Signatureglobal (India) Limited analyst Q&A

The first question is from the line of Pritesh Sheth from Axis Capital.

Congrats on a great year. Firstly, on the launches, INR17,000 crores, if you can break that up in terms of projects and the timeline. So we can keep a track on that how spread across we are throughout the year? That would be my first question.

Sure, Pritesh, good morning, thanks for asking this question. So in terms of launches, I’ll start with the large ones first. So within this quarter, we are targeting about 1.6 million to 1.7 million square foot of launch in Sector 71, which is Phase 2 of Titanium. Thereafter, we are launching another 3 million plus in Sector 37D, it should closer to 3.3 million. So between these 2 launches itself, we are launching about 5 million square foot. Adding on it, there are 1 or 2 smaller launches, 1 in 37D again by the name of Iconic. And there is some more inventory getting launched in Sohna market. There's some inventory, which is with us in project Daxin. There is another project by the name of the Signature Global Park in sector 36 Sohna. So by and large, these launches will happen in the first quarter of the year and will be between 100 billion to 110 billion hereof launches will happen within the first 6 months itself. For the second half, there are land parcels, in which hereon which we are working on the plans, etcetera. But there are more launches coming up in Sector 71 and 37D again in the second half of the year. But this will be like a sustained supply throughout the year, which will happen.

So we are -- I think some more will come from the land that you acquired from here on? Is it all? Or all of this INR17,000 crores is there already in the pipeline that we have?

No, this is entirely out of land, which is already with us. And we are fairly advanced in each of these land parcels in terms of approvals. Only those have been considered.

On the collection, so I think only mix that we would have from last year would be on collection, we have discussed that in past as well. But for this year, INR6,000 crores, which was a similar number you were targeting last year. I think what would be the key milestones, and I'm sure you work a lot on the numbers. So if you want to provide a breakup of where the 6,000 is coming from the completions, ongoing projects that you've already sold in last year. So some of those milestones will help us track this number well?

Sure, sure. So Pritesh, you're right that we were targeting a much higher number, but that was with the assumption of 2 large launches, both of these Titanium Phase II and about 3 million plus square foot in Sector 37D, getting launched previous year which got deferred to the current year because of some, I would say, not just approval delay but technically more of planning, which we ended up doing around these projects. So that was 1 of the larger reason for us to miss our guidance of collection in the previous year. These -- both of these are fairly large projects almost INR10,000-odd crores worth of GDV potential interest. In the current year, our collection guidance, of course, is basis, both are ongoing projects as well as in launches. So if I may give you the broad split about 75%-odd, collection will come out of the projects which we've already sold or and 25% is anticipated out of the new launches which we are planning.

And in general, you want to talk about demand scenario over the last 12 months, 6 months, has there been any change? And how do you look forward to in terms of demand? I mean your sales guidance gives us good confidence that you are looking at it as if things are normal. But anything certainly which has changed and which could be key for us clock this number next year?

Pritesh, in terms of market, we are not seeing very significant competition in this medium-term housing segment. There is -- some will supply and that too by multiple players, if you look at the upper mid segment to luxury segment, there is supply and there are multiple players who are tapping into that segment. Our focus area is getting more into this early mid-income segment. Price points starting from lets say about -- we were little less than INR2 crores and going up to, let's say, INR3.5 crores to INR4 crores. So this INR2 crores to INR4 crores ticket size. And depending on different locations, so INR2 crores will be more in the Sohna market. 2.5% to 3% more towards Dwarka Expressway in Sector 37D. And above that number, if we come to the southern peripheral road, INR3.5 crores to INR4 crores in sector 71. So these 3 markets, we have a product, and product is fairly good. It's just that the unit sizes are small, but these are very good quality product, which is being delivered or being developed by us. So at these price points, we have not seen much competition. And we are also witnessing good demand. And that's why as and when we are launching these projects, it's safe to say that about 70% plus inventory is getting absorbed within short span of time. I would say at launch itself, that trends to be a little scary only, but yes within a couple of months, a few months. Time from the launch, you'll see almost like 70% uptick of inventory. And this is real estate. It is like a higher ticket size, purchase for anyone. But as we are launching, we are seeing good absorption. And that's why we are confident in giving this 20% plus growth over a fairly good numbers which we achieved the previous year.

Got it. And one last, just on that continuation. So at 20% growth for long term, this is first time you are providing that. But at what point you would think that we have to go beyond Gurgaon? Is it INR12,000 crores or INR15,000 crores, so your thoughts on that?

