Puravankara Ltd Q2 FY24 Earnings Conference Call Insights

Key highlights from Puravankara Ltd (PURVA) Q2 FY24 Earnings Concall

• Business Performance
  • Achieved highest ever quarterly sales value of INR1,600 crores in Q2 FY24, a 102% increase from INR791 crores in Q2 FY23.
  • Sales attributable to Purvankara brand was INR736 crores, Provident brand was INR740 crores, and Purva Land was INR124 crores.
  • Average price realization per square feet increased by 7% to INR7,947 in Q2 FY24 from INR7,396 in Q2 FY23.
  • Net debt to equity ratio declined from 1.10 to 1.01.
• New Project Launches
  • Launched Provident Ecopolitan in Bangalore with 1.13 million square feet saleable area.
  • Introduced new phase Purva Park Hill Tower B in Bangalore with 0.3 million square feet saleable area.
  • Launched Phase 4B of Purva Windermere in Chennai with 0.35 million square feet saleable area.
  • Launch pipeline of about 13 million square feet ensures consistent new projects.
  • 42% of ongoing projects and 72% of launch pipeline now outside of Bangalore.
  • Providence brand accounts for 50% share of total launch pipeline.
  • For H2 FY23, PURVA has 15 projects in advanced stages of RERA approval.
  • 12-13 projects are expected to be launched by March 2024.
• Cash Flow Visibility
  • Outstanding receivables of INR3,636 crore covers about 77% of remaining cost to complete unsold inventory.
  • Projected cash flows of INR6,455 crore over next 3-4 years provides funding cushion.
• Financial Outlook
  • In Q2, only 481 units were delivered, leading to a loss due to high overhead costs.
  • In H2, expecting delivery of about 2,500 units which should lead to a positive outlook if overheads remain stable.
  • Not providing guidance or quantifying profit, but directionally profit is expected with higher unit deliveries.
• Debt Position
  • Net debt reduced from INR2,144 crore in Q2 FY23 to INR1,992 crore in Q2 FY24.
  • Debt per square foot of building assets decreased from INR1,376 to INR886
  • Gross debt was INR2616 crores, first time net debt below INR2000 crores at INR1992 crores.
  • PURVA has INR624 crores of cash and cash equivalents across accounts.
  • The company has debt repayment of about INR400 crores due by end of FY2024 which will happen automatically.
  • Will maintain current debt levels through growth and land acquisitions, while managing repayments.
  • The company aims to keep absolute debt levels stable while increasing project launches.
  • Debt repayment of about INR700 crore is expected over the next 12 months.
• Future Growth and Expansion
  • Will continue to grow its business volume and market share.
  • New land acquisitions are being evaluated for future growth.
  • With strong collections and sales momentum, growth is expected to be sustained over the next few years.
  • The real estate market outlook remains positive, supporting expansion plans.
• Realization Trends
  • Current realizations are around INR8,000 per square feet for residential projects.
  • New Purva Land and Provident launches at lower price points will temper average realization in the near term.
  • Longer term trajectory is for higher realizations, driven by Mumbai/Pune projects.
  • Margins expected to remain stable around 30% plus despite mix changes.
• New Launch Contribution
  • New launches contributed INR680 crore out of INR1,600 crore sales in Q2 FY23.
  • With upcoming launches in H2 FY23, similar sales momentum is expected.
• Growth Outlook
  • Strong collections and sales trends expected to continue in H2 FY23.
  • Positivity in real estate market bodes well for expansion plans.
  • Strategy is to increase market share and volumes along with realizations.
  • West India and South India acquisitions to aid growth next fiscal year.