understood the elements which we are either over budgeting, overestimating on things like that and tried to tone that down so that our guardrails process and the process of estimation of those costs remains, you know, better off or healthier so that we have enough cushion or enough buffer if there are things that go wrong. We added contingencies, we added some of the escalations that can come in cost and things like that over a period of time. What we are doing now, as compared to what we were doing last year, is we are now thinking of, you know, making those guardrails a little bit more stringent. So, for example, if we were okay with a required rate of return or IRR of about, say between 18 to 20%, we are now targeting things that are, you know, upwards of 20% between that 20 to 22% range so that, you know, as we enter into this particular phase of the industry, we can target some more return. That’s one. And the kind of GDV scale that we’ve acquired by now allows us to actually set a slightly higher guardrail than what we have been doing from a BD process. I explained the correlation between, you know, the IRR and the pbt. We still continue to monitor the PBT part of it rather than just EBITDA because we bake in all the relative costs that are for that particular project and then do the project IRR basis. So if we move up the guardrail a bit on the IRR side automatically it has an implication on the PBT side.
Parikshit Kandpal
Because the mix of MMR has gone up and especially the premium projects. So when I look at 23, 24% PBT. So will there be almost a slippage of like when I move from EBITDA to PBT? So at least 7, 8% point could be the shift. So is it right to think that the EBITDA will be Networks of now 30% on the new business development.
Avinash Bapat
Just purely based on the mix? I’m not understanding the question exactly just because the mix may change. I don’t think it will have an implication on dilution of ebitda. So it is. It is not mixed linked. Let me put it that way. It is not even the type of the deal linked. Meaning it’s just because whether higher number of society redevelopment visa vis outright. It’s not linked to that as well. Each project is you know on its own merit evaluated and then brought into the market.
Parikshit Kandpal
But will you put any number on embedded EBITDA margins on this 18,000 crores of pre sales or even removing Bandu if I have to say 6 7,000 crore. Is it right to assume that like your peers are reporting almost 30 to 35% EBITDA embedded EBITDA margins when these sales will get recognized as of current cost prices and with some escalation built in. So do you think that when you reach to that 23% PBD so will that 30% hold or will the.
Amit Kumar Sinha
No, no not 30%. Let me. Let me try to answer. I think we have struggled with making this comparison or analysis and here is the reason why. In the project you have IRR and PBT at a company level you have ebitda. The reason is because you have three components of a cost which is payroll cost which is not inventorized. You have other non payroll cost like consulting, due diligence etc. And then you have sales and marketing, right? These are the three costs which are below the line gross margins minus these three give you ebitda, right? And then you have interest and depreciation. Then you get to PBT and PAT etc. But you can’t do this because in the project accounting as you do irr you don’t have these three components captured. What we do to make it more actual is in the IRR part saying that hey this is the gross margin minus the corporate allocation which are surrogate for these three components. We right now between 80 rupees per square foot per year to 100 rupees per square foot per year. We load those cost and then we calculate our pbt. Right? Because then it gives me a good understanding of whether the the profit of the project is going to cover the the overhead that we are going to have. But the real accounting for that year. You can’t project the F29 F30 when the project completion will happen. And that’s the problem with ebitda because EBITDA is a very different way of looking at it and the project. IRRs are very confusing. They don’t reconcile together. So what we do is just to create a management reporting. What we have done is take a project like Vista, run it from day when we acquire the land and when we finish the project and get out of the project, do the cash flows at the end. If IRR is 20%, the ROE should be close to that, right? And that comes only after 10 years. If you don’t do any more investment on any other project which. Which is for the future. So very difficult because it’s India’s accounting. So we track IRR very tightly which has a corporate overhead which is surrogate for EBITDA. And our PBT is roughly 19 to 20%. Right. Even though Mumbai project should have a higher. But the approval costs are very high. The land prices, the expectations are very high. So everybody prices that saying that you don’t get the kind of 30% that at at least we have not seen 30% kind of project. There are certain projects we have seen very high IRRs but those are smaller project potentially in let’s say Bangalore, sometimes in Pune. But Bombay is so competitive if you can get 20% I will take it any day. And you saw from the previous chart our affordable was 9%. Right. Our premium was 18%. Right. So 18 could go 19, 20 for a specific project. So that’s how we look at the IRR surrogate for ebitda.
