Puravankara Ltd (PURVA) Q3 FY23 Earnings Concall Transcript

Puravankara Ltd (NSE:PURVA) Q3 FY23 Earnings Concall dated Feb. 10, 2023.

Corporate Participants:

Neeraj Gautam — Executive Vice President, Finance

Abhishek Kapoor — Executive Director & Chief Executive Officer

Unidentified Speaker —

Analysts:

Samar Sarda — Axis Capital — Analyst

Aryan Sharma — Infinity Capital — Analyst

Mihir Desai — Desai Investments — Analyst

Ronit — Sharekhan Limited — Analyst

Srinath Nandi — RFL Fincap — Analyst

Anushka Gadhvi — Value Investments — Analyst

Harish Shah — HS Capital — Analyst

Nikita Mehta — Newlands — Analyst

Vaibhav — VK Capital — Analyst

Tanushree Mehta — Insight Securities — Analyst

Harsh Parekh — SMC Global — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Puravankara Limited Q3 FY ’23 Earnings Conference Call, hosted by Axis Capital Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Samar Sarda from Axis Capital. Thank you, and over to you, sir.

Samar Sarda — Axis Capital — Analyst

Yeah. Thanks, Dheeraj [Phonetic] Good evening, everybody, and welcome, again, for the quarterly conference call of Puravankara Limited. From the senior management, we’re led by Mr. Abhishek Kapoor, the CEO, Neeraj and Vishnu Moorthi. Gentlemen, congratulations, on yet another good quarter on pre-sales. And I hand it over to you for your initial comments.

Neeraj Gautam — Executive Vice President, Finance

Good evening, and welcome, once again, to Puravankara Limited’s earnings call for this third quarter. My name is Neeraj Gautam and I serve as the Executive Vice President of Finance at Puravankara Limited. I would like to thank you for joining us today. As a leading real estate company, we are proud to report our financial results for the last quarter and nine-month periods and we look forward to sharing our outlook and key initiatives with you. The results of quarter ending December 31, 2022, along with a comprehensive presentation have already been uploaded to the stock exchanges for your review. During this call, I will provide a summary of the key highlights of the quarter and nine-month periods and my colleagues and I will be available to answer any questions you may have. Additionally, we welcome any feedback or suggestions you may have.

We are glad to report that company has made a strong start to the current fiscal year and we are maintaining this momentum throughout the — this quarter. We are thrilled to announce that we have achieved a record high sales for the third quarter and for first nine months of this fiscal year, highlighting our strength in our markets. We believe and hope that we are at the peak of mortgage interest rate cycle. Amidst this uncertainty, high interest, and inflation in the western part of the world, our economy has shown resilience and the latest fiscal budget and monetary policy provide a stable outlook for our economy and growth. We see sustained and strong demand, particularly for Grade A developers. The government’s focus on infrastructure investment and housing for all, the budget is commendable. That steep hike in outlay for the P.M. Awas Yojana by 66% to INR29,000 crores will give the much-needed flip to the affordable housing sector. An estimated growth rate of over 6% for the Indian economy for next fiscal year is likely to support the current momentum of sales in the real estate sector.

Moving to the operational performance of the company. During the quarter FY 2023 — during the third quarter of FY 2023, collections from operations amounted to rupees INR742 crores, an increase of 87% compared to the same period in the previous fiscal year when collections were INR397 crores. On a nine-month basis, collections for FY 2023 reached to INR1,959 crores, a 78% increase compared to the same period in the previous fiscal year when collections were INR1,100 crores. Concurrently, operating outflows also increased by approximately 78%, reflecting increased spending on projects development to ensure timely efficient completion.

Coming to our debt management, our prudent launch strategy has resulted in a decreasing debt per square foot on construction area, demonstrating a CCM capital utilization. Over the last four years, debt per square feet — I would put an emphasis there, debt per square feet has decreased by approximately 49%, despite incurring additional debt of approximately INR100 crores for [Indecipherable] our net debt has declined to INR2,135 crores as of December 31, 2022.

Moving to our quarterly sales performance. We are happy to report that we achieved the highest-ever sales for third quarter of FY 2023 with a total of of INR796 crores, a 20% increase compared to INR666 crores in the same quarter of the previous year. We sold 749 units, covering an area of 1.02 million square feet during the quarter, a 3% increase from 690 units, covering 0.99 million square feet sold in the same quarter of the previous year. Our sales were primarily driven by ongoing projects with over 90% of our sales bookings coming from these projects during the quarter.

Moving to our financial performance for the quarter. Financial results in that third quarter of financial year 2023, our consolidated revenue was INR410 crores, which represents a 67% increase from INR246 crores in the same period the previous year. Our EBITDA for the quarter was INR128 crores, with an EBITDA margin of 31%. This is a significant increase of 51% compared to INR85 crores in the same quarter last year. Our net profit after tax was INR21 crores in Q3 FY ’23, a significant increase of 12 times compared to INR2 crores in the same period a year ago.

Coming to nine months’ performance. In terms of sales, the company recorded its highest-ever nine-month sales of INR2,100 crores, a 33% increase compared to INR1,576 crores during the same period the previous year. This was achieved by selling 2,078 units with a total area of 2.79 million square feet, which was 20% higher than 1,616 units sold in 2.32 million square feet for the previous year. Most sales came from ongoing projects. During the nine-month period, the collections from operations was INR1,959 crores, a 78% increase from INR1,100 crores in the previous year.

