Shriram Properties Ltd (NSE: SHRIRAMPPS) Q2 2025 Earnings Call dated Nov. 14, 2024
Corporate Participants:
Murali Malayappan — Chairman & Managing Director
Gopalakrishnan J. — Executive Director & Group Chief Executive Officer
Unidentified Speaker
Analysts:
Raaj Makwana — Analyst
Unidentified Participant
Darshil Jhaveri — Analyst
Saumil Shah — Analyst
Analyst
Tanya Desai — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Shriram Properties Q2 and H1 FY ’25 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.
[Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Murali M., CMD, Shriram Properties Ltd. Thank you and over to you, sir.
Murali Malayappan — Chairman & Managing Director
Thank you. Good evening, everyone. I’m delighted to welcome you all to our analyst call today. We are here to discuss the financial results of Shriram Properties Limited for the second quarter and the half year ended March 30, 2024. Firstly, I’m pleased to report that we achieved strong sequential growth in sales volumes and the values during Q2 FY ’25, with sales volumes reaching 1.03 million square feet and sales value amounting to INR568 crores.
Despite the slowdown in customer decision-making due to inauspicious period, our overall sales performance remained satisfactory. We successfully launched three new apartment projects in Bangalore, Chennai and Kolkata during September ’24. These projects are expected to contribute strongly to our sales in the second half of the fiscal year.
Additionally, we concluded two new projects in Bangalore, acquiring development rights in land parcels near Yelahanka and Electronic City with a combined development potential of approximately 0.8 million square feet — 8 lakh square feet. Looking ahead, we are not on a — looking ahead, we are on a steady growth path, focusing on leveraging our operational base — strong operational base for profitable progress.
Market conditions are rebounding well, particularly in the mid-market and mid-market premium segments, offering promising long-term opportunities for sustainable growth. With a robust project pipeline and continued efforts in cost control and scaling benefits, we aim to sustain margins and profitability while creating substantial value for our stakeholders.
I would like to ask Mr. Gopal to briefly discuss the performance in detail with you. I’ll be happy to answer any questions you might have thereafter.
Gopalakrishnan J. — Executive Director & Group Chief Executive Officer
Thank you, Mr. Murali. Good afternoon, everybody. I hope you all have access to the presentation that we have uploaded on the stock exchanges as well as company website. I would like to go through the presentation very briefly, explaining the performance for the quarter as well as half year and also to highlight the outlook that we have as we see for H2 FY ’25.
I’ll start with slide number 2 of the presentation, which you must be viewing. One of the most important landmarks that we went through this quarter was about the brand transition. It’s a new beginning for us. We try to create a new brand identity to create a stand-alone positioning in the market and more importantly, to create a new positioning of the market — a new positioning of Shriram properties in the minds of customers, as well as other stakeholders with the sole intention of deepening the image — brand image as well as the brand offering in the minds of our target customers.
These transition efforts have delivered good results and it has been a good beginning for us. The campaigns had successful start and successful reach. As you can see from slide 3, some of the outreaches that have actually delivered good results for us. Our transition brand logo — brand film has reached over 2 million views on YouTube and the entire brand campaign efforts digitally have reached over 205 million impressions among people.
So I think it’s a good start. More important than the transition was the commitment that we have reassured ourselves as well as reassured to our shareholders or our stakeholders. While honoring the past, we’re embracing the future.
We have earned a significant strength in the marketplace and our demonstrated strength in terms of scalability, seamless operating platform, partnership capabilities, asset-light strategy and capability to enter new markets, identify and enter market successfully, foray into new territories and so on. All of these have been earned over the years and, in fact, have been instrumental in our remarkable growth since RERA.
Some of the data you will be seeing on Page 4, 3.5 times growth in sales volume since RERA was introduced in FY — in 2017, 2.8 times growth in revenues, 5.3 times growth in EBITDA. All of these have been delivered based on the strength that we have gained over the years, and we want to consolidate that, and we want to deliver much stronger growth going forward by embarking on a mission for three years during 2024 to 2027.
We have already talked about it in detail, and therefore, I would like to now move to current quarter. It has been one of the most challenging quarter for us in the recent times, but we believe it’s a short-term aberration. The challenges were not primarily on the company side. Majority of these issues were from the external factors where — which had impacted not only the volumes, but also in terms of revenue recognition, and that has led to the short-term aberration during this quarter.
We had seasonal impact, which impacted not just Shriram Properties but across the entire southern regional real estate, and I believe most of the real estate sector in India, as can be seen also from various volume data declared by various listed companies. The seasonal impact came from two or three factors. The two inauspicious period came in the same quarter — and unlike the previous recent years where these actually were not in the same quarter, and therefore, there was an aberration from a customer decision-making and therefore, the volume impact perspective.
There were — in southern markets, at least in Bangalore and Chennai, we saw some delays in approval process across the regions and across players, and that led to a relatively modest launches by various players, though Shriram Property at least had three launches. Overall market launches have been substantially lower during the quarter, and that had adverse impact on volumes. I’ll explain that in the next slide.
Unseasonal rains and flash floods in Chennai also had compounded the effect of delayed decision-making by customers. All of this together had some impact on the volumes, not just for Shriram, but also sector. But more importantly, for Shriram also, it had some impact. I’ll explain that in the next slide. Is that the negativity continuing still? We believe no.
