Sunteck Realty Limited (SUNTECK) Q4 FY23 Earnings Concall Transcript

Sunteck Realty Limited (NSE:SUNTECK) Q4 FY23 Earnings Concall dated May. 29, 2023

Corporate Participants:

Kamal Khetan — Chairman and Managing Director

Prashant Chaubey — Chief Financial Officer

Analysts:

Adhidev Chattopadhyay — ICICI Securities — Analyst

Parvez Qazi — Nuvama Group — Analyst

Alpesh Thacker — Antique Stock Broking — Analyst

Pritesh Sheth — Motilal Oswal Financial Services — Analyst

Abhinav Sinha — Jefferies India — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Sunteck Realty’s Earnings Conference Call for Q4 and Full Year FY ’23. We have with us today Mr. Kamal Khetan, the Chairman and Managing Director of the Company; Mr. Prashant Chaubey, the Chief Financial Officer; and Mr. Abhishek Shukla, the Vice President of Strategy and Investor Relations.

Please note that this call will be for 30 minutes and for the duration of this conference call, all participant lines will be in the listen-only mode. This conference is being recorded and the transcript for the same may be put up on the website of the Company. After the management’s discussion, there will be an opportunity for you to ask questions. There is a Q&A session. We request to restrict questions to two per participant. [Operator Instructions]

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 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 will now 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 Realty’s fourth quarter and full year earning call for the financial year FY ’23. Hope the year gone has been prosperous for you and your family. Now in the year gone by, we achieved a strong sustained growth in both pre-sales and collections. In fact, on both the parameters, this is our best-ever performance indeed. We closed FY ’23 with INR1,600 crore in pre-sales and INR1,250 crore in collections. The strong operational performance has enabled us to generate more than INR425 crore of surplus operating cash flow in FY ’23. Cumulatively over the last three financial years, we have generated close to INR950 crore of surplus operating cash flow. This has allowed us to not only do aggressive acquisitions but also enabled us to reduce our already negligible net debt equity ratio in the last three years from 0.22 to 0.1.

During the course of FY ’23, we have added two more new growth engines namely Sunteck Beach Residences at Vasai West and Sunteck Skypark at Mira Road. These two new big projects have received overwhelming response from the customers and the robust demand for recent launches, soon to be launched, existing and new projects will enable us to grow on sustained basis and we enthusiastic — as we enthusiastically embark on FY ’24.

Along with residential, we are also now focusing on building a rental portfolio from our commercial projects and to mention, we have already pre-leased the entire project of Sunteck BKC51 at BKC Junction for lease tenure of 29 years. Similarly we are looking to pre-lease our second project also at BKC Junction namely Sunteck Icon.

Over the now past several years, our team has put in tremendous effort to build the Sunteck brands. Our brand in the IOPA [Phonetic] stakeholders, is reflective of luxury living and the strong balance sheet with strong cash flows. We will continue to deliver on this and set new benchmarks.

I would now like to hand over the call to Mr. Prashant Chaubey, our CFO 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 to one and all 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 stood at INR537 crores in quarter four of FY ’23 compared to INR396 crores in quarter three of FY ’23, a growth of 36% on a quarter-on-quarter basis. Our full year FY ’23 pre-sales stood at INR1,602 crores compared to INR1,303 crores in FY ’22, a growth of 23% year-on-year.

We achieved collections or INR330 crores in quarter four of FY ’23 compared to INR304 crore in quarter three of FY ’23, a growth of 8% on a quarter-on-quarter basis. Our full year FY ’23 collections stood at INR1,250 crores compared to INR1,052 crores for FY ’22, a growth of 19% year-on-year. Additionally to this, I’m happy to share that our pre-sales and collections CAGR for the last two years has increased in tandem to 25% and 27% respectively.

With respect to the financial highlights, we have reported a consolidated revenue of INR362 crore in FY ’23 and our surplus operating cash flow stands at INR428 crore for 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

Good evening. Am I audible?

Operator

Yes, you are.

Kamal Khetan — Chairman and Managing Director

Yes, Adhidev, you are audible.

Adhidev Chattopadhyay — ICICI Securities — Analyst

Yes, yes. Sir, just a question on the guidance now for FY ’24. Maybe just help us understand what are the planned launches for the year, what is the approval status of the projects which you are planning and also how would the collections trend in line with the pre-sales which you have achieved in the last year? That’s it from my side.

Kamal Khetan — Chairman and Managing Director

Yeah. Hi, Adhidev. So we are — so guidance, I would only say that we are confident that we’ll continue to — last two, three years you have been seeing we have been able to achieve a growth of — sustained growth of 20% to 30% and that we are confident we will continue to do that.