Coming to the consolidated revenue for nine months. During the nine-month period, company’s consolidated revenue was INR961 crores. The EBITDA for the same period was INR325 crores, resulting to an EBITDA margin of 34%. Additionally, the profit after tax for the nine-month period stood at INR35 crores. Debt reduction and surplus cash flow reflects company’s debt and financial stability. There has been a steady decrease in debt per square foot of the under-construction area. So, taking effective use of capital over the past four years, this debt per quite feet has been reduced by approximately 49%. Additionally, even though repo rate has risen by 225 basis points, in the 10 months, the cost of debt has gone slight — only slightly increased in our case. As on December 31, 2022, the balance receivables from sold units in all launched projects was INR2,643 crores, covering more than 75% of our remaining cost for under-construction projects, which was estimated to be INR3,517 crores. When combined with unsold receivables of INR5,641 crores from the launch projects, the company is projected to have a surplus of operating cash flow of INR4,767 crores, which is favorable in comparison to current net debt of INR2,135 crores. Furthermore, the company also has unopened inventory in existing projects with an estimated surplus of INR2,007 crores.

On the business development side, the company has successfully acquired approximately 100 acres of land in Chennai in the quarter for a planned plotted development project. The project is expected to be launched in next six months. And there are several other opportunities being considered for inclusion in the south and west.

In general, the Indian real estate market is demonstrating robust growth and resurgence with the new facilities arising due to system market conditions. The Indian economy is displaying stability, robustness, and we have a positive outlook on it. Our attention in — on our new projects, we will persist in expanding our operations while preserving a sound financial position. Our focus is on implementing environmentally, socially, and government’s responsible practices in delivering value for our stakeholders through openness, creativity, strong management, and brand recognition. We are optimistic of continued improvement in the long run and our capability to offer reliable, cost-effective, profitable, and responsible growth.

That concludes my statement. Thank you for all attending the conference call. Now we are open to answering your questions you may have. Thank you.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Aryan Sharma [Phonetic] from Infinity Capital. Please, go ahead.

Aryan Sharma — Infinity Capital — Analyst

Yeah. Good evening, sir. Thank you for taking my questions. So, my first question is, what is your revenue guidance for next around five years down the line?

Abhishek Kapoor — Executive Director & Chief Executive Officer

Good evening, Aryan. We don’t give guidance, Aryan, typically as a process. But as you are seeing the trend, typically, I mean, from last year to this year, if you look at our numbers, this year we already had INR2.100 crores of pre-sales, right? Now, these pre-sales keep accumulating and as delivery happens, they get converted into our revenue recognition, and therefore, into our — in terms of accounting showing us revenue numbers. So, as I said, currently in this year itself, we have launched about 4 million square foot already. We’re adding another 2 million square foot. The numbers that were shared by Neeraj a little while back — and in fact, if you look at our total revenue guidance in terms of the projects that have already been launched and will get launched is to the extent of total value is — total value that we are looking at in terms of adding in terms of 6 million square foot that we have looked at for the launch. Just the surplus — sorry, just the surplus itself, total top-line will be about INR4,500 crores, other than what is already under construction and the revenues that are to be collected from the under-construction projects. So, if you just look at the top-line that we will add with 6.28 million, it’s INR4,500 crores. So, you can estimate that these projects will get completed between three to four years. Then we are adding — they’ve given a launch pipeline of another 16 million square foot, that will again add revenue potential. So, potentially, you can calculate what kind of numbers we’ll be achieving on an annualized basis.

Aryan Sharma — Infinity Capital — Analyst

Yeah. So, that would give me the answer for the guidance, I guess. So, now the guidance number, what would be the targeted debt levels [Indecipherable] so if you can shed some light on that?

Abhishek Kapoor — Executive Director & Chief Executive Officer

So, our target is to continue to maintain debt-equity level of under one. And as we have seen on a per-square-foot basis, we have brought down our debt numbers from about INR2,500 a square foot to INR1,291 a square foot. That’s shared on Slide Number 30. Of course, given the fact that while we have reduced the net debt from INR2,144 crores to INR2,135 crores last quarter, we have also acquired land. So, on an overall basis, if you look at it, the debt has gone down in the last quarter by about INR109 crores. So, it’s a constant process in our business. Debt is something that works for us at a certain optimum level. So, we are bringing those efficiencies in our cost of capital, and at the same time ensuring that the growth doesn’t get compromised. So, while the debt per-square-foot number will continue to decrease, and as I said, we are launching another 2 million in this quarter, we are launching another total of 16 million before the March of next quarter, I mean, you can look at the per-square-foot debt coming down. And therefore, that adds a lot of value. And going forward, naturally, with its own tendency, the residential debt will continue to come down.

Aryan Sharma — Infinity Capital — Analyst

Okay. Thank you, sir. My next question is on the Mumbai market. How was the response and how do you see the Mumbai market’s current and future potential?

Abhishek Kapoor — Executive Director & Chief Executive Officer

I’m sorry?

Aryan Sharma — Infinity Capital — Analyst

The Mumbai market.

Abhishek Kapoor — Executive Director & Chief Executive Officer

So, Mumbai market, our — we have a dedicated team that we have built for the Mumbai market. And we are looking at new acquisitions. Multiple proposals are under the acquisition discussions. And we are looking at redeploying a lot of capital in that market between Mumbai and Pune. So, as we go ahead, over next two to three years time frame, you will see a clear shift in our acquisitions, and therefore, over a period of time in our launches. So, our goal is to increase, and over the next three- to five-year time frame, go up to 30% to 40% of our pre-sales coming from that market.

Aryan Sharma — Infinity Capital — Analyst

Okay. Noted. And a last question if I can add is, can you shed some light on the commercial projects and the what would be the commercial and residential mix in the years to come?

Abhishek Kapoor — Executive Director & Chief Executive Officer

So, our overall — from a group’s point of view, I’ll just give you a broad guideline of how we look at our revenues or pre-sales number coming from. About 35% of our business will come from Puravankara, 35% will come from Provident. Of course, the square footage in Provident will be higher because per-square-foot realization would be lower compared to Puravankara. About 20% of our business will continue to come from project development and about 10% will come from commercial. Having said that, obviously, commercial, there will be a leave-and-pull strategy other than one project that we have right now which you’re looking at started selling. So, as we go along, that number will increase.

Aryan Sharma — Infinity Capital — Analyst

Okay, sir. Thank you, and all the best for the future.