Consumer sentiments are improving. We have seen that remarkably during the onset of festive season. As you are aware, Q3 and Q4 are traditionally a very strong quarter for regional residential sector. With the impact of deferred decision from Q2 as well as stable pricing, prices have not gone up significantly. So stable pricing, deferred demand or a pent-up demand from Q2 as well as a traditional strong seasonal activity should give a strong boost to not only launches, but more importantly, on the volumes during the second half.
Therefore, we remain positive and confident about delivering our full year numbers or achieving our full year target substantially, but the Q2 was a little bit of a disappointment for us. We tried to take several aggressive efforts, and those proactive efforts helped us in mitigating the impact at least partially.
We had three launches in Q2, though it was towards the quarter end, therefore, the impact on Q2 was minimal, but at least the launches happened very successfully, and those impacts are now showing up in terms of customer confirmations of volumes or buying and therefore, boost our confidence on Q3 and Q4.
Sustenance sales were very strong, thanks to our aggressive marketing and campaign efforts. Therefore, we were able to deliver a very strong quarter-on-quarter growth, the sequential growth, but we were still lower on a year-on-year basis. Some approvals — some regulatory OC delays, the completion certificate or occupancy certificate receipts were delayed a little bit in a couple of projects in Bangalore. And therefore, we had revenue recognition issues in Q2.
INR150 crores worth of revenues of the units have been postponed to Q3, and therefore, we had a deferred revenue recognition and that had — even though we had a stable margins, it had a significant dent on our Q2 revenues and therefore, Q2 EBITDA, unfortunately. I’ll explain each of this as we go through, but I just wanted to set the overall framework of our Q2 and therefore, explanation in slide 6.
Moving to slide 7, very briefly on — all of you must be more aware of this than listening from us. You all saw the market was little soft. On the right-hand side chart on slide 7, you will see overall sales volume in top 7 markets. As you know, the top 7 markets account for nearly 80% of resi demand in India. Year-on-year volumes are low — year-on-year as well as quarter-on-quarter volumes were lower by 10%, 11%. As I said earlier, launches were substantially lower and that we saw across most markets, predominantly in Bangalore, Chennai and to some extent, Western markets as well.
As I said earlier, the two inauspicious periods of Ashadha and Shraddha, they both happened to coincide in the same quarter, unlike in the past, and that had some dent on the interest levels. Also, the launches were muted across multiple markets because of time lines. The approval time lines were more than the typical time line. For market-specific reasons, I wouldn’t generalize, but there were delays across several markets, and therefore, most players had very few launches — it appears that most players had very few launches during the quarter, which was at least a very prominent trend we saw in southern markets.
Chennai rains had some impact. But all of this got at least fortunately wiped out in the last three, four weeks, where the festive season started on a good note. The customer — consumer interests have been coming back. Customers are now closing the transaction that they have been visiting. So we had a very strong footfalls, very strong site visits. Only the closings were not happening, and those closings are happening now. And therefore, we are confident of regaining deferred volumes. I wouldn’t say lost volumes. We are confident of regaining those deferred volumes from Q2 to Q3.
And so therefore, second half should be a stronger period as traditionally we have seen also. The slide 7 bottom part gives you the summary of what I’ve been saying over the last few minutes. With all our efforts, we managed to perform slightly better than the sector. Q-o-Q growth, the sequential growth in sales volume in Q2 for us was 47% higher volume. I’ll explain the numbers in the next slide, as compared to a 10% growth for regional peers and a negative 10%, 11% growth for the industry.
We have done about 10% lower on a Y-o-Y basis compared to the regional and industry average, which is also negative 40% and 11%, respectively. Somewhat similar trend in the HY basis, but it’s primarily because of Q2. So in a nutshell, it’s basically a disappointing quarter for us as well as some of the market — some of the players in the market. But we believe the market is bouncing back now with the onset of festive season.
Looking closer, now moving from macro to Shriram Properties. Looking at slide 8; our sales volumes on a quarterly basis, our Q2 numbers were above the 1 million threshold that we have been trying to strive at for the last several quarters. It was at 1.03 million square feet and reflected a growth of about 40% — 47% quarter-on-quarter. And similarly, the revenue — sales value is also higher by about 51% quarter-on-quarter, and collections were higher by about 13%, 14% handovers were higher by about 10% during the quarter.
The sequential trend, therefore, has been satisfactory. However, on a H1 to H1, year-on-year basis, if you look at on a full year — on a half year basis, our volumes are about 1.7 million square feet, minus 10% revenue is minus 11% year-on-year. Collections are marginally lower. Handover is higher on a half yearly basis, but remaining metrics are a bit muted for the quarter, but we believe this is an aberration, and we are confident of recouping these volumes in the coming quarters.
Looking more closer at the quarterly and half yearly performance, slide 9. As I said, volumes, I’ve have already spoken. The strong quarterly trend is driven by sustenance sales more than the new launches. New launches contributed, but they contributed only a small extent because they were launched towards the end of the quarter. We had received in — one of the projects we got the approvals by mid of September, so we could launch them only in September end.