Parikshit Kandpal
So one chart you have given in the presentation where we can extrapolate it so that number comes to like FY26 is about 3730, 800 crores and then 6000 for FY27. So is it the number is what.
Amit Kumar Sinha
I was warned that you’ll ask this question what’s your short term guidance? Right. You know, you know us, we’ve never given. Because I wish I can predict when the approvals will come. Right. And as we saw in the past financial year, if you had approvals I would have been much higher than what we are at it. Everything is ready. Half the work is also done for project Pink for example. And you know, even for New Haven it could have come easily last financial year. We’re just waiting. I khata issue, BBMP issue, this issue, that issue. Two months nothing happened. Three months nothing happened. So we have not. But I think for your modeling and you know, you just take 20,804 to 95, put a straight line and say this is what it is, there’ll be plus or minus. It’ll come out to 27.6%.
Parikshit Kandpal
Just last question on business development. So this year was phenomenal. 18,000 crores and we are now almost at the top. And you said in the call initially that 5 to 10,000 is what you will target on a sustainable basis. Do you think that with the money coming in from REITs so this number could be more closer to 10 and maybe there could be some years we’ll surpass that. I mean are we geared up for doing that kind of both financially as well as execution?
Amit Kumar Sinha
Side. I think in the past we always used to say that we’ll carry 5,000 crore worth of project in pipeline. We right now carry 25 to 30,000 crore worth of project in our pipeline. In different stage one, stage two, stage three, stage four is when a final document has happened. We can easily do more deals if the deals are attractive. There is good news is given the little bit of track record we have now, I will say little bit because we have to deliver these projects. I think corporate is very supportive saying that you guys fight externally. If you need funds, come to us. Fund is not going to be concerned as long we continue to execute. So from that point of view if there is a good deal which is 5,000 crore, 10,000 crore, it needs that special attention. We will get that. And many of those deals don’t require too much capital because they are typically JDA or some kind of revenue share or some kind of society redevelopment. So we are always looking for capital efficient. What goes away is the time part outright has a benefit of benefiting from a time society development takes 18 months to bring to the market. Right. Given the points Vimlendra mentioned. So we’re always tracking that. I would love to make sure that we are not chasing deals, we are chasing profitable deals. Five to ten thousand is the, you know something that we will do and there will be a few years it will be 15 to 20,000 if we get a good deal. And we are looking for some good deals, large deals in Pune and near airport in Bangalore. There’s a question behind I think. Question behind I think.
Unidentified Participant
Thank you sir for sharing the interesting perspective on the IRR of the projects. So just wanted to get the sense sir. I mean if you can also give us a broader sense. What were the IRR when initially these projects were put at the time or underwritten and where they have slipped to the 3 to 8% and at the current juncture we are also indicating 28%. So what are the safeguards we are managing so that these are going to remain intact over a period of time?