Abhishek Kapoor — Executive Director & Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Mihir Desai from Desai Investments. Please, go ahead.

Mihir Desai — Desai Investments — Analyst

Thank you for the opportunity. Sir, congratulations for good set of numbers. So, my first question would be around EBITDA margins. So, if you can give some color on how the EBITDA margins and PAT margins are going to be, or what is your expectations for each project, or I must say, product mix?

Neeraj Gautam — Executive Vice President, Finance

See, if you look at our current EBITDA margin is at 34% for the quarter. And typically in our Puravankara projects, we have an EBITDA margin of 30% to 32%. In Provident projects, we earn an EBITDA margin of 22% to 25%. In plotted projects, we earn EBITDA margin of 35% to 40%. That’s broadly EBITDA margin for different products. As far as PAT is concerned, PAT is a function of multiple things. It’s all — as you know, that interest account, revenue recognition, and profit reporting based on accounting is [Indecipherable], PAT will be the function of the kind of operating expenses we are incurring in a quarter, sales and marketing overhead, which have been the kind of units and number of units we are delivering in the particular quarter and we are recognizing the deal. I hope that clarifies your — my answer — your query.

Mihir Desai — Desai Investments — Analyst

Yes, sir. Sir, one another query [Technical Issues] tell is what is the…

Operator

Mihir, sorry to interrupt you, but we are losing your audio. May I request you to come in a better reception area, please?

Mihir Desai — Desai Investments — Analyst

Yeah. Is it better now?

Operator

It’s still the same.

Mihir Desai — Desai Investments — Analyst

Okay. Hello?

Neeraj Gautam — Executive Vice President, Finance

Yeah. Please, go ahead.

Mihir Desai — Desai Investments — Analyst

Yeah. So, sir, if you can also give an indication on how much is our ready-to-move inventory left from our newly-launched projects?

Neeraj Gautam — Executive Vice President, Finance

If you look at our place — in our investor presentation, Slide Number 40 — Slide Number 34 and 35, our ready-to-move inventory is very less, with 0.29 million square feet left, and our inventory from ready — our inventory from ongoing projects as seen on December 31, 2022 was 6.9 million square feet.

Mihir Desai — Desai Investments — Analyst

Okay. Fair enough. So, sir, supply shouldn’t be a constraint for us, right?

Neeraj Gautam — Executive Vice President, Finance

Of course, not. And what it means, inventory left only for 0.29 million square feet means is over the last 2 and 2.5 years, we have completely sold our ready-to-move-in inventory. And right now, our launched projects inventory is already 6.9 million square feet, which is a good decent inventory. Besides this, as Abhishek mentioned sometime back, this financial year itself, we are adding another 2.5 million square feet by launching new projects in Q4. Besides that, our launch pipeline is at — on Slide Number 20, which gives information that 16 million square feet we are targeting to launch in the next 12 month period from now. And hence, there will be now dearth on supply at the different product segments from Puravankara, Provident and plotted developments.

Mihir Desai — Desai Investments — Analyst

Okay, sir. Sir, lastly on cash flows. Sir, can you give some projections of cash flows for, say, two-three years down the line?

Neeraj Gautam — Executive Vice President, Finance

If you look at our Slide Number 25, which gives us kind of trend that what kind of cash flow we are been generating quarter-on-quarter basis on nine-month basis or year-on-year basis, we have been generating operating surplus for last few years by now. If you look at the nine-month period, we — our cash flow from operation has grown by 78%. And trend is very visible. Every quarter we are surpassing substantially previous quarter collections. Now, what kind of cash flow we can generate, A, is the trend you can see by spending on construction and development cash flow is coming. Beside that, if you look at our Slide Number 37 in our presentation, that gives us kind of estimate the potential of cash flow which our business can generate in next financial year, in some two, three years.

Mihir Desai — Desai Investments — Analyst

Sir, that’s all from my side. If I have more questions, I’ll join the queue.

Operator

Thank you. [Operator Instructions] The next question is from the line of Ronit [Phonetic] from Sharekhan Limited. Please, go ahead.

Ronit — Sharekhan Limited — Analyst

Yeah. Good evening, sir, and congratulation on good numbers. Sir, my first question was on this new business development. So, can you elaborate what kind of developable area will be there for the Chennai project? And how much money has been spent on this project and how it was funded?

Abhishek Kapoor — Executive Director & Chief Executive Officer

So, it is 100 acres. Total deployment in the project is about INR200 crores. We are looking at generating a little over 3 million square foot of development area. And the total development potential will be about INR750 crores.

Ronit — Sharekhan Limited — Analyst

Okay. Great. And you also highlighted that it would be launched in the next six months. So, has the management been looking for business development, which can be launched at a much faster pace, say, within six months or is there kind of a gap in timeline to affect for that new business development to come to the lunch pipeline within six months or say within nine month’s period?

Abhishek Kapoor — Executive Director & Chief Executive Officer

You are absolutely right. So, one clear business development parameter which we looked at before deploying any capital is that the project should be launched within six to nine months from the date of deployment. So, all our new acquisitions in Provident, Puravankara or Purva Land are focused on ensuring that we have visibility on the sanctions, which is in a shorter period of time so that we can take the project to markets.

Ronit — Sharekhan Limited — Analyst

Great, sir.

Abhishek Kapoor — Executive Director & Chief Executive Officer

And in terms of the acquisition strategy, we are looking at both land joint development, both the opportunities, both in terms of greenfield and brownfield projects which are coming our way. So, on both asset-light and capital deployment side, acquisitions side we’re looking at it. So, that’s the broad structure.

Ronit — Sharekhan Limited — Analyst

The related question would be, sir, you’ve generated strong cash flows and debt levels are comfortable. So, have you put a number to the cash flow that X amount of this cash flows will be used in business development and this much percentage should go in construction? So, what kind of money you’ve spent per annum, say, as a percentage of cash flows or whichever way you want to project it?