And we had another project in Chennai got launched in September once we received the market feedback and the RERA approvals. And Kolkata was also opened up in September. Since most of these launches happened in and around September towards the end of the quarter, their impact on the quarter in terms of volumes were minimal, but the response has been very good.
We’ve had a very strong footfall. We had very strong walk-ins, customer negotiations going — were very encouraging trend. We are now beginning to see these new launch projects clocking their volumes. I think we’ve had a very encouraging festive season for us. So all that should reflect in Q3 volumes on these projects. Coupled with new launches that are targeted, we believe Q3 will be a very strong quarter for us.
On the project execution, as I said, we had 580 handovers in Q2. We just saw one minute ago. It is a 10% higher number as compared to last year — last quarter. Overall, we have had about 1,100 launches or so in H1 — 1,100 handovers in H1. But majority of the Q2 handovers were in JVs and DM, so had a limited impact on revenue recognition.
We unfortunately had three projects pushed to subsequent quarters. I’ll explain that in the next slide. But despite the delay and the delay — the postponement of — or a deferment of these handovers had an impact on financial performance. But overall, on a full year basis, we believe the handovers are on track, 1,100 handovers in H1. We believe we are on track for 3,000-odd handovers in full year basis. Both in Q3 and Q4, we have a strong lineup of projects.
Now all these approvals are in our control. And therefore, it’s a question of executing these handovers, like we have done last year. We are very confident of handing over these numbers to our customers and therefore, very strong revenue recognition happening in H2.
Construction momentum has been remaining strong. We don’t see any significant challenge that is in front of us on the construction side. In fact, it gained momentum during the quarter with starting of new — starting of construction work in new launch projects like Shriram Sapphire and Shriram 122 West, as well as continuing acceleration in Shriram — The Poem by Shriram. All these three projects revived or they commenced their activities and therefore, very strong construction outlook for second half for us in terms of construction spending.
On the business development side, we completed two projects as was announced to stock exchanges during the quarter, one JDA project in Bangalore, one own project in Bangalore, together 0.8 million square feet of saleable area, gross development value of about INR600 crores.
Pune has finally moved — made traction. MOF approvals have come. MOF approvals have progressed well and now waiting for the local clearance — the Pune municipal clearance, which we believe is around the corner post election on 20th, basically in a week’s time, the election is over. So code of conduct comes out.
And therefore, we think we’ll launch either by end of the month — either by end of this — during this quarter, we will launch either by late November or early December, we should be able to kick off. We wanted to launch this before the Christmas season starts.
So strong — supply pipeline is still continuing to be strong, and we have multiple new projects assembled as we have said in a couple of months ago in terms of our new growth aspiration. 15 million, 18 million square feet of new pipeline has to be assembled. So we are working hard to put these deals together and BD pipeline is fairly robust right now. And the deal — we should see more stronger deal closure over the next couple of quarters.
Slide 10 talks about the launches that we had during the quarter. As I already explained, we launched them towards the end of the quarter. Most of them were in September and had some limited impact in terms of their volume contribution during the quarter, but they have started now showing up in late — mid-October onwards, the festive season, things have started showing up very nicely.
Slide 12 on the pricing, we see in the market level — at the market level, we see a very stable pricing in the market. Prices have not moved up in a big way. In a way, that is good because season, it was the inauspicious period. Customers were already not taking decisions. Therefore, I think prices were muted. We believe for the rest of the year also, we will see about 5% to 6% increase in market level pricing.
In Shriram’s portfolio, we have seen about an average of 6% increase in the portfolio. That’s primarily because of product mix in our sales. We see ending the year with 6% to 8% average realization growth, but the market realization is likely to be in the 4%, 5% growth for the full year, not a significant rise that we saw in the past two, three years.
Important and interesting fact is that our — all our committed efforts to move up the price curve over the last two years is genuinely showing a noticeable impact. You can see the chart on slide 12 on the right-hand side. Our mid-market products are now averaging around INR6,700 per square feet, compared to about less than the sub INR5,000 levels we saw in the pre-COVID level.
But clearly, it’s not just the market improvement. It is also a conscious effort taken to rise the project mix curve or the product quality of our project portfolio with a better product offering and better market mix. All that is now paying off, and therefore, we are — we believe we are on the right track. Shifting to financial performance; as I said, one of the most challenging quarters that we have had, but is an aberration in our view. We had revenues of about INR366 crores for the quarter — for the half year.
Margins — gross margins were about INR94 crores or 32%. So project profitability had remained stable. In fact, it is slightly better than what we have seen in recent quarters. But because we had lesser revenue recognition in Q2, overall EBITDA margins came down on a half yearly basis also, INR67 crores of EBITDA and therefore, PAT of only INR17 crores for the half year.
On a quarterly basis was the disappointment. We lost three project revenue recognition deferred to Q3 or second half. As a result, our Q2 revenues were only INR155 crores. That took a toll, even though the margin — gross margin was still okay, 30% margins were still there. The project profitability has not deteriorated. Project profitability remains intact. It is a base effect. Revenue not recognized in some projects got deferred.
And therefore, we had the base effect, and that is why we had only INR13 crores EBITDA, which is a very low number compared to what we have achieved over the last several quarters. But we believe it’s an aberration, and Q3 will be a bumper quarter with all the pent-up or the postponed handovers and revenue recognition getting materialized in Q3. Therefore, we see this INR13 crores EBITDA and a near zero PAT as an aberration for the quarter.
