Sunteck Realty Limited (NSE: SUNTECK) Q3 FY23 Earnings Concall dated Feb. 01, 2023
Corporate Participants:
Kamal Khetan — Chairman and Managing Director
Prashant Chaubey — Chief Financial Officer
Analysts:
Adhidev Chattopadhyay — ICICI Securities — Analyst
Harshvardhan Agrawal — IDFC Mutual Fund — Analyst
Pritesh Sheth — Motilal Oswal Financial Services Ltd. — Analyst
Kunal Lakhan — CLSA — Analyst
Nishit Shah — Nuvama Wealth — Analyst
Alpesh Thacker — Antique Stock Broking Limited — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Sunteck Realty’s Earnings Conference Call for Q3 FY ’23.
We have with us today, Mr. Kamal Khetan, the Chairman and Managing Director of the company and Mr. Prashant Chaubey, the Chief Financial Officer. Please note that this call will be for 30 minutes. [Operator Instructions] This conference is being recorded and the transcript for the same may be put up on the website of the company. [Operator Instructions] Please note that this conference is being recorded
Before I hand the conference over to the management, I would like to remind you that certain statements made during the course of this call may not be based on historical information or facts and may be forward-looking statements, including those related to business statements, plans and strategy of the company, its future financial condition and growth prospects. These forward-looking statements are based on the expectations and projections and may involve a number of risks and uncertainties and other factors that could cause actual results, opportunities and growth potential to differ materially and those suggested by such statements.
I now will turn the conference over to Mr. Khetan, the Chairman and Managing Director of the company. Thank you, and over to you, sir.
Kamal Khetan — Chairman and Managing Director
Thank you for joining Sunteck Reality third quarter and nine months earning call for the financial year 2023.
Hope each one of you and your families are safe and healthy. In the first nine months of 2023, we have achieved robust growth in both pre-sales and collections. This continued strong operational performance has enabled us to generate close to INR311 crores of operating cash flow surplus, which further makes the balance sheet more stronger, taking the negligible net debt ratio from 0.19 times in FY ’22 to 0.14 times in nine months of FY ’23.
On the cumulative basis, since FY ’21, we have generated close to INR830 crores of operating cash flow surplus. All our existing growth engines, namely Sunteck City at Goregaon West, Sunteck World at Naigaon and Sunteck Beach Residences at Vasai West, are throwing positive cash flows on sustained basis. We have been felicitated by EDGE-IFC, the World Bank Group company with EDGE Green Building pre-certification for our six ongoing projects, four residential and two commercial. Our endeavor is ensuring that the company’s projects are designed sustainably as next-generation buildings, keep the environment wellbeing at the center of its mission.
I would again now like to reiterate that in the past three years, we have acquired 25.5 million square feet across micro market of MMR with a gross development value of INR20,000 crores. And this is our company’s best ever performance. Our endeavor is to maintain this momentum going forward. I’m very proud of the team that we have built at Sunteck in the last 15 years, and we are growing and strengthening it further.
I would now hand over the call to our CFO, Mr. Prashant Chaubey, for his comments. Thereafter, I would be happy to answer your questions if any. Over to you, Prashant.
Prashant Chaubey — Chief Financial Officer
Thank you, sir. Good evening, everyone, and thank you once again for joining us today and taking out your valuable time for this conference call.
The financial and operational numbers have already been published on the stock exchanges. I believe all of you must have gone through the same. Now, I would like to highlight the key financial and business performance numbers. Our pre-sales grew by 12% year-on-year in quarter three of FY ’23 to INR396 crores compared to INR352 crores in quarter three of FY ’22. Collections grew by 13% year-on-year to INR304 crores in quarter three of FY ’23 compared to INR270 crores in quarter three of FY ’22. For the nine months, similarly, the pre-sales grew by 33% and the collections grew by 42%, respectively. With respect to the financial highlights, we have reported a consolidated revenue of INR314 crores in the nine months of FY ’23, and our operating cash flow surplus stands at INR311 crores for nine months of FY ’23.
We can now open the forum for questions from the participants. Thank you very much.
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 Adhidev Chattopadhyay from ICICI Securities. Please go ahead.
Adhidev Chattopadhyay — ICICI Securities — Analyst
Yeah. Good evening, everyone. Am I audible?
Operator
Yes, sir. You are.
Adhidev Chattopadhyay — ICICI Securities — Analyst
Yeah. Sir, main question is, sir, could you just now give us on what is the upcoming launch pipeline for the next six months to 12 months? And therefore, what is the sort of sales targets in terms of overall sales you are looking at over the next couple of years? And some updates on where the approvals, at what stage are we — at what stage are we in the different projects? Thank you.