Abhishek Kapoor — Executive Director & Chief Executive Officer

So, if you just simply look at the last nine months’ number, where we generated an operating inflows of about INR2,000 crores, the total operating — total land payments made were about INR200 crores. We see this kind of trend continuing in terms of our acquisition strategy. We’ve continued to deploy money into new acquisitions other than, of course, operations and some capital goes towards debt reduction, etc., but we will continue to deploy this kind of money.

Neeraj Gautam — Executive Vice President, Finance

There will be no fixed percentage, however, as Abhishek mentioned, business development is also important. At the same time, we — our cash flow and outflow — operating outflow presented on Slide Number 25 gives some details that what kind of focus we have on completing the construction of our ongoing projects, and deploying our collections towards constructing and completing our projects. Hope that clarifies your question.

Operator

Sir, the line for the participant dropped. We move on to the next participant. Next question is from the line of Srinath Nandi [Phonetic] from RFI Fincap [Phonetic] Please, go ahead.

Srinath Nandi — RFL Fincap — Analyst

Sure. Hi. Very good evening, everyone, and congratulations on the numbers. Sir, I want to understand how are the Mumbai projects from a diversification perspective, how are our Mumbai projects performing and what are the growth plans for Mumbai as well as western as a micro-market in terms of new flat launch plans?

Abhishek Kapoor — Executive Director & Chief Executive Officer

So, we have launched two projects in Mumbai, one under the brand Puravankara in Chembur, called Clermont, and another one in Shilphata, Dombivli called Palmvista. For our expansion plans, we are looking at multiple strategies, we are looking at outright as well as JDA structures and society redevelopment. So, we are — we have a robust pipeline of projects in all three areas. And depending on the kind of margin and the kind of action because we are very much focused on ensuring that we have profitable business, and keeping in mind our strengths, we are looking at all three categories of projects, which is JDA, outright, and society redevelopment. Each has its own advantage and we will go with what kind of feasibility we see in the pipeline. And we will see this deployment happening over next 18 to 24 months.

Srinath Nandi — RFL Fincap — Analyst

Yeah, sir. Thank you so much.

Operator

Thank you. Next question is from the line of Anushka Gadhvi [Phonetic] from Value Investments. Please, go ahead.

Anushka Gadhvi — Value Investments — Analyst

Hello. Yes. Sir, thank you for the opportunity and congratulations on a very good set of numbers. Sir, I had a couple of questions. So, we are seeing interest rates rising. Have you noticed a decrease in, say, traffic to the site? Any particular trends that you’ve noticed? And say, if the rates were to rise further, at what point do you think it will start affecting our demand?

Abhishek Kapoor — Executive Director & Chief Executive Officer

So, I think two things. If you look at our sales, almost 80% of our sales — over 80% of our sales are in the sub-INR2 crore bracket, right? And you can see that and refer to Slide Number 14 and that’ll give you a breakup of the geography, the average ticket value of our units. So, in terms of increasing interest rates for now, to answer your question, we haven’t seen any decrease in demand because of increasing interest rates, as you can see that in the numbers. Also, we believe that we are now in the tapering off-cycle of the increasing interest rates and the last increase is at 25 bps. We are hopeful and positive that there may be no further increases from RBI. Having said that, the impact of this increase, which is happening on the repo rate and the EMI, if you look at, and you do the numbers, the math stacks up in a way where increments of salaries and income on an annualized basis versus increasing EMIs easily get enough headroom for customers to continue to buy. And the other factor which is very interesting, which we have seen is that the consumers are now very, very aware that over a buying cycle which lasts almost 15 years to 20 years, though average repayment now has come down between 11 to 15 years for loans, bank loans, consumers have become really, really sharp in knowing how they want to manage their cash flows and how they want to repay their loan because there’s a lot of flexibility today available with banks in terms of the product itself. So, on an overall basis, our view at this point in time is even if there is an impact, it will be marginal. And for now, we are not seeing any real change on the ground.

Neeraj Gautam — Executive Vice President, Finance

And besides this, for our Provident customers by the break in the income tax per year limit that government has announced the increase in taxable limit for — in this project, that will also leave some more money in the hands of our customers, and that will enable them to set up any — increase any EMI because of increased interest rates.

Anushka Gadhvi — Value Investments — Analyst

Sure, sir. That’s very helpful. Sir, another thing. Do you have any new locations for integrated development like in Delhi NCR or any others?

Abhishek Kapoor — Executive Director & Chief Executive Officer

From geography point of view, we’re very focused on south and west. Our goal or general focus is on five markets, which is Chennai, Bangalore, Hyderabad, Mumbai, and Pune. The rest of the markets, we will continue to deploy more opportunistically. As far as north is concerned, that plan is always on the handle. But we haven’t really moved in that direction at this point in time. Our clear focus is to go deeper in the markets we are present in. And of course, right now, where take focus is on the west, so we want to scale up the west business as we speak.

Anushka Gadhvi — Value Investments — Analyst

Sure, sir. Got it. Okay. Sir, just one more, if I could squeeze. Sir, what is the outlook for JDA with regard to, say, new project acquisitions over the next one or two years? And do you think the field is becoming more competitive from a bidding perspective?

Abhishek Kapoor — Executive Director & Chief Executive Officer

That’s a healthy way of actually doing business development. It should be a healthy mix between outright [Technical Issues] deal in land and that gives us opportunity to developers like us. But as consolidation has happened, there aren’t enough developers in the market who everybody will trust. So, as you may see the consolidation has happened in consumer demand, it’s happened in capital, and it’s also happened in land. So, the number of people who are approaching the developers because there are limited number of developers, it is much higher. So, we don’t see that as a challenge at all for a strong brand like ourselves.

Anushka Gadhvi — Value Investments — Analyst

Sure, sir. And so, would you be able to share the total revenue breakup of Purva Streaks and Starworth?