Next, I’ll explain that if you have any queries at the end of this presentation. Slide 15 talks more detail about the financial performance. Our Q2 revenues, as I said, suffered due to delayed receipt of OC or completion certificate or release order in three projects.
Slide 17 gives you the details of the project that witnessed a deferred revenue recognition. The project development in Bangalore where we had already received part release order. In project development, it is called release order, where we are authorized to hand it over to customers and therefore, recognize revenue. We received them part release that happened — part release has happened in the first quarter itself or even Q4 some part.
However, subsequently, when we went for the final release, the local panchayat — or local authorities had demanded additional money in the form of a penalty because some delay in development prior to our acquisition. So we had challenged that in the courts. We had to go to the — we had to file a writ. Fortunately, we had a favorable order from the High Court dismissing the demand made by the panchayat as the local authority as an unjustified demand.
And since it involved a significant amount of outflow, we opted to postpone this revenue recognition and prefer to go through the legal route to challenge that instead of paying what the government — what the local authority wanted. And fortunately, we have received the favorable order towards the end of September, early part of October, we got the orders in hand. And the local authority is yet to release the document. So final clearance should be received in any time now in Q3 or in November.
Once it is received, we will be able to recognize this INR85 crores of pent-up or a deferred revenue. Similarly, we had some delays in Kolkata. The OC came only towards the end of the quarter, or beginning of October. And therefore, once it started coming in, we started handing over only from post September. Therefore, it got delayed and had a revenue impact of INR33 crores.
The third project that got deferred was a very small project, 4 lakh square feet, but a high-value project in J.P. Nagar in Bangalore and therefore, had INR34 crores of revenue — deferred revenue. Three towers have got OC, Shriram Southern Crest. And one final tower is stuck because BBMP has challenged a few things. We have seen this trend across the market here. BBMP has started challenging a few things. So I guess it is a part of our overall some approach BBMP has taken. It’s — now the approvals are beginning to flow through.
We are confident of Southern Crest coming through in the next couple of — in the next month or so. And therefore, this will be a second half revenue recognition, hopefully, Q3, otherwise Q4. But Pristine Estate and Grand One, this is INR85 crores plus INR33 crores will get recognized in the coming quarter. And therefore, these revenues are not lost, but they are deferred from Q2, but still had an impact of INR150 crores.
If this INR150 crores revenue was recognized, I would have had at least INR280 crores, INR300 crores of revenue — operating revenue would have shown much stronger — very strong growth on a Q-o-Q and a Y-o-Y basis. That was a big disappointment for us during the quarter, but we are confident of regaining or recouping this lost revenue in the coming quarter.
As I said in the previous slide, you would have appreciated that the gross margins have remained stable. You have seen — those who are monitoring on a quarterly basis would appreciate the total revenue minus cost of revenue. My gross margins have been in that 30% plus margin levels. And I think that reaffirms the business profitability issues. So it’s all about the timing mismatch. But otherwise, the business profitability appears to remain intact.
Because of the base effect, despite the fact that the employee cost, other expense, all of them remaining under control, notwithstanding the three launches. We had a very low EBITDA margin for the quarter, and that, therefore, muted the margin position for H1 itself. But we believe this will correct it in the coming quarters and therefore, full year margin expectations of mid-20s EBITDA margin will remain intact in FY ’25 as well.
Finance costs for the quarter have been almost flat and non-finance — noncash charge associated with the royalty payable to government of West Bengal provision has come down slightly because we are at the fag end of this provisioning period, even though the outcome of the challenge that we have made in the courts is yet to come, but I believe we are confident of a favorable outcome there during this financial year.
In the interim, as a matter of prudence, we continue to provide this INR4 crores, as you can see in row unwinding impact row in slide 15. INR4.1 crores we have provided compared to INR5 crores last year. And we believe until a return order comes out, we’ll continue to provide and maybe we’ll reverse them in its entirety at the end of the process when the return binding orders are released by the authorities. But for that, the interest expense and other finance cost together is almost — it’s marginally higher.
And if I look at the overall interest expense, it’s come down. Other finance cost includes write-off of unamortized prepaid costs when we move from one facility to other facilities. So overall finance charges are remaining almost flat. And therefore, it’s purely because of the loss of revenue recognition, we had a PBT in the negative zone. In the tax expense, we had reassessed the tax charges and the tax credits that we had, the deferred tax assets that we had on certain capital gains had to be revisited based on the finance tax and it was approved from a 20% long-term gain to 12.5% without indexation and all that.
Whatever is provided in the previous quarter, had to be reassessed. And therefore, we had ended up with a net profit of close to zero or minus 0.8% for the quarter. The full year — half year profit remains intact based on the Q1 number. It remains intact at about INR17 crores for the first half.
And we expect to see a very sharp momentum in coming quarters with the revenue recognition of the deferred INR150 crores in Q3, or substantially in Q3 and rest in Q4, as well as on top of the scheduled handover for Q3 and Q4, which in itself is about 2,000 homes.
And therefore, collectively, we will still reach our revenue recognition target of over INR1,200 crores of revenue recognition and revenue — the PAT guidance that we had of very strong growth coming in full year FY ’25. So we believe we are on track for our full year earnings. The current quarter number is an aberration, which will get reset or which will get recouped and recovered in Q3 and Q4.