No, it's like a moving target, Pritesh once you achieve a particular number, it doesn't seem that you really set up the demand in the market and you're able to set further. That's not the case. And so it's like a moving target. If you really see, we've sold just a little about 4,000 units, which was split across Gurgaon and Sohna market. So it's not that in terms of volume, we've achieved some 10,000, 15,000 units within a year. So Gurgaon is a very deep market. It is seeing a lot of traction. A lot of people are immigrating into Gurgaon for a lot of places in North India. I wouldn't say just Delhi, but in most of North India, you'll find maximum amount of white color jobs being offered in the Gurgaon market and hence this is very strong migration into Gurgaon. So I'll have to eat into my words if I were to say that, okay, at INR12,000 crores or INR15,000 crores, you'll end up exhausting the Gurgaon potential. I don't think it will be fair to make any such comments with regard to the micro market.

Sure. That’s helpful. That’s it from my side and all the best.

Thank you. The next question is from the line of Murtuza Arsiwala from Kotak Securities. Please proceed.

I think just continuing from what Pritesh was saying. Do you think in some other times these three micro market sort of concentration, what sort of constrain your ability to grow and you would have to look a little beyond if not another city, but at least other segments within Gurgaon itself, that's one question. And the second is, there is still a gap between the reported margins and the embedded margins. I think at what level or maybe a year down the line or 2 years down the line, do you think revenue recognition would be of the more profitable projects and one will be able to see the reported margin come closer to what the embedded margins, which we've been talking about for the last 2 years or so. These are my two questions?

Yes, sure. So Murtuza these three micro markets cover a lot of Gurgaon. So if we were to leave the luxury housing segment, which is typical because Golf course road and something like at the start of the Golf Course extension road. So if we were to leave that micro market, which has never been our play since inception. We are by and large covering the relevant micro markets within Gurgaon, focusing on these three micro markets. Nothing stops us from adding one or two larger areas to our city, but we feel we will continue to do good developments in all these three micro markets. We are not -- we are giving enough choices to our customers. So Sector 71, we have more than 90 acres of land with us. There's almost like 17 million to 18 million square foot of underlying development potential excess, including Titanium which we launched last year. So that's like the premium market. On the contrary, there is very little supply on the Southern peripheral road as of now. Barring one or two players, there's literally no one in the market who's holding such significant supply potential on the Southern peripheral road. There's very little which comes on Golf Course road or Golf Course extension road. This is very upcoming and promising area where infrastructure developments, which are taking place. So as we speak so many roads is being uplifted, there's an elevated highway, which has been planned on top of it. Phase 2 of metro is going to cross our site very closest to. So that entire area is getting uplifted. So we saw something similar happening on the Dwarka Expressway in Hind Sector 37D, there was a huge surge in capital value during the previous year and likewise in the Sohna market. So I think these three micro markets are fairly representative if one has to play a mid-income theme in the Gurgaon market and we don't feel the need to add a fourth or fifth market. As far as the question around margins are concerned, yes, you are right that there is a gap between the embedded EBITDA margin guidance, which we've been giving and the number which is actually getting reflected in the P&L. So guidance is close to 35%. What is currently getting achieved is close to 15%. There is a direct correlation also in terms of the past square foot, which one can relate to. Our average selling price of the presales number is 12,500, wherein we are giving a guidance of 35% EBITDA margin, whereas in terms of P&L, our realization of recognition happened on sales, which was at about INR6,500 a foot on which we've earned close to 15% EBITDA margin. GP margin of almost 30% plus. In the coming year, we are still completing some more affordable projects which got sold at INR4,000 and Deen Dayal Project, of course, had higher realization per square foot. So if we are achieving, I mean, once we are achieving this almost INR5,000- odd crores in terms of revenues, margin profile will continue to improve. It will not hit this 30% EBITDA level plus 35% EBITDA level number in the year like FY26. But yes, from coming year onwards, we'll start delivering certain projects in the Sohna market, like Daxin certain plots will start to get delivered. From where all these guidance numbers will take -- will become reality. So margin profile and absolute number of profitability is -- will take a steep increase in the coming year as in the current year.

So would it be fair, while we may not get a 35%, but we will see the reported P&L showing an improving trajectory. So at least bridging some of the gap between 15 and 30?

Yes.

Fantastic. Thank you so much.

Thank you. The next question is from the line of Heet Parikh from Ashika Institutional Equities. Please go ahead.

Very good morning sir and thank you for the opportunity. So my question is on business development with already 2 to 3 years of dry powder on hand and 40 million square foot of [inaudible 43 26] development, how aggressive we would be in FY '26 in terms of business development and on the similar lines, how are we seeing the land prices and the supply of land, if you could give some highlight of it?

Sure. So see, we are fairly active in tapping newer opportunities in terms of land acquisition. So -- the good part is that if you look at our sort of post listing, we've never been tempted to do any subsequent fundraise from the market because operating surplus has been good. Even in the coming year, this operating surplus is going to go through a good rise vis-a-vis the previous year. And hence, since the market conditions are good, sales are happening at a good pace, we do intend to deploy almost INR1,200 crores to INR1,500-odd crores. I'm giving a range at start of the year, I can't really put a number to it. But we do intend to redeploy anywhere between INR1,200 crores to INR1,500-odd crores in terms of fresh business development and keep adding on to the underlying implicit growth of the company in terms of its land bank.