Abhishek Kapoor — Executive Director & Chief Executive Officer

I think [Speech Overlap] yeah, we can the share that detail offline. But yeah, I think for us the big focus is really Starworth and we will continue to see growth happening there. We can share that separately.

Anushka Gadhvi — Value Investments — Analyst

All right, sir. That’s it from my end. Thank you so much and best of luck.

Abhishek Kapoor — Executive Director & Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Harish Shah from HS Capital [Phonetic] Please, go ahead.

Harish Shah — HS Capital — Analyst

Hello?

Abhishek Kapoor — Executive Director & Chief Executive Officer

Yes, Harish. We can hear you.

Harish Shah — HS Capital — Analyst

Hello? Yeah. Thanks for the — yeah. [Technical Issues]

Operator

Hello, Harish? Your voice is breaking.

Harish Shah — HS Capital — Analyst

[Technical Issues]

Operator

Harish, I can hear you but your voice is breaking. May I request you to come in a better reception area or rejoin the queue, please?

Harish Shah — HS Capital — Analyst

[Technical Issues]

Operator

We will move onto the next participant. The next question is from the line of Nikita Mehta from Newlands [Phonetic] Please, go ahead.

Nikita Mehta — Newlands — Analyst

Yeah. Good evening. Thank you so much for the opportunity. I just had a couple of questions [Indecipherable] I just wanted to check what are your thoughts on the current market, Mumbai market potential? And how do you see this growth further? Just your thoughts on this.

Abhishek Kapoor — Executive Director & Chief Executive Officer

So, we believe that Mumbai market is poised for continuous growth. Multiple infrastructure initiatives are currently underway, which we believe will make a huge difference to the movement of people and therefore economic activity in Mumbai, whether it is the Coastal Road or whether it is Nhava Sheva-Sewri Link, or the new airport or the metro stations or the new flyovers connecting BKC. So, there is tremendous infrastructure that is going on in Mumbai. And we believe that that will make it the livability and the quality of life will significantly improve for people in that market and it will continue to attract talent and people as the city becomes larger and larger megapolis. So, we believe there is a huge opportunity in Mumbai and that’s why we want to be there. And we think that the market is going to continue to grow.

Nikita Mehta — Newlands — Analyst

Okay. Sir, and also what is the breakup in terms of JV own development and development in terms of total sales? And do we see changing this mix or are we going to continue with the same?

Abhishek Kapoor — Executive Director & Chief Executive Officer

I think this information we can share offline. But it’s — on a broad stroke, I can share with you that our strategy on all three counts will continue. Of course, in Mumbai, we will be a lot more focused on society redevelopment.

Nikita Mehta — Newlands — Analyst

Okay. And sir, what are the deal levels that you’re looking at, like any guidance in there, sir?

Abhishek Kapoor — Executive Director & Chief Executive Officer

In what sense, would you elaborate? Deal size you are saying?

Nikita Mehta — Newlands — Analyst

Yes, sir.

Abhishek Kapoor — Executive Director & Chief Executive Officer

Okay. So, for us, the sweet spot is anywhere between 1 million to 2 million square foot. That’s the majority of our transactions. Ideally, the target is that a minimum of INR750 crores, INR800 crores of top-line should be there to make it viable for us to put our time and investment and effort in the business in a particular project, so that it’s remunerative enough for the organization to participate in the project. But if it is a city center project, we can make some exceptions, if it’s a marquee project. But generally speaking, that’s the kind of evaluation criteria we put. Some of our projects are very large, which will be in excess of 5 million, 6 million square foot. But they are fewer. But focus really of BD is to look at projects between 1 million to 2 million square foot.

Nikita Mehta — Newlands — Analyst

All right, sir. That has really helpful, sir. Sir, any follow-up questions, I’ll join back in the queue. Thank you.

Operator

Thank you. Next question is from the line of Vaibhav [Phonetic] from VK Capital. Please, go ahead.

Vaibhav — VK Capital — Analyst

Hi, sir. I wanted to understand both the EBITDA margin level, what kind of cost do we see going forward on a sustainable basis and how much of the interest cost would be normally?

Neeraj Gautam — Executive Vice President, Finance

As you know, the interest in the case of — our case is of borrowing costs for inventory. So, whatever interest we are incurring, it simply gets capitalized to the inventory. EBITDA margins, as I mentioned, for we are pushing off some other participants, at a Puravankara level, our EBITDA margin will be close to 30% to 34%. For Provident Housing Limited, our EBITDA margin will be in the range of 20% to 25%. For Purva Land business, our EBITDA margin will be — would be in the range of 35% to 40%. That is, EBITDA margin broadly what we are operating in our different product segments. If you look at our EBITDA margins over the period — over a period of time, quarter-on-quarter or year-on-year basis, that is also ranging in the same range. As I mentioned about interest, interest is essentially part of our inventory and gets capitalized as and when we incur.

Abhishek Kapoor — Executive Director & Chief Executive Officer

Just to add, in terms of other costs, overheads do go up, but they go up marginally, but the volumes can go up significantly, because the leadership team that is already put in place doesn’t require too much addition. What you — what we have already built in last two years of the organization structure and hiring of some senior leadership positions, we have spoken about it in the past and you can refer to some of our earlier conversations, that team is capable of — has brought significant bandwidth. And that’s the reason we are looking at the kind of scale of launches that we are working towards. So, in terms of bandwidth, at the leadership level, I think we are well-equipped and organization structure is very well-equipped, systems processes is well-equipped. So, more or less, we are talking about people who will be hired at a mid-management to lower-management level. And therefore, the overhead costs, we don’t expect to significantly increase with the increased volumes.

On other costs, most of the other costs are pro rata to the project. So, I think that will be in line with the kind of business that we are looking at doing.

Vaibhav — VK Capital — Analyst

So, as a percentage of sales, how much would interest be on a sustainable basis?