Moving on to slide 18 on the consolidated cash flow. We had a very reasonably strong cash flows from operations, INR68 crores cash unlocked for the quarter compared to INR30 crores in the previous quarter and in Q1 FY ’25. And on the basis, H1 is about INR98 crores compared to a somewhat similar number we had in the previous year first half.
And we believe this will be much stronger in the coming quarter — coming two quarters with the scheduled handover — completion and handover and collection of the final tranches of funds from our customers. Overall, free cash flow before new investments was positive, strong at INR30 crores for the quarter and compared to a negative INR18 crores in the previous quarter. And against that, we have also made new project investments. As I said in the opening remarks, one own project and one JDA project in Bangalore together consumed about INR30-odd crores.
And therefore, we had near zero post investment cash flows and therefore, cash and cash equivalents remained flat. We believe that we will get a big boost in the second half, not only from operations, but also the monetization that we are working on is in advanced stage due scheduled for closure as per the broad understanding that we have with the potential buyers.
And therefore, Q3 will see some robust cash flows coming in, which will be used for augmenting or acquiring — which will be used for redeployment or augmentation of new capacities, new development pipeline that we are working on in the BD side. Slide 19 about the balance sheet, slide 20 about the debt profile, more or less unchanged, except for the fact that net debt has come down by another INR40 crores. So we are at about INR400 crores net debt. Debt equity has dropped to 0.31:1 from 0.35% and 0.34% that we have seen in recent times. Cost of fund is remaining almost flat.
So overall, on the balance sheet side, things have remained strong and stable. Cash flow sides have been encouraging. P&L, Q2 was a bit of an aberration. But otherwise, broadly, we are on track as per our expectation in terms of the full year. And I believe the journey is continuing to remain fairly satisfactory. Just the last one or two slides on the outlook. We remain confident of achieving and delivering our full year numbers in terms of key parameters of sales, handovers and revenue recognition.
Industry bouncing back and pent-up demand from Q2 where customers had postponed for the auspicious or inauspicious reasons from those Q2 factors as well as the traditional strong timing. All of this should help us recoup the volume. And we are planning for a couple of launches during the quarter. All this should help in giving a big boost to our thrust on growth — sales volume growth during Q3 and Q4 for us.
And as I said earlier, Pune launch is on track for this quarter. I believe post election, once we get the paper back in our hand, I think the things will take off within about a couple of weeks of we gaining control of situation. The team is already on the ground. Prelaunch efforts have already begun.
As we speak yesterday and today is the channel partner meet happening on the project site itself. Marketing office is ready. Promotional campaign strategies are ready. We believe we are all set to kick off as soon as the PMC sign-off comes through post Maharashtra elections.
And therefore, overall, we believe we are on track from a volume perspective, revenue recognition perspective, if you look at slide 23, you will appreciate most of the projects that are scheduled for handover this year are broadly on track. And these 6, 7 projects alone will account for about 3,200 units handover as well as from projects from the last year’s release order or the completion certificate.
Those will get added. Therefore, we are very comfortably positioned to do at least 3,300 handovers compared to last year’s 3,000. And internally, we are aspiring to hand over a much larger number than 3,300. So therefore, we believe the range that we’ve indicated to the market, we should be able to hand over, and that will give us the targeted revenue recognition opportunity as well in second half.
Slide 14 — 24, last but one slide talks about the position of launches. I think we are pretty much on the flat zone as per the plan, except for one or two projects which are running slightly behind because of various reasons. But we believe these delays are maybe a month or two of delay. So — but they might get pushed towards Q4 or — in terms of launches.
But their overall volumes that we considered for this year would be about 0.5 million square feet. Therefore, we believe the volatility is restricted to a small number, but we are confident of launching these projects as well during the year. To support these launches, I think we have a project pipeline, which is robust enough. But the thrust is more than the conversion.
The thrust is on building further moment — further pipeline and the entire management effort is towards building those pipelines over the next one or two years in terms of reaching the aspired large pipeline addition for the strategic objective that we announced a month ago in terms of our medium-term targets of doubling sales in three years. For that purpose, I think we are extremely focused on pipeline addition.
Overall, therefore, we believe we are on a correct strategic path and the progress is meaningful. One quarter deferment of some volumes and revenue potential, we believe, is an aberration, but the medium-term prospects and medium-term progress is likely to be satisfactory as you would see in second half as well as you would see in the — on a full year basis.
With this, I pause and I stop here. I, Mr. Murali and my colleagues will be happy to answer any queries that you may have. Over to you.
Questions and Answers:
Operator
Thank you. [Operator Instructions] The first question is from Raaj from Arjav Partners. Please go ahead.
Raaj Makwana
Hello, am I audible? Sir, how much is the GDV of the ongoing projects?
Unidentified Speaker
So GDV of ongoing projects is.
Gopalakrishnan J.
He is retrieving the data. Some of us are away — me and Mr. Murali are in Chennai and my team is sitting in Bangalore today.
Unidentified Speaker
Around INR9,800 crores GDV of ongoing projects, out of which we have already sold INR7,000 crores.