Kamal Khetan — Chairman and Managing Director
So, Adhidev, as far as the sales numbers, I think, Prashant will give you and update on the — coming to the update on the approvals, I’ll get on with that one [Technical Issues].
Prashant Chaubey — Chief Financial Officer
Good evening, Adhidev. So, Adhidev, in the first nine months of FY ’23, as you are aware, we have done a year-on-year growth of 33%. On a compounded annual growth rate basis, since FY ’18 till FY ’22, we have delivered a pre-sales growth of 22%. So going forward, our target is to deliver pre-sales growth of around 20% to 30% on a compounded annual basis. So, that is the target of the company, which it wants to achieve going forward in the coming years.
In terms of launch pipeline, Adhidev, as you are aware, we have acquired 25.5 million square feet in the last three years, which has a gross development value of INR20,000 crores. So, these projects include projects in Borivali West, Mira Road, Kalyan, Vasai. So, all these projects are going to be launched in the — out of this, Vasai, we have already launched in FY ’23. And in the coming financial year in FY ’24, our endeavor is to launch Mira Road and Kalyan project.
Kamal Khetan — Chairman and Managing Director
So, Adhidev, obviously before March ’23, we are looking to launch at least one project out of these two projects, Kalyan and — Kalyan or Mira Road, at least one project. We are quite confident and we will do that because the approvals of both the projects are at very advanced stage. We are trying, obviously, both the projects, but it will be too ambitious to say that both the projects will be launched before 31st March. But at least one for sure. Plus, we are doing a new activation, launch of a new tower in Vasai West also. So these two are the big launches, one coming from mostly Mira Road or Kalyan and the other one, the activation of new tower in Vasai West.
Adhidev Chattopadhyay — ICICI Securities — Analyst
Okay, sir. Thank you, and all the best.
Kamal Khetan — Chairman and Managing Director
Thank you.
Operator
Thank you. Next question is from the line of Harshvardhan Agrawal from IDFC Asset Management. Please go ahead.
Harshvardhan Agrawal — IDFC Mutual Fund — Analyst
Hi, sir. Trust you all are doing well. Thanks for the opportunity. Just wanted to understand, last quarter we said that we’ll be achieving an INR1,800 crores of pre-sales this year, this financial year. Looking at the run rate that we have currently, we seem to be falling short. So how should we look at it?
Kamal Khetan — Chairman and Managing Director
So, Harshvardhan, if you see our track record from last two years to three years or whatever, the Q1 has been better than the Q2 and the — sorry, Q2 has been better than Q1 and Q3 is better than Q2 and Q4 is better than Q3. So Q4, which is the best quarter, always has been for Sunteck. I think we are waiting for that Q4 quarter. We are very confident, if not INR1,800 crores, we will be very close to INR1,800 crores. That’s because we are banking on at least one launch out of this Mira Road launch or the Kalyan launch before the March 31st.
Harshvardhan Agrawal — IDFC Mutual Fund — Analyst
Okay. So, sir, if I just were to look at the numbers of, say, INR1,800 crores, we are currently at, more or less you had done INR1,100 crores already. So what we need is INR700 crores. So, what is our expectation that this new project will contribute as to what percentage of this remaining INR700 crores?
Kamal Khetan — Chairman and Managing Director
So, we are looking at, at least INR300 crores — approximately around INR350 crores coming from there.
Harshvardhan Agrawal — IDFC Mutual Fund — Analyst
Got it. Sure. And, sir, one last question is, from a PPT, specifically Slide Number 29. So, if I were to look — compare the slides from 2Q PPT versus 3Q PPT, absolutely nothing has changed in terms of numbers. So is it fair to assume that during this quarter, there was no launch per se that was done within the existing projects also?
Prashant Chaubey — Chief Financial Officer
So, Harsh, Prashant, this side. So from the existing projects, as you are aware, last time what we have communicated is that we had already launched two projects, that is Sunteck OneWorld and Sunteck City 4th Avenue. The higher floors of Sunteck City 4th Avenue was launched in the third quarter and Sunteck OneWorld new launch, new activation was done in the third quarter, in the quarter gone by. So, these projects are already launched and with new approvals, we launched new phases of these projects, which were already launched. So, that’s why the numbers have not changed.
Harshvardhan Agrawal — IDFC Mutual Fund — Analyst
Okay. So basically, the way we should look at it is, if you have [Phonetic] already launched column that we have, it is when we put a number there, it’s for the entire project that we put out.
