Key takeaways of the call

The company surpassed the FY19 guidance in case of project completion and Exit Rentals. But launches in 9mFY19 were way off from the guidance. The company's project completion in 9mFY19 was 24.10 msft compared to 10-12 msft in FY19 translating into 241% of FY19 guidance. Similarly EXIT rental for 9mFY19 was Rs 862 crore compared to FY19 guidance of Rs 800-825 crore translating into 108% of current year guidance. The launches at 3.16 msft in 9mFY19 were just 32% of FY19 guidance of 10 msft. Similarly the leasing at 1.35 msft is just 68% of FY19 guidance of 2 msft; the collection at Rs 3164.3 crore was 84% of FY19 guidance of Rs 3750-4000 crore; and presales at RS 3184.5 crore was 91% of FY19 guidance. The company with a sales turnover of Rs 3358.6 crore in 9mFY19 has achieved 96% of FY19 guidance of Rs 3500-4000 crore sales turnover.

Residential launches in Q3FY19 were just 0.91 msft spread over one project i.e. Prestige Willow Tree. Launches including residential and commercial in Q3FY19 were about 1.56 msft of which 0.65 msft were commercial space [0.58 msft of commercial at Prestige Minsk Square in Bengaluru and 0.07 msft commercial spaces in prestige phoenix, Hyderabad].

Launches in 9mfY19 at 32% of FY19 guidance is largely as some approvals taking more time than expected. With just one quarter left meeting the guidance target is difficult, but the launches in next two quarter are expected to be strong considering strong project pipeline of the company which at various stages of approvals.

Total unsold stock of as end of Dec 31, 2018 was 9.71 msft (estimated value of Rs 7345.9 crore). Of the total unsold stock, that of completed projects was 3.33 msft (with a value of Rs 2801.3 crore), commercial projects were 0.31msft (or Rs 202.1 crore) and the balance is mid, premium and luxury residential space in ongoing projects.

Completion in 9mFY19 was a record time high with the company complete 9 residential projects, 5 office and 3 retail project during this period.

Unrecognized revenue as of now is Rs 13000 crore including the sales reversal of Rs 7000 crore due to accounting method change to project completion method from percentage completion method. In addition to unrecognized revenue, the company has about RS 7000 crore worth of stock on hand.

Strong completion in 9mFY19, the company expects the revenue recognition to pick up with handover commencing on these projects. So the company expects a revenue recognition of Rs 1250 crore in Q4FY19 and about a quarterly recognition of about Rs 1300-1500 crore in FY20.

GST cut to 5% for RE, with no mechanism for input credit, the GST paid to suppliers and vendors by RE companies has become cost. So the companies will pass on the same to customers.

The company is keen on owning full stake in case of mall or retail assets, but in case of commercial assets the company is open to sell some stake in rental yielding assets.

Gross and Net debt as end of Dec 31, 2018 was at Rs 8523.7 crore and Rs 7565.1 crore respectively. Of the gross debt that pertain to residential development was 43% or about Rs 3600 crore.

Of the EXIT rentals (office & retail) of Rs 862.8 crore in FY19 that of office space was Rs 581.5 crore and on retail space was Rs 281.3 crore. Hospitality revenue for 9mFY19 was Rs 326.1 crore with its EBITDA margin stand at 40%.

The company has spent Rs 675 crore on development/residential business, Rs 156 crore spent on Retail, commercial and hospitality.

The Comrade and Sheraton the two hospitality projects got completed and thus the capex going forward will be lower. Future hospitality capex will be about RS 150-175 crore.

Further capex required for under construction retail 250 crore, office is about Rs 800 crore. This will take rental income up by another Rs 330 crore.

Jindal City, which was launched in end of Q4FY18 or early Q1FY19 contributed to the tune of 60% for the total Q3FY19 sales bookings.