And on the launch front it’s — like last year — in FY ’23, we already launched two big projects which is Sunteck Beach Residences and we could launch in fact the second project which was in Q4 and in fact — in the end of March — towards the end of March ’23. So — because of that we could not take the full advantage of obviously the new launch of Skypark, which is Mira Road. The second project what we newly launched. We are confident this year we will be able to at least launch — looking at the approval what we have in place, Kalyan project which we are very, very confident. And with this and new launches of the existing projects, we are confident that we’ll be able to achieve this growth of 20% to 30% minimum.

Adhidev Chattopadhyay — ICICI Securities — Analyst

Okay. So sales for at least INR2,000 crores plus is a very achievable target there to understand it correctly going forward?

Kamal Khetan — Chairman and Managing Director

So I think that should be achievable.

Adhidev Chattopadhyay — ICICI Securities — Analyst

Okay, sir. Yeah. That’s it from my side. Yeah. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Parvez Qazi from Nuvama Group. Please go ahead.

Parvez Qazi — Nuvama Group — Analyst

Hi. Good afternoon and thanks for taking my question. So my first question is, the overall demand environment obviously remains good. What is the outlook on the pricing scenario? Did we take any kind of price hikes in FY ’23 in our projects?

Kamal Khetan — Chairman and Managing Director

So, Parvez, again not, very frankly, looking at any price rise. But we are confident the demand is strong and it will continue to stay and we have not considered that any price rise, which will be — we will be looking at in FY ’24. So if it comes, it is great if the market gives us that price rise. And if we feel we should increase, we’ll definitely look for it. But otherwise we have not considered that.

Parvez Qazi — Nuvama Group — Analyst

Okay. And a question for Prashant. What would be our current inventory in the ODC and the Naigaon projects?

Prashant Chaubey — Chief Financial Officer

Yes, yes, Parvez. Just give me one second.

Parvez Qazi — Nuvama Group — Analyst

Yeah. You can — you can answer it maybe a minute or two late. We can take the next question.

Prashant Chaubey — Chief Financial Officer

So, Parvez, for ODC, we have three projects which are launched, Sunteck City Avenue 1, Sunteck City Avenue 2 and Sunteck City 4th Avenue. Very minimalistic inventory is remaining in these three projects as of now because we have sold. Currently we have — the balance inventory which is available to us in these three projects put together is close to around INR250 crores, that is the number.

And for Naigaon, at Naigaon again from the — from the launch phases, Naigaon — again from the launch phases, which is Sunteck West World, Sunteck Maxx World and Sunteck One World, these three projects put together, we have close to around INR400 crores of balance inventory to be sold. When I say balance inventory to be sold, this does not include the balance receivables, Parvez. So these are basically the inventory levels. And also just to clarify, not the phases to be launched.

Parvez Qazi — Nuvama Group — Analyst

Yeah, yeah.

Prashant Chaubey — Chief Financial Officer

In both the locations.

Parvez Qazi — Nuvama Group — Analyst

Sure. And can I get a similar number for the Vasai project also?

Prashant Chaubey — Chief Financial Officer

Sure. So Vasai — only the launched portion I am talking about, Parvez, again. In the launched portion, we have close to around INR600 crores of future sales inventory which is available with us.

Parvez Qazi — Nuvama Group — Analyst

Sure. Okay. Great. All the best for future.

Kamal Khetan — Chairman and Managing Director

Thank you. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Alpesh Thacker from Antique Stock Broking. Please go ahead.

Alpesh Thacker — Antique Stock Broking — Analyst

Thank you for taking my question. Sir, first question is on the commercial side. So, you mentioned that in the BKC —

Operator

Alpesh, sorry to interrupt. Your voice is not coming clearly.

Alpesh Thacker — Antique Stock Broking — Analyst

Hello. Is it audible now?

Operator

Slightly okay.

Alpesh Thacker — Antique Stock Broking — Analyst

Okay. So in the commercial part, sir, as you mentioned in your opening remarks that we were able to see leased whole portion of BKC 51. Sir, at what rate was it done? So what was the rental for that?

Kamal Khetan — Chairman and Managing Director

So the rental was like INR300 per square feet plus.

Alpesh Thacker — Antique Stock Broking — Analyst

Okay, okay. And what is the status of the other commercial projects?