Prashant Chaubey — Chief Financial Officer
Correct. Like, for example, entire Sunteck OneWorld is there, entire Sunteck City 4th Avenue is there.
Harshvardhan Agrawal — IDFC Mutual Fund — Analyst
Okay. And that’s why — although we are achieving some sales number, but it’s not increasing the launch number per se?
Kamal Khetan — Chairman and Managing Director
Correct, Harsh. Correct.
Harshvardhan Agrawal — IDFC Mutual Fund — Analyst
Got it. And sir, just one last thing regarding our pre-sales target for FY ’24. So what target do we have for, say, ’24?
Kamal Khetan — Chairman and Managing Director
So, Harsh, as we said that — Prashant already said that, we are looking at growth of 20% to 30%. So on a conservative side, we can assume from FY ’23 — that FY ’24, we will be at least more by 20% to 30% on our pre-sales number.
Harshvardhan Agrawal — IDFC Mutual Fund — Analyst
Okay. So, sir, just if I were to quickly do the number, that comes to somewhere around INR2,300 crores, INR2,400 crores. So that is the number that we are targeting.
Kamal Khetan — Chairman and Managing Director
Yeah. Whatever that number is, I think, we are pretty confident because the kind of acquisitions we have done, I think, Harsh, you will appreciate. Obviously, the approvals have to come. I think we are turning around the projects. We are trying our best to get there. We are putting pressures on our landlords because the approvals — we put the obligation of getting the approvals on the landlords. That is what we are doing. And I think if you look at Vasai, we turned around very fast. Again, Mira Road, if we can launch it before 31st March, I think it will be a record time like in less than a year after acquisitions we have turned around the project and launched it as well. So, I think we are pretty confident that 20%, 30% growth for the next year should be very comfortable.
Harshvardhan Agrawal — IDFC Mutual Fund — Analyst
And, sir, just if I can slip in one last question is, again, this is regarding the Borivali project. In last quarter, we had said that we are looking to launch Borivali, Kalyan and Mira Road maybe in the next four months, five months. But right now, if I look at ’23, ’24, we are looking to launch Mira Road and Kalyan. So is it that our Borivali project is moving to, say, probably FY ’25 launch?
Kamal Khetan — Chairman and Managing Director
So last time also we said that we will try to launch at least one or two projects minimum in this financial year. So out of which I think Vasai we already launched. And now we are — out of the three projects, Borivali, Kalyan, and Mira Road, if you ask me, the way it will go, first two launches will be either Mira Road and Kalyan or Kalyan or [Foreign Speech] first Kalyan and second, Mira Road or Mira Road, the way the approvals are coming. And then, thereafter, we can look at Borivali project.
Operator
Thank you. I request all the participants please restrict to two questions per participant. Next question is from the line of Pritesh Sheth from Motilal Oswal. Please go ahead.
Pritesh Sheth — Motilal Oswal Financial Services Ltd. — Analyst
Yeah. Hi. Thanks for the opportunity. Just on the launches, I had — I also had a similar question on Borivali. But any update on the Pen-Khopoli project launch. We had again signed that land parcel quite some time back. So any update if you can provide? And just, again, reiterating on the previous question. So Borivali can still happen in FY ’24, or is it a FY ’25 thing?
Kamal Khetan — Chairman and Managing Director
So, Pritesh, first, I’ll answer for your Borivali project. Borivali project, I would like to launch it maybe yesterday because as we all know that’s a great land parcel. It’s, I think, one of the most best land parcel one can get it in Borivali West. But unfortunately, approvals are not in our hands. And again, even if we are trying our best, although the approvals is the obligation of the landlord and obviously, he is also looking to monetize it ASAP. But we are helping him and we are trying our best to get the approvals as early as possible. Definitely, we are not looking at FY ’23. We should be looking as early as possible. Obviously, we’ll try to launch it in FY ’24.
Pritesh Sheth — Motilal Oswal Financial Services Ltd. — Analyst
Okay. And on Pen-Khopoli?
Kamal Khetan — Chairman and Managing Director
So, Pen-Khopoli, I think it’s a plotted development and some villas development. I think we are waiting for, again, there also some small approvals. That’s not a big project in terms of gross development value, if you look at it. I think we should be — we are working on it. I think once we get some clarity, I would like to comment on it.
Pritesh Sheth — Motilal Oswal Financial Services Ltd. — Analyst
Sure. And just lastly, again on launches, any phase launches that you’re planning in Naigaon or Goregaon in FY ’24?