Abhishek Kapoor — Executive Director & Chief Executive Officer

So, if you look at this year’s numbers, we were at — we are at about INR2,100 crores as of now. And our interest cost as of now, year-to-date, is about INR257 crores.

Neeraj Gautam — Executive Vice President, Finance

And I would like to tell that interest as a percentage of sales is not an appropriate metric to look at. Interest we are incurring to funding the construction cost. And on an overall basis, if you look at that from a square feet basis what kind of interest we are incurring, it’s ranging from INR250 per square feet to INR400 and INR450 per square feet interest costs were are incurring for developing a project.

Vaibhav — VK Capital — Analyst

No, but what interest you are paying on ongoing projects will be capitalized, right? So, I’m saying as a percentage of the sales which you are booking, what is the trend…

Abhishek Kapoor — Executive Director & Chief Executive Officer

If you look at our average realization is about INR7,500 to INR8,000, and the interest cost, as Neeraj mentioned, is about INR400 to INR450, you’re looking at about 5% to 6% of the top-line as your interest cost.

Vaibhav — VK Capital — Analyst

Okay. Got that. Yeah, that’s what I was trying to figure. And secondly, if our EBITDA margins are somewhere between 25% and 30%, so these are margins before overhead, the thing?

Neeraj Gautam — Executive Vice President, Finance

EBITDA margin is always after overhead, after meeting all our costs.

Vaibhav — VK Capital — Analyst

So, that’s what my earlier question was. So, if we take EBITDA margins at this level and then interest is another 5%, 6%, depreciation would not be much, right? So, then what kind of PBT margins are we targeting?

Unidentified Speaker —

What is current PBT margins?

Abhishek Kapoor — Executive Director & Chief Executive Officer

So, I think the right way to answer that question is also on the mix of what is hitting your revenue recognition. So, in a JDA, typically, your margins are slightly lower because you are deploying lower capital. In outright, your margins are much higher because you’re acquiring outright. So, on an overall basis, if you look at it, I think net of these numbers, it obviously, depending again, on the mix of the inventory which is getting recognized on delivery, you will look at the number moving anywhere between 12% to 15% as a number.

Neeraj Gautam — Executive Vice President, Finance

[Indecipherable] Our PBT after EBITDA margin would be about 20%, in the range of 18% to 20% will be our PBT at a project level. However, when you are looking at my P&L statements, here the PBT is coming, but that top-line is coming from the revenue we recognize from the units which we have handed over. However, expenses which is being charged to that arriving at the PBT or EBITDA is the all operating expenses, sales and marketing services expenses which are incurred in the period. And hence, the EBITDA margin, which is coming out of — or the PBT is coming out of the profit and loss statement, it is not a reflective of the PBT which you’re making at a project level.

Vaibhav — VK Capital — Analyst

Okay. I understood that. That I understood. But then — so that means at the P&L level, even the EBITDA margins will be lower because we are booking more expenses and overhead right now?

Abhishek Kapoor — Executive Director & Chief Executive Officer

Because new launches are there and [Speech Overlap]

Vaibhav — VK Capital — Analyst

Exactly. Understood.

Abhishek Kapoor — Executive Director & Chief Executive Officer

…I think that a lot of those expenses get booked right now. So [Speech Overlap] of course. And then you add all the other overheads that have to be booked on an annualized basis. We can’t capitalize those, right? So, therefore you have that — the impact on the PBT.

Neeraj Gautam — Executive Vice President, Finance

And then we can correct offline, the profit will accrue to the P&L as and when we — right now, the under-construction inventory which we are developing and inventory which we’re planning to launch, all the inventory will start completing handing over capitalizing, profitability keeps flowing in the P&L statements.

Vaibhav — VK Capital — Analyst

Right. Of course, I understand. So, by when do we expect that P&L revenue recognition will be somewhat close to pre-sales in the next two, three years maybe, like at least it should be 70%, 80%?

Neeraj Gautam — Executive Vice President, Finance

No. Definitely, next two years.

Vaibhav — VK Capital — Analyst

Next two years? So, then…

Abhishek Kapoor — Executive Director & Chief Executive Officer

Two to three years.

Neeraj Gautam — Executive Vice President, Finance

Two to three years, after two years.

Abhishek Kapoor — Executive Director & Chief Executive Officer

Yeah. So [Indecipherable] coming in.

Neeraj Gautam — Executive Vice President, Finance

That cycle [Speech Overlap]

Vaibhav — VK Capital — Analyst

So, by FY ’26, I think our P&L will more or less reflect our operations — operating profits in that sense, right?

Abhishek Kapoor — Executive Director & Chief Executive Officer

Yes, correct.

Vaibhav — VK Capital — Analyst

Okay. Got it.

Neeraj Gautam — Executive Vice President, Finance

And this financial year also on a nine-months basis, we have reported a profit. And last — if you look at last nine-month period also we reported a profit of INR158 crores. However, it’s not coming straight with kind of things we have done. Those profits will reflect as and when you start handing over, as you mentioned, after two or two and half years, we will start getting position. Those — profits from these current sales will come to the [Indecipherable]

Vaibhav — VK Capital — Analyst

Sir, this nine months, what are our sales and profits?

Neeraj Gautam — Executive Vice President, Finance

[Speech Overlap] also become consistently coming, right? So, because we’re launching, every quarter you will be delivering every quarter as you go out. That cycle also gets stabilized over next three-year time frame.

Vaibhav — VK Capital — Analyst

Of course. I understand. And sir, this nine months, what is our P&L sales and profit? And why is it so low?

Neeraj Gautam — Executive Vice President, Finance

P&L in this nine months? This nine months, we have our top-line INR960 crores and PAT is INR35 crores. This is because we have handed over only 548 units during last quarter. On a nine-month basis, 1,065 units. In the last nine months, we have handed over 1,065 units only. And that is why revenue from these handed over projects is less, which is INR960 crores on total revenue basis. And as against this income, all overhead, all the sales and marketing expenses for our [Indecipherable] projects have been charged. And thereby, the profit is less.