Raaj Makwana
Can you repeat the number, please?
Unidentified Speaker
INR9,800 crores is the GDV potential of ongoing projects, out of which INR7,000 crores worth is already sold.
Raaj Makwana
INR7,000 crores is sold, all right? And how much is the embedded EBITDA on this GDV, INR9,800 crores?
Gopalakrishnan J.
Roughly about 20% to 23%.
Raaj Makwana
20% to 23% EBITDA. And how much is the completion timeline for this?
Gopalakrishnan J.
Completion time line would be — recently what we have launched, it will take three years. Most of the projects will be in 2 to 2.5 years max, we will be able to complete the ongoing projects, which are in the pipeline.
Raaj Makwana
All right. So we can expect in around till FY ’27, approx around INR7,000 crores to INR8,000 crores of sales will flow into your P&L, right?
Unidentified Participant
Yes, sir.
Raaj Makwana
And sir, what is the GDV of the upcoming projects? As I can see, there is 17 million square feet is upcoming, right?
Gopalakrishnan J.
We have about 18 million square feet of upcoming and roughly about INR10,000 crores to INR12,000 crores, right, Shrikanth?
Raaj Makwana
This would be the overall GDV, right? So how much of this is our share?
Gopalakrishnan J.
So other than — our share would be — JDA would be about 23%, 24% revenue share. Shrikanth, would you have — offline, would you have the Shriram share? Otherwise, we can give it to you offline.
Unidentified Participant
We can give it to you offline.
Raaj Makwana
All right. Offline is fine. For the ongoing, the GDV is around INR9,800 crores. From that, how much would be our share?
Unidentified Participant
Around INR4,200 crores.
Raaj Makwana
Okay. In next two years, we can expect from this INR4,200 crores, around INR3,500 crores to flow into our sales, right?
Gopalakrishnan J.
In two years, yes.
Raaj Makwana
All right. Sir, how much would be your PBT on this INR4,200 crores?
Gopalakrishnan J.
That would be difficult to speak because it will be — year-wise, you need to see. But I would guess like on a 20%, 22% EBITDA, our PBT would be about 10% roughly.
Raaj Makwana
Okay. PBT would be 10% in this ongoing project, okay. All right. And how much of incremental cost are we supposed to incur for the completion?
Unidentified Speaker
Close to INR2,000 crores has to be incurred, sir.
Raaj Makwana
How much?
Unidentified Participant
INR2,000 crores.
Raaj Makwana
INR2,000 crores of incremental cost we are supposed to incur, right?
Unidentified Participant
Yes, to complete the project ongoing.
Raaj Makwana
All right. All right. So our current debt position is around INR400 crores, right? How much would be our peak debt in next two years?
Gopalakrishnan J.
I think our peak net debt could be — we’ve been working towards a negative net debt, zero net debt. But our peak gross debt can be somewhere around INR600 crores, INR700 crores.
Raaj Makwana
Okay. And it would be in FY ’27?
Gopalakrishnan J.
Then it will start decelerating. Because we are pursuing an aggressive volume growth over the next three years because 16 million, 17 million square feet of pipeline to be added, even if I use the typical project mix that we have in mind, which is our project ownership mix, about 40%, 50% would be a JV, JDA share, about 20%, 25% would be a DM.
The balance will be own. And then if I apply all of this, we will still need roughly about — the entire 15 million, 16 million square foot would mean INR2,000 crores of land commitments. And therefore, we might — our share of investment might be in the INR400 crores, INR500 crores, as we explained in July, August last time earlier this year.
So to that extent, some operating cash flows will support this. But I would imagine part will be debt as well. Therefore, I’m adding — I’m saying a maximum of INR600 crores, INR700 crores would be the gross debt. And our intent is to work towards over the next 18, 24 months, can we reach a zero net debt basically, at least cash and cash equivalent to that extent, if not the lower gross debt.
Raaj Makwana
Understood. All right, sir. Thank you.
Operator
Thank you. Your next question is from the line of Darshil Jhaveri from Crown Capital. Please go ahead.
Darshil Jhaveri
Good evening, sir. Thank you so much for taking my question. So sir, I just wanted to understand a bit more in terms of H2 and how that will pan out. So I think in the opening comments, you were saying around INR1,100 crores revenue we are expecting for the full year. Is that correct, sir?
Gopalakrishnan J.
Yes, somewhere in the vicinity.
Darshil Jhaveri
Okay. Okay. Okay. So that would mean a very high revenue recognition in H2, right? Like that would be around roughly INR800 crores. So what kind of margins can we expect? And how confident are we that we will be able to get this kind of revenue?
Raaj Makwana
So interesting question, and thanks for asking. So it allows me to take you to slide 33. So historically, we have had second half being much larger share. And therefore, there is a precedence of we able to reach that number. And we believe we can reach this 5-plus million square feet of sales, INR2,700-plus crores of sales value. All that is doable in our view based on these launches that we have in line.
And this quarter will be make or break for us. So we’ll know as we progress this quarter, whether the demand bounce back and demand recoup is happening or not. On the handover, we are fairly confident because these approval delays by a couple of — a month or two, those kind of things will keep happening in the industry. All of us are familiar with this whole approval related — a few months of delays are very common.