Kamal Khetan — Chairman and Managing Director
Obviously. Yes. So in all the projects, which are the existing projects, like, let’s say, in Sunteck City, we will be looking at some more inventory to be launched in Sunteck City, Goregaon West. Then coming to Naigaon, again, we will be launching some few more towers of Sunteck OneWorld. There are two, three towers more, which are not being launched.
And plus, there will be a second phase of Sunteck MaxXWorld, which is as big as Sunteck MaxxWorld first phase. So it is as good as the — again, a big launch of more than 2,000, 2,500 apartments that we are looking at. Plus, obviously, if we launch Mira Road this year, then we will be launching Kalyan next year. So, there are quite a big pipeline for the next year FY ’24. So, I think that’s how it is.
Pritesh Sheth — Motilal Oswal Financial Services Ltd. — Analyst
So in next 12 months, 15 months, what is the sales value that we are probably looking at launching that could probably give us a clarity on what sort of pre-sales we be able to clock? So just on the overall sales potential of the launches that you are planning.
Kamal Khetan — Chairman and Managing Director
So, Pritesh, project to project phase-wise launches, I think we’ll have to then calculate how much exact value. Again, Prashant can give you a rough idea. We are looking at — Prashant, can you give the numbers?
Prashant Chaubey — Chief Financial Officer
So, hi, Pritesh. Prashant, this side. So, Pritesh, if you go through Slide Number 29, up to FY ’24, the target of the company, the goal of the company is to launch close to 7.5 million square feet. That is the goal. And if we are able to achieve 80%, 90% of that, we will be easily achieving our previous target of 20% to 30% growth.
Operator
Thank you. Pritesh, I will request you to come back in the queue. [Operator Instructions] The next question is from the line of Kunal Lakhan from CLSA India. Please go ahead.
Kunal Lakhan — CLSA — Analyst
Yeah. Hi. Good evening. My question was again on the Slide 29. So, our 20% to 30% growth outlook for ’24, can it happen without, say, Borivali not getting launched? Or it is contingent upon Borivali getting launched in FY ’24? And also I wanted to understand what is there in others of 1 million square feet, which projects are there for FY ’24?
Kamal Khetan — Chairman and Managing Director
So we, definitely, when we are talking about 2,400, 2,300, whatever that 20%, 30% growth, we are definitely not considering Borivali into it. If that happens, we will be much above — the growth of 25%, 30%. In fact, we will be crossing more than 30% growth. So conservatively, if we look, we have not even taken Borivali into the next year target. But our endeavor is definitely to get the approval for that as well and try to launch as much as possible. And in other projects like there are some — there are like projects like Pen-Khopoli, some commercial, small, small within the existing land parcel, some retail. So all those put together are the others.
Kunal Lakhan — CLSA — Analyst
Nepean Sea Road is not included in others, I’m assuming.
Kamal Khetan — Chairman and Managing Director
No, not at all. Neither Nepean Sea Road is included, nor our Borivali is included.
Kunal Lakhan — CLSA — Analyst
So, Borivali is included above, right? It’s shown separately.
Kamal Khetan — Chairman and Managing Director
So, Borivali is included above. Correct. So not in the others. Okay. Sorry, I thought it’s mentioned in — it’s mentioned separately. Yes, that’s what [Speech Overlap].
Kunal Lakhan — CLSA — Analyst
Sure. And Kamal ji, what’s the status on Nepean Sea Road project, if you can highlight?
Kamal Khetan — Chairman and Managing Director
So very frankly, it will be very difficult to comment that when — at least to launch in, maybe in FY ’24. It looks — to be very, frank, I want to be very straight, it looks difficult. We can target it maybe in FY ’25.
Kunal Lakhan — CLSA — Analyst
Sure. Thank you. I’ll come back in the queue. Thank you.
Kamal Khetan — Chairman and Managing Director
Thank you, Kunal.
Operator
Thank you. Next question is from the line of Nishit Shah [Phonetic] from Nuvama Wealth. Please go ahead.
Nishit Shah — Nuvama Wealth — Analyst
Hello? Yeah. Good evening, sir. So, I’m relatively new to the company. So pardon my ignorance. Just a couple of questions. So first, on the bookkeeping side. So in terms of area, I mean, can you just highlight how much area that — bookings that we have received in maybe — in Q3 as well as the corresponding quarter in the last year?
Prashant Chaubey — Chief Financial Officer
So, hi, Nishit. Prashant, this side. In Q3 FY ’23, we have sold close to around 0.35 million square feet, close to 3.5 lakh square feet. That is what we have sold. Okay. And in quarter three of FY ’22, we have sold close to around 0.30 million square feet, that is 3 lakh square feet, roughly.