Vaibhav — VK Capital — Analyst

Understood perfectly, sir. So, how much would this overhead and launch expenses number be? Any idea approximately, like INR100 crores additionally compared to…

Neeraj Gautam — Executive Vice President, Finance

It’s part of our other expenses schedule, which you can refer in the Dunkin’ RevPAR in the [Indecipherable] However, in offline, I can send the detail to you.

Vaibhav — VK Capital — Analyst

Understood. Thank you. Thank you so much. Understood.

Operator

Thank you. Next question is from the line of Tanushree Mehta [Phonetic] from Insight Securities. Please, go ahead.

Tanushree Mehta — Insight Securities — Analyst

Hi. Good evening. Thank you for taking my questions. Sorry, if this was asked earlier, just wanted to know, how many square feet do we plan to launch in the current calendar year, 2023 added?

Abhishek Kapoor — Executive Director & Chief Executive Officer

We are looking at 16 million square foot of total launch. And you can refer to the launch pipeline Page Number 20 from the…

Neeraj Gautam — Executive Vice President, Finance

Investor presentation.

Abhishek Kapoor — Executive Director & Chief Executive Officer

… yeah, ICP, yeah.

Neeraj Gautam — Executive Vice President, Finance

Refer Page Number 20 from ICP. That gives detail of our launch plan for next 12 months. And you can also refer our Slide Number 19 for the projects which we have launched in last nine months and which we are launching in the next two months for this financial year.

Tanushree Mehta — Insight Securities — Analyst

Got it. Understood. Just one more question. How is the price ranging across our projects? And any specific locations where you are witnessing the price appreciation?

Abhishek Kapoor — Executive Director & Chief Executive Officer

So, if you see overall year-on-year average price increase, it’s about 15%, if you look at the Slide 12. It’s a mixed bag of price appreciation. We have had it across all products, Provident, Puravankara, and Purva Land, and of course, on the stage of the cycle of the project and the inventory available. So, in certain micro-markets, we see where we have lesser inventory and high sales, the prices have gone up much higher in certain markets where there is larger inventory, but — and the volumes are also large but there is — prices are inelastic there, the prices have not gone up so much. But on an overall basis, you can see that we have increased the prices by about 15% year-on-year basis.

Tanushree Mehta — Insight Securities — Analyst

Understood. Thank you. Thank you for answering. I’ll get back in the queue.

Operator

Thank you. Next question is from the line of Harsh Parekh from SMC Global. Please, go ahead.

Harsh Parekh — SMC Global — Analyst

Yeah. Hi. Congratulations on the good set of numbers. My first question is with respect to the land purchase INR185 crores, I think. Can you just — sorry, INR138 crores of land payment which have been made. What is this land payment for? And my second question is with respect to the mix of JV, JDA and own development in total sales. Is there anything you’re changing with — in YTD?

Abhishek Kapoor — Executive Director & Chief Executive Officer

So, this investment as I mentioned earlier on the call, is towards the plotted development, wherein total of about 100 acres has been acquired. And we have — we are looking at a total potential of about 3 million square foot, over 3 million square foot in this development. And this is a plotted development and we’re looking at a revenue potential of over INR750 crores as far as this is concerned. Now from the point of view of going forward, as I mentioned earlier, not every project can be acquired out front. We’re well aware of that. So, we look at selectively the best opportunities in terms of acquiring projects as in purchase of land. And then we look at the JDAs on a year-to-date basis where we believe that our margins are healthy enough to look at the opportunity. And that is an asset-light model and it continues to be the larger portion of our volumes in terms of acquisition because that’s an asset-light model. But having said that, the margins are bigger in outright. So, we will have a healthy mix of both.

Harsh Parekh — SMC Global — Analyst

Okay. And regarding the AIF status, what is the status as of now?

Abhishek Kapoor — Executive Director & Chief Executive Officer

So, in the AIF, we have done the first deployment, which is already done. We are looking at a second deployment and in fact the project is expected to launch between six to nine months from now. And for the second deployment, we are already in process in the final stages. We are expecting to deploy the second round within — by the end of this quarter. And then of course, there are other projects which are under evaluation. So, we should be fully deployed in next six to nine months for the AIF. And we should start seeing revenues in the AIF coming back within next six to nine-months time frame. So, I think it’s on track. Of course, we believe that as the revenues start picking up there and we start returning capital, that will be a great platform to go back and raise further capital from.

Harsh Parekh — SMC Global — Analyst

Okay. Thank you.

Operator

Thank you very much. Next question is from the line of Samar Sarda from Axis Capital. Please, go ahead.

Samar Sarda — Axis Capital — Analyst

Yeah. Thanks, Neeraj. I thought we’ll probably close it with a couple of questions from my end. It would be on this debt per square feet you’ve highlighted this time in your presentation, I’m assuming it is debt per square foot of area under development, which is 24 million square feet? Hello?

Operator

The line for the management dropped. Please stay connected, sir. Ladies and gentlemen, stay connected while we join the management back to the call. Participants, thank you for your patience. We have the line for the management reconnected.

Samar Sarda — Axis Capital — Analyst

Yeah. Hi. Mr. Moorthi?

Abhishek Kapoor — Executive Director & Chief Executive Officer

Hi, Samar. Yeah, Abhishek here. Sorry, we missed the last piece. The line dropped.

Samar Sarda — Axis Capital — Analyst

So, before I checked like this, debt per square feet you’ve highlighted this time around, I’m assuming the debt per square feet is — the denominator is area under construction, which is 24 million square feet, right?

Abhishek Kapoor — Executive Director & Chief Executive Officer

Correct.

Samar Sarda — Axis Capital — Analyst

Now, it will also have a lot of plotted development which we’ll increase going ahead. My question really was, isn’t debt-to-cash flow or debt-to-collections a more better phenomenon, because if I see like from a sales perspective, of course, the last two years have been good. But if there is a year of bad sales or bad collections, we end up borrowing for paying for servicing interest, interest cost has jumped quite a bit in the nine months of this fiscal year. Why wouldn’t we do that and take debt per square feet as the metrics because — shouldn’t that be better as the industry following?

