Will launch 5 msf projs in H2; expect strong sales: Brigade

Sonia: If you look at the sales volumes on a year-on-year (YoY) basis, it has actually fallen by 11 percent YoY at 712,000 square feet. Can you take us through what the second half of the year will look like in terms of sales volumes?

A: The sales for the half year are slightly higher than the sales for the previous year, the same half year, in fact I would say that is in terms of volumes because you may be having some kind of seasonality, but we cannot go totally on quarter-on-quarter (QoQ), but on a YoY basis we can compare, that is what I have been saying consistently because there are a lot of seasonality in real estate sector. However, because of the launches of the projects, you may be having good sales during one quarter, and that may not be true for the other quarters, but when you go on YoY basis, then it will be nice.

In the same way, what happens is, even for revenue recognition, revenue recognition, for this quarter, we have not recognised any new projects during this quarter. It may go in Q3 and that is why the total revenue as per the profit and loss (P&L) is flattish for us. However, the profit has increased because we have sold some of the things from the old stock which are already complete with very high margin and that is why the margin is also very good. So going forward the sales volume could be around two million square feet for the next half year.

Latha: What is your estimate of the annual growth? What kind of a run rate can we expect in revenues and in terms of volumes?

A: Volume, it could be from close to 3-3.5 million square feet minimum, we will do. And in terms of P&L, definitely one can expect around 30-35 percent growth. For half year, it is around 25 percent, we have seen YoY, but definitely, it will be around 35 percent. On profit, it will be having a very big impact on the profit because on a consolidated basis our subsidiaries are also doing very well and it also contributed very well and that is why the half year profit itself is more than double for Brigade Group.

Latha: Which particular subsidiary are you referring to that is doing well?

A: We have Brigade Properties Private Limited, the project Cosmopolis with GIC Singapore and Brigade, wherein we have more than 51 percent, is also doing well. We have another one called BCV Developers; this is another subsidiary which is doing a project in Devanahalli called Brigade Orchards with villas and affordable housing. This is also doing very good.

Sonia: You did mention a 35 percent growth is your expectation. That is a growth in profits for the year or in revenues?

A: Topline revenue as per the financial statement.

Sonia: Can you tell me a little bit about your margins because this time around, your average realisations have gone up quite a bit to almost Rs 5,600 per square feet. I heard you mention that you have sold some of your high margin earlier projects, but going forward in the second half of the year, what kind of average realisations can you clock in?

A: On a YoY basis we are expecting a minimum of about 10-12 percent increase in price realisation for the projects. Again, I am not saying that it should be on average realisation because that also depends on the product mix. When you launch a new project at Rs 4,000, obviously, the average realisation will come down. However, that does not mean that there is a shrink in margin.

There will be a good margin also, but only thing is the average realisation will come down because of the product mix. So, once we launch some more projects during Q3, obviously, when the launch price is less than Rs 5,000 then it will come down.

Latha: What kind of revenues are you expecting on your hospitality and your leasing segments for the second half?

A: Slightly higher than what is there in the first half because the occupancy rate itself is very good for hospitality now. It is more than about 80 percent in both the hotels that is Sheraton Grand as well as Grand Mercure, it is no more than 80 percent and we expect the same occupancy or maybe a slight better occupancy from there also. And leasing definitely, we will be able to achieve slight about one or two percent higher than what we have shown now.

So, you can expect overall about Rs 200 crore extra from both these sectors, in the second half. So a total of Rs 200 plus Rs 200 crore that is Rs 400 crore from these two sectors on annual basis.

Sonia: What does the launch pipeline is looking like, because you did mention that in the second half of the year, you do have a lot of projects that will help you with this 35 percent revenue growth. So, in the next six months, what are the projects to be launched?

A: We are planning for about more than five million square feet for the next half and some of the projects, maybe a pre-launch has been done where the response is also good, but definitely during the second half, we may expect to launch about five million square feet on residential side alone apart from about more than two million square feet in commercial as well as the hospitality segment for the second half. We expect that the sales will be good in terms of volume and definitely even on topline as per the financial statement that is with the percentage completion, we will be able to achieve the target what we have given now.