Kamal Khetan — Chairman and Managing Director

So other commercial project is also very close to completion and we are already in talks. So we are looking to create that also, which is on the BKC Junction, the second one again. Same as Sunteck BKC 51 that is Sunteck Icon. The name of that project is Sunteck Icon.

Alpesh Thacker — Antique Stock Broking — Analyst

Okay. Understood. And rest of the three projects that we have, what is the status on that?

Kamal Khetan — Chairman and Managing Director

Other two commercial — three commercial projects?

Alpesh Thacker — Antique Stock Broking — Analyst

Yeah.

Kamal Khetan — Chairman and Managing Director

We are doing strata sales. We are doing the sales, like individual offices, we are selling those three projects.

Alpesh Thacker — Antique Stock Broking — Analyst

Okay. Got it.

Kamal Khetan — Chairman and Managing Director

[Indecipherable] two commercial projects.

Alpesh Thacker — Antique Stock Broking — Analyst

Got it. Thanks for that. And second one on breakup of the fourth quarter sales numbers. So a mid-income — can you give the breakup of what was [Indecipherable]?

Prashant Chaubey — Chief Financial Officer

So, Alpesh, Prashant this side. I will provide this number separately to you.

Alpesh Thacker — Antique Stock Broking — Analyst

Okay. Okay. No worries. Thank you.

Prashant Chaubey — Chief Financial Officer

— in the presentation we have given. I will separately also talk to you about this. It’s already there on the presentation already.

Alpesh Thacker — Antique Stock Broking — Analyst

I will check it. That’s it from my side.

Prashant Chaubey — Chief Financial Officer

Okay. Thank you.

Kamal Khetan — Chairman and Managing Director

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from Pritesh Sheth from Motilal Oswal. Please go ahead.

Pritesh Sheth — Motilal Oswal Financial Services — Analyst

Hi. Thanks for taking my question. First is on, how much was the size of the launch that we had in Skylark [Phonetic] — sorry, Skypark this quarter? And in terms of Kalyan which you are planning to launch this year, what should be the launch size we would be looking at?

Kamal Khetan — Chairman and Managing Director

Just one second, Pritesh. So, Pritesh, in Skypark in Mira Road we had launched — the total inventory size was close to around INR700 crores. Hello?

Pritesh Sheth — Motilal Oswal Financial Services — Analyst

Yeah, yeah. Yeah, audible.

Kamal Khetan — Chairman and Managing Director

Yeah, Pritesh, total inventory launch at Mira Road was close to INR700 crore. And of what we have sold, we have given the numbers in the presentation is obviously till March 31st, which was sold only in the March month.

Pritesh Sheth — Motilal Oswal Financial Services — Analyst

Sure. And how much was that contribution, if you can just —

Kamal Khetan — Chairman and Managing Director

That was close to approximately INR250 crore. Exact numbers, I think Prashant will be able to give you after the call. If you want, you can separately get connected. And the total combination numbers must be there anyhow on the presentation? It is there.

Pritesh Sheth — Motilal Oswal Financial Services — Analyst

Yeah. Yeah. And the launch size that you are planning for Kalyan?

Kamal Khetan — Chairman and Managing Director

Something similar INR500 crore, INR600 crore.

Pritesh Sheth — Motilal Oswal Financial Services — Analyst

Okay. So that would be like around 0.5 million square feet, is it?

Kamal Khetan — Chairman and Managing Director

We can easily look at that site.

Pritesh Sheth — Motilal Oswal Financial Services — Analyst

Okay, so just a follow-up on that. How should we look at monetization of such large project? I think the Mira Road, it’s around 3 million to 4 million square feet, if I’m not wrong. And Kalyan would be similar, around 10 million square feet. And if we are launching at — for the first phase at 0.5 million square feet, how should we think about the monetization of these two large projects?

Kamal Khetan — Chairman and Managing Director

So obviously we are looking at all projects. These are huge projects. These are 50 acres, 40 acres. We are not — Sunteck is now not looking at taking small, small projects because we feel we like set up a growth engine or a factory production house there for next seven to eight years, 10 years. So we are — first launch, we are always looking at anything between 0.5 million to 1 million square feet. Maybe we launch 1 million square feet also. But I don’t want to overcommit to you right now anything.

Pritesh Sheth — Motilal Oswal Financial Services — Analyst

Sure.

Kamal Khetan — Chairman and Managing Director

That is how we want to go ahead and build locations where we can be there for seven to eight years and change the — in that location we command a premium. And that’s how we have gone and done. Now we have created almost six locations and six production houses for us at [Indecipherable]. We are looking like a manufacturing facility for us in that particular location. And that’s how we want to go about in future acquisitions as well.