Abhishek Kapoor — Executive Director & Chief Executive Officer

So, I’ll answer it in two parts. One is, of course, this debt per square foot we have calculated on the denominator of about 16 million square foot, which is on Page 35 of the ICP. The second is, you are right, that is also a matrix with we set benchmark. And if you look at our cash flows versus our debt numbers, they’re significantly improving as I think Neeraj spoke about it a while back. And on an ongoing basis, our view is — if you see in other slides that we have got on the debt pieces, the profiling of the debt, right? Now, if you look at the profiling of the debt, it talks about how much debt is already being — is currently being — is part of residential. And then this is self-liquidating. And how much is going towards capex in commercial and how much is going towards land. So, in our view, over a period of time, as we increase the volumes and we hold the debt at the same level, if you see consistently have been holding the debt at the same level or a similar level, especially, the residential debt has continued to reduce. So, what we’re trying to indicate from this particular slide is that on an overall basis, there is consistent reduction of debt. Even in an absolute number, if you look at it for last four years, the debt has been reduced from INR3,000 crores to about INR2,000 crores. So, there is a consistent conscious effort. At the same time, growth is important. And therefore, increasing volumes is extremely important for us, and therefore, this is resulting into cash flows. But having said that, I think debt per square foot gives you another marker to look at on what is the kind of area which you are constructing, what is the kind of cover and revenue potential you have from the business that you’re doing and where in that context debt fits in. So, that’s where we see it as one of the matrices which can help. Of course, you’re right. The other two matrices also can be evaluated and we should look at it as a healthy mix of…

Samar Sarda — Axis Capital — Analyst

Okay. Just a follow-up on this slide, if I take a more smaller period, say from FY ’21, obviously, from FY ’19, we brought down our debt from INR2,900 crores to like INR2,500 crores. And again, we’re nearly INR2,600 crores. Going ahead, you will have more area under construction as you expand into these four markets, five markets. Do you have a number in mind for your absolute gross debt in the near term, because even if you have debt allocated to land, it is your ongoing projects which are going to service it.

Abhishek Kapoor — Executive Director & Chief Executive Officer

So, let me answer that in two parts. One is, we intend to keep the debt at similar levels where we are at. And if you see consistently, we are holding it at a similar level. The other is the debt profile will change in the sense, as I mentioned earlier, if you’re taking against — for land acquisition, the debt is clearly — couldn’t get service within six to nine-months time frame because that’s the target. The second is that the capex that is going towards commercial is creating an asset and obviously potential lease rentals and therefore it is a capex. In that sense, that is going up. So, if you look at the debt profile, you have to look at a little more deeply and understand where we are at. As I said it earlier also in the in the conversation, that on an overall basis, on the residential, the debt has actually come down. And where have we deployed? We have deployed in a profit development there. The turnaround of the cash flow would be much faster. So, I think on an ongoing basis what’s important for us is all the absolute debt increase your top-line, increase your cash flows, continue to do the launches, and then the number starts looking very, very different over a period of time.

Samar Sarda — Axis Capital — Analyst

Okay. And going back to Slide Number 26, we have a big increase with respect to the operating outflows. What will be the breakup with respect to construction and corporate overheads, other expenditure for this nine months because you’ve expanded the team quite well?

Abhishek Kapoor — Executive Director & Chief Executive Officer

Samar, we can share that offline with you. But the point is that whatever deployment of capital is happening or operating outflow is happening is obviously generating significant upside on the collections. So, clearly, majority of the money is going towards…

Unidentified Speaker —

Construction [Speech Overlap]

Samar Sarda — Axis Capital — Analyst

Okay. I’ll stop here. Thank you for answering this. Thank you.

Abhishek Kapoor — Executive Director & Chief Executive Officer

Thank you, Samar.

Operator

Thank you. Next question is from the line of Vaibhav from VK Capital. Please, go ahead.

Vaibhav — VK Capital — Analyst

Sir, one question like, what is the kind of square footage sales which we are looking at over the next few years? So, right now, I think we are at 1 million for this quarter, right?

Abhishek Kapoor — Executive Director & Chief Executive Officer

Yes, we’re at 1 million for this quarter. So, as I said, our typical run rate is dependent on new launches and on the sustenance business. Our increased effort towards adding new launches which is to the tune of almost 16 million square foot in the coming year. And adding to that, what is going on in the sustenance business which continues to churn the sales number for us, we’ll obviously give you a direction in what we look at as a volume. We don’t give guidance, we don’t give forward-looking statements in that sense. But you can calculate from your own methodology on what the trend has been over the last three years. And as we go forward, as we launch 16 million square foot, of the phases that we launch, we typically sell anywhere between almost 40% to 50% in the first financial year of the phase that we have opened. So, if you do the numbers, you’d obviously get a sense that we are on a high-growth path.

Vaibhav — VK Capital — Analyst

So, out of the 16 million, how many — what percentage of that will be launched in terms of the phases which are being launched?

Abhishek Kapoor — Executive Director & Chief Executive Officer

Again, I think we can share that offline. But almost — you can assume anywhere between 6 to 8 million square foot would be in the launch.

Vaibhav — VK Capital — Analyst

Launch phase? Got it. Okay.

Abhishek Kapoor — Executive Director & Chief Executive Officer

Thank you.

Operator

Thank you very much. As there are no further questions, I will now hand the conference over to the management for closing comments.

Neeraj Gautam — Executive Vice President, Finance

I would like to express my gratitude for your participation in this conference call. If you have any additional questions or would like to continue the discussion, please feel free to reach out to us in the coming weeks. Wishing everyone a fantastic weekend and a Happy Valentine’s Day. Thank you very much.

Operator

[Operator Closing Remarks]