Puravankara Ltd Q3 FY23 Earnings Conference Call Insights

Key highlights from Puravankara Ltd (PURVA) Q3 FY23 Earnings Concall

Management Update:

• [00:01:59] PURVA said that the company achieved record high sales for 3Q23 and for first nine months of FY23.

Q&A Highlights:

• [00:10:31] Aryan Sharma of Infinity enquired about the revenue guidance for next 5 years. Abhishek Kapoor ED answered that PURVA doesn’t give guidance as a process. The company has already launched 4 million sq. ft. of projects and plans to launch an additional 2 million sq. ft., which will add a total of INR4,500 crores in top-line revenue, which should take 3-4 years to complete. Also, there is an additional 16 million sq. ft. launch pipeline that will add additional revenue potential.

• [00:14:01] Aryan Sharma with Infinity asked about the Mumbai market’s current and future potential. Abhishek Kapoor ED replied that the company has a dedicated team for the Mumbai market and are looking to increase the pre-sales coming from that market over the next 3-5 years, with multiple acquisitions being discussed.

• [00:15:05] Aryan Sharma with Infinity queried about the commercial projects and the commercial residential mix going forward. Abhishek Kapoor ED answered that 35% of the company’s business will come from Puravankara and 35% will come from Provident. 20% of the business will come from project development and 10% will come from commercial.

• [00:16:24] Mihir Desai from Desai Investments asked about EBITDA and PAT margin expectation for product mix. Neeraj Gautam EVP Finance said that typically EBITDA margin for Puravankara projects is 30-32%, Provident projects is 22-25%, and plotted projects is 35-40%. PAT is determined by operating expenses, sales and marketing overhead, the number and type of units delivered in a quarter, and revenue recognition.

• [00:18:17] Mihir Desai from Desai Investments asked about the ready-to-move inventory left from the newly-launched projects. Neeraj Gautam EVP Finance replied that as of Dec. 31, 2022, the company had 0.29 million sq. ft. of ready-to-move inventory and 6.9 million square feet of inventory from ongoing projects.

• [00:19:56] Mihir Desai from Desai Investments enquired about the cash flow projections for the next 2-3 years. Neeraj Gautam EVP Finance said that the company has been generating an operating surplus for several years, with cash flow from operations increasing by 78% in the nine-month period.

• [00:21:28] Ronit of Sharekhan asked about the new project in Chennai; developable area, funding, and total amount invested. Abhishek Kapoor ED replied that the project is 100 acres with an investment of INR200 crores. It has the potential to generate over 3 million sq. ft. of development area and a total potential value of about INR750 crores.

• [00:25:31] Shrinath Gandhi at Arka Fincap asked about performance of Mumbai projects and growth plans for Mumbai and western micro-market w.r.t. launch plans. Abhishek Kapoor ED replied that it’s looking at multiple strategies for its expansion plans, including outright purchases, JDA structures, and society redevelopment. This will happen over the next 18-24 months and PURVA will go with the most feasible and profitable project.

• [00:29:59] Anushka with Value Investments asked about any new locations for integrated development. Abhishek Kapoor ED said that the company’s focus is on the south and west, with five main markets; Chennai, Bangalore, Hyderabad, Mumbai, and Pune. PURVA plans to go deeper in these markets before expanding into the rest of the country, including the north. Right now, the focus is on scaling up PURVA’s presence in the west.

• [00:30:55] Anushka with Value Investments enquired about JDA outlook w.r.t new project acquisitions over the next 1-2 years and if competition is increasing. Abhishek Kapoor ED answered that consolidation in the market has made it harder for developers to gain trust from buyers, but PURVA has a strong brand that helps it overcome this challenge.

• [00:35:14] Nikita Mehta from Newland asked about the deal size guidance. Abhishek Kapoor ED replied that PURVA’s sweet spot is projects between 1-2 million sq. ft., with a minimum of INR750-800 crores of top-line. However, larger projects over 5 million sq. ft may be considered in certain cases.

• [00:45:50] Tanushree Mehta enquired how many sq. ft. the company plans to launch in CY23. Abhishek Kapoor ED answered that the company is looking at 16 million sq. ft. of total launch.

• [00:46:44] Tanushree Mehta also asked about the price hike across projects. Abhishek Kapoor ED said that on an overall basis, avg. prices have increased by about 15% YonY across all products for Provident, Puravankara, and Purva Land. In certain micro-markets with lesser inventory and high sales, the prices have gone up much higher, while in other markets with larger inventory and lower elasticity, the prices haven’t risen as much.