Okay. Perfect. And secondly, sir, on M&A margins, with realizations heading towards North, how do we see M&A margins? Is there any scope for further improvement to the 35% number, which we are guiding or that is on a higher side?

And that's not on a higher side that there's definitely scope of improvement or rather once we will complete these projects, which we've launched over the last five to six quarters, which were at peak sort of price points. Last year, our average selling price was INR11,800. This year, it was INR12,500. So any of these projects, which have been launched at these price points, 35% is not an aggressive number, which we've put in place. Even for the inventory, which is at fairly advance stage of completion, which is close to 10 million square foot, the underlying revenue recognition is of almost 100 billion. So that recognition is at an age of about INR10,000 a foot. And hence, because of that, the margins will improve as and when these projects get completed.

Okay. Thank you so much.

Thank you for the opportunity. My question, I think last time I alluded that we will be exploring the fairly city market in terms of expansion. So any update on that, where were we, is it still some time away or have you already done some work over there? Yes, that's the first question?

So Adhidev, we've been tracking that market more closely. We've been kind of looking at opportunities which are coming in Delhi, but we will stay disciplined in our approach, in capital outlay approach. So there is more clarity required in terms of the policy framework from the government side, the new state government, which was formed a few months ago. Till the time we don't get absolute clarity on the developability of the underlying land, which one can acquire, will not put in capital. Having said that, our understanding on the kind of opportunities which exist is much better than what it was three, four months ago. So we are watching that situation. And we'll put capital at the right stage into the market.

Sure. My next question is on the -- if you could just guide us on what has been a sort of like-for- like price growth in your ongoing projects in the last year. And overall on a like-for-like basis, how do you see this panning out over the next 2 to 3 years in terms of balancing volumes and the value of sales?

Like-to-like have been quite good. When we say the price rise is only 6%, it's, of course, on a normalized basis, that INR11,800 square foot gone up to INR12,500 does not give full picture of the like-for-like price increase because in the previous year like fiscal year '25, where we achieved INR12,500 a foot, a lot of sales came from the Sohna market. And almost close to 45%-odd of sales have come from the Sohna market. That proportion of Gurgaon in terms of percentage sales was lower in FY '25 vis-a-vis FY '24. And that's why it's a good question. The like-to-like price rise is much higher. So if you look at Sector 37D, we have to do a subsequent launch, but you may very comfortably assume at least a 15% price rise and almost closer to a 20% price rise in Sector 71 vis-a-vis -- for Phase 2 launches, which vis-a-vis the launch which we did previous year. So there's a fairly good price rise happening within Gurgaon and in the micro markets where we operate. And just to explain it, it's not that there's any euphoria and hence it's happening. There is a lot of underlying development taking place in these markets. If you realize in the previous year Phase 2 of Metro, Gurgaon Metro got a clearance. Now there's a clear path at what all places, the Gurgaon Metro is coming. There's continuous improving in the infrastructure situation in Gurgaon. So with all these things, people are ready to pay more for these markets, which are becoming quite established and liveable. So the price rise is healthy.

Sure. And just -- again a question, my last final question is on the overall market. So obviously, the Gurgaon market has been doing fairly well in the last 3 to 4 years. So in terms of the competitive intensity, how do you see that panning out because we keep hearing about new players entering the overall market. So have you seen Gurgaon as an overall market size growing in the last year or it has been a fairly stagnant market? If you could just help us understand overall Gurgaon market as you see it. I am sure that either number of units or value or some ballpark number which you may be working with?

So see Gurgaon market is definitely improving. The market size has improved the number of launches. There's been sustained supply by various players in the market. The sweet spot where we're enjoying a very unique position in the market is that we are the only company which is focusing on mid-income housing and can do a sustained supply of units. There are a bunch of players who are tapping this upper, mid or luxury segment, but don't have the rightful amount of land with them to do a sustained supply. So we can do sustain supply and we want to tap this early-stage mid-income market, which no one else is doing, and that's kind of a very peculiar or positioning for the company, which is getting reflected in terms of our regular year-on-year growth.

Sure. That is very helpful. Thank you and all the best.

Than you. As there are no further questions, I would now like to hand the conference over to the management for closing comments.

Yes. We would like to thank everyone to take our time this morning and we'll be updating everyone in that [inaudible 52:04] as and when more progress is happening, but just to end with a positive note that the business scenario is very positive, very good and we are very positive regarding the current operations for the company. Thank you.

Thanks a lot.

On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.