Pritesh Sheth — Motilal Oswal Financial Services — Analyst

Sure. Got it. So seven to eight years or 10 years should still be the timeline that we should look at, yeah?

Kamal Khetan — Chairman and Managing Director

Yeah. Because we don’t want to — and if we can buy a raw material without putting too much money on it and hold it for 10 years without affecting the IRR and balance sheet, without putting the balance sheet money, so I think it cannot be a better thing than this.

Pritesh Sheth — Motilal Oswal Financial Services — Analyst

Got it. Fair enough. That’s clear. That’s it from my side and all the best.

Kamal Khetan — Chairman and Managing Director

Thank you. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Abhinav Sinha from Jefferies India. Please go ahead.

Abhinav Sinha — Jefferies India — Analyst

Hey. Hi. Sir, just wanted to check a couple of things. So, on the affordable housing side of the business, how is demand looking like as compared to the overall?

Kamal Khetan — Chairman and Managing Director

So, hi, Abhinav. Abhinav, first thing obviously we should understand where we are in which segment, whether we call it affordable or lower mid-income group segment because affordable means whatever we are talking if we talk the lowest selling price of all our six — which we are calling six growth engines what we have right now, six big — large projects what we have, the lowest selling price is for Naigaon, which is almost like INR11,000 per square feet, which is more than an average selling price of any Bangalore developer or a Chennai developer or a Hydrabad developer, which is not affordable at all.

So which we are now — because the prices — price point when we launched, which was INR6,000. Now what we are selling at is INR11,000 a square feet. So now it is — I would put it in — even that project, which is the lowest selling price at a low mid-income group segment. And to mention your question — answer to your question, even that is doing well. If you see the sales are across all the segment, whether we now call it lower mid-income segment or upper mid-income segment and the luxury, uber luxury segment, all three segments, we are doing extremely well and the projects are selling — if you see the sales are proportionately almost divided depending on the approval and what we have launched first or — before or later.

Abhinav Sinha — Jefferies India — Analyst

Right. Sir, secondly on when we’re expecting, let’s say, 25%-odd growth for FY ’24 on pre-sales, what are the new launches that we should expect to contribute to the same?

Kamal Khetan — Chairman and Managing Director

New launches, Abhinav, is — obviously one is Kalyan and we’ll see the new launch, which we recently did in March 31st, during the end of March31st, our Skypark launch, which is at Mira Road, both this in itself should be sufficient to give us a minimum 20% to 30% growth or 25% to 30% growth. And over and above obviously, all the other projects, we will continue to do some new launches or the other.

Abhinav Sinha — Jefferies India — Analyst

Okay. And sir, just —

Kamal Khetan — Chairman and Managing Director

Any other acquisition, new acquisition will obviously keep adding to this portfolio.

Abhinav Sinha — Jefferies India — Analyst

Right. Sir, where are we targeting these new acquisitions, within which geographies?

Kamal Khetan — Chairman and Managing Director

So definitely MMR region. Nothing — we feel there is enough cream [Phonetic] in the Mumbai market, MMR market. And definitely we are looking something more towards the city side now in the uber luxaray segment and mid-income segment.

Abhinav Sinha — Jefferies India — Analyst

Okay. Okay. So something closer to the midtown area, is that what you’re looking at?

Kamal Khetan — Chairman and Managing Director

Yes, yes, yes, yes, yes.

Abhinav Sinha — Jefferies India — Analyst

Okay. Got it. And, sir, finally — I mean, not sort of dwelling on it, but generally wanted to check that last year you had given a guidance of around INR1,800 crores. But we are slightly short of it. So what are the reasons you would say and is it like approval delays were there and is that a reason or you thought the demand was slightly lower than what we would have expected it to be?

Kamal Khetan — Chairman and Managing Director

No, you are absolutely right, bang on. So, Abhinav, obviously, as I said, we were expecting this Skypark launch to be earlier than March. We were looking at Q3. Anyhow we managed to launch in Q4 and that too also towards the last month of Q4. So I think that — because of that, I think that got short of our target, because of that, I think. So the approval delays, obviously, which we were expecting in Q3. The approvals came towards the end of Q4.

Abhinav Sinha — Jefferies India — Analyst

Okay? So thank you and all the best.

Kamal Khetan — Chairman and Managing Director

Thank you. Thank you, Abhinav. Thank you.

Operator

Thank you. [Operator Instructions] I now hand the conference over to Mr. 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.

Operator

[Operator Closing Remarks]