But we have done that in the past. We believe we can do that again in second half. 3,300 homes is what we have set the target for ourselves. And if you look at slide 33, last two, three years, we have done — nearly two-thirds of handovers happened during second half. And therefore, we remain confident and optimistic about reaching this range of 3,300 to 3,500 homes to be delivered in second half. That basically means revenue recognition expectation should also come through.
Darshil Jhaveri
Okay. Okay, great. That’s great to hear, sir. And sir, just wanted to confirm like our margins you are saying around our projects are 20%, 22%. So on a reported basis, what kind of margins will be reflected for the full year, sir?
Gopalakrishnan J.
So we have — instead of talking about a one-year number, I would probably prefer to say, we have been able to and we continue to work towards a mid-20 EBITDA margins. And we’ve been in the last — what was a reasonable period since listing. We have been in that 20% to 24%, 23%, 24% EBITDA margin and about 9% to 10% of PBT. So we believe that trend will continue, about 9%, 10%, give and take, 0.5% here and there. That’s a zone in which we believe our earnings — net earnings will be and EBITDA in the mid-20s would be a very reasonable estimate to have.
Darshil Jhaveri
Okay, okay. Fair enough, sir. Yeah, that’s it from my side. Thank you.
Operator
Thank you. [Operator Instructions] [Operator Instructions] The next question is from the line of Saumil Shah from Paras Investments. Please go ahead.
Saumil Shah
Yes, sir. Sir, for the first half, we have done PAT of INR17 crores, whereas I think in previous calls, we were mentioning that we were guiding for INR100 crores PAT in current financial year. So are we on track to achieve that or we would like to revisit our guidance?
Gopalakrishnan J.
No, we are remaining with our expectation right now. It’s a combination of monetization gains and handover. As I said earlier, the handovers are largely clustered towards — you saw this last year also the earnings — the handovers were mostly skewed towards second half, and that will bring both income recognition as well as earnings.
And the monetization that we have been talking about for the last two quarters relates to land in Chennai. We are fairly at an advanced stage of closure on the documentations. The diligence is nearly complete, and we don’t see a significant surprise coming at this point of time. Therefore, that will also come on track — come on to contribute to the earnings. That’s another operating income because the monetization of development rights.
Combination of these two will still be there on track, and that exactly was the original plan as well. So I think we believe we are on track. This one quarter is an aberration because it gets forwarded. Once the revenue recognition gets deferred to Q3, only profit is postponed between the quarters. And therefore, we are hopeful of reaching that number for the full year. Small variations may be there, but it may not be a substantially different outlook from what we think we would have.
Saumil Shah
Okay. And sir, a couple of months back, we had given a notification about ED searches in our premises in Bangalore and Chennai. So could you let us know the outcome of that or has it been resolved?
Gopalakrishnan J.
Yes, it’s not a couple of quarters ago. It’s just about 10 days ago. So this is — I’ll give you an update. As reported to the exchanges. This was related to some FIR filed by state government DVAC, the vigilance agencies against a minister — former minister from the opposition party.
So without getting into details of why all this is happening, somewhere there’s an alleged involvement of Shriram related something, which we have challenged because the FIR clearly states the giving party is somebody else, taker is the former minister. So it is not related to Shriram, but the allegation was that it relates to one of the Shriram projects and not other part of the Shriram Group.
And therefore, based on that, suo motu Enforcement Directorate came in for searching for some documents. The company has cooperated with the ED on their document requirements, and we have provided all the documents as required by them, but they could not — during the search process, they could not establish or identify any trail of transactions between Shriram Properties and the names allegedly involved in as per the FIR.
Therefore, they have just taken some documents from us related to our past — certain SPVs transaction in the past. but they could not really identify any links. With that, the process ended and that was reported to stock exchange. We haven’t heard anything back from them on any additional document required. If it comes, we will provide.
Just to clarify, the FIR filed by the state government agency relates to certain companies owned by the former Minister and some company belonging to Shriram Group, which had some — which was named there. Shriram Property was not named in the FIR itself.
It is the NGO which has been propagating this for some time. Their allegation that relates to Shriram Properties some project approval. And therefore, ED came for searching for any trails and they have gone back without having any direct linkage being identified.
Saumil Shah
Okay. Okay. Thanks for your detailed clarifications. So that’s it from my side. Thank you and all the best for the future quarters. Thank you, sir.
Operator
Thank you. [Operator Instructions] The next question is from the line of Subrata Sarkar from Mount Intra Finance Private Limited. Please go ahead. Mr. Sarkar, your line is in the talk mode. Please go ahead. There seems to be no response from the current participant. [Operator Instructions] The next question is from the line of [Indecipherable] Jain from Jain Capital. Please go ahead.
Analyst
Hello. Yeah. A couple of questions from my side. Sir, firstly, how is the competitive landscape shaping up in Pune as even one of our peers, Macrotech is also planning to expand its presence in that region?
Gopalakrishnan J.
Yes. Pune market offers lots of good opportunity. We are pretty happy about it. So we anticipate Pune to be at par with Bangalore in terms of opportunities, particularly in the segment where we are operating, mid-market and premium mid segment. So we expect good growth for us in Pune market. We also expect our project to do very well in Pune market now.