Amit Kumar Sinha
I think. Let me just try. I think you sound exactly like my corporate just by the way and it actually. Right question because why is this 3% or 9% right. Because it when the business case was done they were all 18% right. And they all came down to whatever reason, some controllable, some uncontrollable. Right. But whatever it is we need to have the learning to deploy for future projects. Now the deployment there are few things that we have to address this dilution, IRR Dilution that typically happens. Right. And if you can create a cushion for yourself it allows you to absorb as much of dilution. Right. The dilution could happen on the velocity side. The dilution could happen on the on the pricing side and dilution could happen on the cost side. Dilution could happen on the timing side. Right. And in the past we have classified all those things. How much happened because of velocity? Velocity has never been an issue for us. Let me just minor projects even in the bad before COVID when the market was low, we sell 30 to 40% in 90 days. That is a thumb rule or whatever. We launch, 30 to 40% will go up. Never been an issue. Pricing was an issue for affordable segment. Never was an issue for us for the premium segment. So we, you know, we’ve, we’ve been very careful about how to model pricing. Look at micro market, I think the question about how big is the market, what’s the equal, you know, inventory right now, you know, resale versus new and all those things. We are very careful with pricing. Better to be conservative on pricing and velocity that we have taken into account. The third part is the costing part. Right. And that’s where we’ve taken significant steps. And although in the past the dilution was huge. But in the last Sriramla almost two years, our cost of those 23 projects have gone up less than 2%, less than 3%. Right? Yeah. Before the latest change that we did, we’re trying to do some tier one and a half, you know, create a budget for those. So we’ll take those cost up. So we have been very, very. And prior to that. So F20, 23 budget war room. Right. That’s F23. Right. From that point to now, almost two years have passed and we have been, we have seen very tight control on the cost. Our costs have not gone up. The reason they have not gone up is because we created four or five things to account for the variability in the market. The first is the contingency budget that we never have, you know, never had sufficiently. And even if we had, we would share it with the procurement team and the project team and that will get consumed. So it’s the budget that’s given to our market facing teams are the project budget and contingencies with Sriram and Avinash. So that’s one. The escalations that steel, concrete, glass, all those things, escalations are now true in line with what we have seen in the past. Labor costs are actually as per the government mandate, 6% in Maharashtra and so on, so forth. We factor that in because invariably the contractor will take that into account when they’re pricing it. There is a corporate environment, responsibility. Right. Cer. Right. Corporate cess is there. All those five components are now baked into our costing assumption. Not only new project but past projects also. Because I can’t keep showing that past projects are coming down. So there is a huge amount of, I hate to use the word padding. We have done over cost to make it conservative. Now the flip side of that, I become less competitive if I’m trying to bid for new project. But that’s okay. If I have a good flow of project, I’ll say Don’t worry. Let me take that project that has more upside than downside. And that costing is giving us a lot of comfort because most of the issue in the past where our, let’s say, poor estimation on the cost, some new surprises coming up, something happening and then timing was our other issue. Because of our inability to manage, let’s say some of the remote locations. The remote location affordable has given us the most pain because very difficult to manage those sites. So actually we are getting out of that. So the timing part will get addressed. Velocity and pricing were never major issues costing we have solved. So that’s how we have made sure that the dilution doesn’t repeat again for, for next year or the following year for, you know, for the future teams to have problems. Hopefully give you some, some idea about how you take.
Unidentified Participant
Yeah. Thank you for the detail explanation.
Sriram Kumar
Great. I think probably, you know, we 26 minutes past our scheduled time. Maybe we can take one last question. Amit. Yeah. If anyone, anybody has anything.
Amit Kumar Sinha
Online, also online. Well done online. You done.
Sriram Kumar
Online. Most of the points are covered.
Amit Kumar Sinha
GDV of launch around 6,000, 7,000, 7,000. Between 6 to 7,000.
Sriram Kumar
So look, that obviously will be dependent on approvals and some of the things. Right. So as of now that’s what we are, we are working towards.
Amit Kumar Sinha
Well, thank you. I’ll just do a vote of thanks. Thank you from my side for coming over and we will do this physically going forward. Hopefully this was useful for you and some of you asked, will we do the same slides again and again? No, no, we will, we will, you know, not trouble you with that much. But at least it’s good to meet all of you. Take your feedback and if you have anything else, just let us know. Happy to. Happy to follow.
Sriram Kumar
Thank you. Thanks everyone. Thank you personally for coming here. It was great seeing everyone and hope we had a excellent interaction. You know, happy to address any questions later between me, Avinash and the rest of the team. Thank you. Thank you.