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.