Puravankara, a prominent real estate developer based in Bengaluru, is set to embark on a substantial journey in the upcoming fiscal year, aiming to launch an impressive 7.6 million square feet of residential developments with a projected revenue of about Rs 5,000 crore within FY24.
Abhishek Kapoor, the Executive Director and CEO of Puravankara, stated, “Last year, the company achieved Rs 3,107 crore in business and unveiled 3 million square feet of inventory for sale out of the total approved launches of 6 million square feet. This year, we are almost doubling the inventory available for sale to 7.6 million square feet out of 15 million square feet of launches. We are also anticipating a surplus of Rs 11,200 crore from operations within the next 3-4 years.”
The forthcoming launches will be spread across various cities including Bengaluru, Hyderabad, Chennai, Pune, and Mumbai, with the majority concentrated in Bengaluru.
In the first quarter ending on June 30, Puravankara reported a loss of Rs 17 crore with revenue reaching Rs 323 crore, reflecting a substantial 50 percent year-on-year increase. Explaining the incurred loss, Kapoor highlighted that costs escalated for new launches and sales, with sales and marketing expenses increasing by Rs 15 crore, which could not be capitalized. Additionally, elevated general and administrative expenses contributed to a dip in the overall collection.
Despite the current setback, Kapoor expressed optimism for the coming quarters as the company anticipates delivering more projects, which will subsequently reflect in the financials.
Promising Outlook and Expansion Plans
In Q1 FY24, Puravankara achieved 58 percent of all sales in Bengaluru, approximately 21 percent in Chennai, 13 percent in Kochi, and 7 percent in other markets. By the end of this financial year, Kapoor projected that around 35 percent of launches will occur in Bengaluru, 33 percent in Chennai, 19 percent in Kochi, and the remaining portion towards the western regions of India.
Puravankara intends to launch projects in various parts of Bengaluru, including the northern areas of Hebbal, IBC Road, and Medahalli. Simultaneously, select projects will also be introduced in south-eastern regions such as Bellandur and Saukya Road.
Among the upcoming launches, approximately 3.7 million square feet will be associated with Provident Housing, with the remaining portion allocated to Puravankara and Purva Land. The average rate per square foot for Puravankara launches is expected to range between Rs 9,000-9,500, while Provident Housing will maintain an average of about Rs 7,200 per square foot.
Kapoor also highlighted that average cost realization for launches has witnessed an approximately 11 percent increase across all verticals compared to the previous year.
Steady Debt Management and Alternative Investment
The first quarter of FY23 revealed a net debt of Rs 2,119, reflecting a decrease of Rs 89 crore compared to the previous quarter.
While debt remained relatively stable within the residential segment, ongoing construction capital expenditure contributed to a minor rise in debt value. Kapoor indicated that in the forthcoming quarter, construction costs would likely elevate debt primarily concerning commercial projects.
However, the company’s strategy involves maintaining debt stability within a similar range over the next 2-3 years, as the capital expenditure for commercial projects will be recovered from sales within the residential sector.
In terms of alternative investment, Purva Asset Management, a subsidiary of Puravankara, launched a Rs 750 crore fund in March 2022 to invest in affordable housing projects and plotted developments across multiple cities. The company has already deployed Rs 93 crore in Chennai and has plans to allocate an additional Rs 300 crore in Bengaluru and Chennai by the end of FY24.
With a proactive approach, robust expansion plans, and an emphasis on balanced debt management, Puravankara looks set to continue its trajectory of growth and success in the real estate sector.