Analyst
Understood. Sir, secondly, so are we on track to achieve the stated guidance, which we had iterated earlier for FY ’25 in terms of sales, collections, handovers. So what are the growth drivers in enabling us to achieve the guidance?
Gopalakrishnan J.
Yes, we believe we can achieve that number primarily because the launches are on track for both Q2 launches also happened, but it got deferred by a few weeks towards the end of September, it happened. Therefore, those impact of the three launches did not really fully show up in Q2 and the conversions are happening as we speak. Therefore, the sales at launch that we see in the first 60, 90 days of sales, all of those impact will happen now.
Plus we have a few more launches coming up for the remainder of Q3 and Q4. And therefore, these launches will drive as well as sustenance sales is strong. You may have noticed or you may have heard from the earlier conversation that the inauspicious period came together in Q2, which is — last year, it was in Q2 and Q3. So they don’t come in the same quarter because you lose that momentum.
So a lot of footfalls, a lot of site visits, but didn’t get to what we call is closure or conversion. And those conversions from the new — recently launched projects, impact of planned launches in Q3 and Q4 as well as continuing strong sustenance activity should help us recoup this volume.
You may have recalled — you may remember that even in the past, over 60%, 65% of the volume — at least 60% of the volume in the past have also been in second half over the last several years, right, even before COVID as well as post-COVID. So it’s a typical trend that nearly 60%, 65% of the volumes do take place in second half in southern regional markets.
And therefore, we believe we can still catch up a large part of this in deferred numbers. Handover is on track. We just — Q2, we had an aberration because some of the handovers kind of came in the approvals for the handover, the occupancy certificate or a completion certificate or a release order, whatever it is called, depending on the format and depending on the city. Those releases or the clearances came towards the end or beginning of October.
And therefore, those three, four weeks of delay or 5 weeks of delay impacted that quarter. But during the year, they all will get caught up. If you may recall that we did 1,200, 1,300 handovers in Q4 alone last year. So it is doable. System is equipped for that. So about 1,000 handovers for Q3 is not a difficult task. And therefore, we believe we should be able to substantially get the revenue recognition as well.
Analyst
Sure, sir. Yeah, that’s helpful. That’s all from my side. Thank you.
Gopalakrishnan J.
You can see slide 33 for some more information on this.
Operator
Thank you. The next question is from the line of Tanya Desai from Elevate Research. Please go ahead.
Tanya Desai
Hello, sir, good evening. Thank you for the opportunity. I had one question. What gives us the confidence that the challenges we faced this quarter will not persist? And what will change customers’ mindset going ahead?
Gopalakrishnan J.
So challenges we faced this quarter were two things. One was regulatory related from a handover perspective. We didn’t have a challenge on the launch side, but I believe the industry seem to have had some problem on the launch — regulatory side on the approvals on the launch as well, but we had three launches, but the industry volume came down because there was less number of launches during the quarter.
We can discuss that offline if required, but I think the regulatory challenges related to the approvals, launch-related hurdles, I think is now ironed out. And I think the deck is fairly smooth and clear now. So you would see most of the industry players launching their projects now. Therefore, we have comfort and confident that the launches can happen. That’s the second problem.
The customer mindset issue was mostly related to the auspiciousness and this 10, 12 days of each slot gets lost that loses the momentum. That was the bigger issue. Normal typically, only about that 9, 10 days will be lost. But this time, it was like two instances is lost. Then there was a Chennai flood, flash floods that kind of kept people away from the attention. So all of this, I can’t really predict some of this will happen again or will not happen again.
But I believe Chennai, of course, still has a monsoon continuing. Monsoon period is still there till December. But other than the heavy monsoon surprises, it can throw, we believe the auspicious period is already here. So still except barring, I think, two weeks of another interruption in Tamil Nadu alone between mid-December to — there’s inauspicious period.
Beyond that, there is no big surprise. And therefore, the traditional peak season during second half, which every year, we used to see robust volume, those should still — all those drivers are still in place, and that gives us the comfort that market outlook is better. There was a media article or there was a research report that I saw saying pricing could also be an issue. And I believe that’s the benefit of consolidation. We haven’t seen any big price rise in the last three, four months.
That’s a positive news as well that at stable prices, conducive, religious, auspicious splash whatever it is, those sentiments should continue. Because there is no macro or a financial parameter which is hurting the sector right now, be it interest rates, job losses, availability of loans. Those are not the criteria. It was the emotional sentiment. Therefore, at some stage, they will go away. So we don’t see those as a permanent hurdle or a setback for the industry for a longer term.
Tanya Desai
Okay, sir. Thank you so much. That was really helpful. Thank you.
Operator
Thank you. [Operator Instructions] As there are no further questions, I now hand the conference over to the management for the closing comments.
Gopalakrishnan J.
Yes. On behalf of Shriram Properties, I wish to thank everyone on this call for their time and want to reassure and commit that the company is committed towards ensuring sustained growth momentum, and we’re working towards it. And this quarter — second quarter is an aberration in our view. And therefore, we are confident of delivering meaningful growth and earnings in the coming quarters.
So look forward to staying in touch with each of you. And hopefully, we will see a much stronger earnings and support from all of you in the coming quarters. Thank you once again for your time and look forward to talking to you sometime in the near future. Thank you.
Operator
[Operator Closing Remarks]