Nishit Shah — Nuvama Wealth — Analyst
Okay. Got it. And the last quarter, would be?
Prashant Chaubey — Chief Financial Officer
Last quarter? Last quarter was also close to around 3 lakh square feet, Nishit.
Nishit Shah — Nuvama Wealth — Analyst
Okay. Perfect. And secondly, on the cash flows, so basically if we see the first half, that in the first half we have kind of done a cash flow of, say, around 200 — sorry, just one minute. Yeah, INR225 crores, that is operating cash flow surplus. And for the nine months if we see, it’s around INR311 crores. So from the quarterly run rate in the first half, we have seen a dip to around, say, INR86 crores for this quarter, Q3. So, is there any one-off or any specific reason why is there a dip?
Prashant Chaubey — Chief Financial Officer
There is a dip in the debt you mean to say?
Nishit Shah — Nuvama Wealth — Analyst
No, operating cash flow.
Prashant Chaubey — Chief Financial Officer
No, operating cash flows, Nishit, what you have to understand is that when sir spoke about the approvals that we have, we have applied for Kalyan and Mira Road, so these approvals, the payment has gone from Sunteck because the landowners — we fund the landowners via loan mechanism which is interest bearing. So, this money is going towards the payment of those. So, that also becomes part of your working capital changes. It is not shown as a separate item as the capital expenditure. So, that is why you will see that dip, if I may say so.
Nishit Shah — Nuvama Wealth — Analyst
Great, sir. Got it, sir. Those were my two questions. Thank you.
Kamal Khetan — Chairman and Managing Director
In fact, it is a kind of — in fact, treasury management for us because, obviously, when we are lending to the landlords, it is 14%, 15%, or 16%. And the cost of borrowing for Sunteck is, I think, close to 9% in single digit.
Kunal Lakhan — CLSA — Analyst
Got it. Thank you so much.
Operator
Thank you. Next question is from the line of Alpesh Thacker from Antique Stock Broking. Please go ahead.
Alpesh Thacker — Antique Stock Broking Limited — Analyst
Thank you for taking my question, sir. My first question is on the BKC project. Sir, what exactly is happening there? And if I’m not wrong, luxury market, overall market has been doing good. So are we seeing any traction there? Or what is the challenge with that project? If I’m not wrong, there is no sales for last couple of quarters. So just want to have your thoughts [Phonetic] on that project. And what is the monetization plan going ahead?
Kamal Khetan — Chairman and Managing Director
Sorry. There is a disturbance, I think, at your background. Can you repeat the question?
Alpesh Thacker — Antique Stock Broking Limited — Analyst
Sorry. Yeah. Sure. So, my question is regarding the BKC project.
Kamal Khetan — Chairman and Managing Director
Can you take it from some background where there is no noise in the background, please?
Alpesh Thacker — Antique Stock Broking Limited — Analyst
Sure, sir. So, my question is regarding the BKC project. So what exactly is our monetization plan there because I see that there is a kind of slow down in the monetization of that project, while the overall luxury market has been doing quite decent for last one year? So just your thought on that project.
Kamal Khetan — Chairman and Managing Director
So, Alpesh, obviously, your concern is right, I think, to certain extent, obviously because we have not been able to do — not much sales in last few quarters about — in terms of BKC. But we are aggressively trying our best to monetize the project. There is — means we are trying the best way how we can monetize. I don’t have a answer right now for that, that how it will happen, when it will happen. But we are trying our best. I can only say that much to you.
Alpesh Thacker — Antique Stock Broking Limited — Analyst
Okay. Sir, but are we seeing any inquiries or the visitations like that is tracking up or taking of that sort, like in last, let’s say, one or two quarters like more visitations or the inquiries about that project, any momentum there?
Kamal Khetan — Chairman and Managing Director
So, Alpesh, I would say the inquiries have only increased and number of hot deals are quite number — [Foreign Speech] decent number which are there. I don’t want to commit anything till the time we conclude the deal, but you will see some action in this current quarter and next coming quarters. I can only say that.
Operator
Thank you very much. Ladies and gentlemen, we’ll take that as the last question. I now hand the conference over to the Chairman and Managing Director, Mr. Khetan for closing comments.
Kamal Khetan — Chairman and Managing Director
Thank you all for taking out the time from your busy schedule today. In case, if any of your queries have been left unanswered, you can get in touch with me or my team. We look forward to your continued support.
Thank you once again for joining us today and please be safe. Thank you.
Operator
[Operator Closing Remarks]