Shriram Properties (“SPL”) reported an impressive performance with strong growth in sales for the quarter ended September 30, 2022 (“Q2FY23”).
The Company has achieved sales volumes of 1.01 msf in Q2FY23, up 52% QoQ compared to 0.66 msf in Q1FY23. Aggregate sales value stood at INR 435 crores in Q2, reflecting a growth of 39% QoQ, compared to INR 313 crores in Q1FY23. Projects under the Development Management (DM) accounted for 30% of sales volume while share of plotted development stood at 32% in Q2.
The Company successfully launched two plotted development projects during Q2 viz., “Shriram Eden-II” at Bangalore and “Shriram Golden Acres” at Chennai, with aggregate saleable area of over 0.48 msf with an impressive sales-at-launch ratio of 48%. During H1FY23, the Company launched over 1.0 msf with a sales-at-launch ratio of 34%. Shriram Eden-II is almost entirely sold as of date. H2FY23 looks very strong with over 5.0 msf to be launched across Bangalore, Chennai and Kolkata.
On a half yearly basis, for H1FY23, the Company reported sales volumes of 1.67 msf, compared to 1.56 msf in H1FY22, reflecting a growth of 7% YoY. Aggregate sales value grew more strongly by 27% YoY to INR 747 crores in H1FY23.
Aggregate collections stood at Rs.315 crores for the quarter, while construction spending stood at INR 135 crores in Q2. On half yearly basis, aggregate collections were higher by 13% YoY at INR 639 crores in H1, while aggregate construction spending remained nearly flat at INR 272 crores, amidst stronger and unseasonal monsoon rains during H1FY23. Activity levels remain robust and overall spending is expected to rise strongly in the traditional strong periods of H2FY23.
The Company has handed over 700 completed units to customers during H1 and is on-track to complete and handover more than 2,000 units to customers during FY23.
Average realisation for constructed units was higher at INR 4,924/sqft in Q2FY23 as compared to INR 4,897/sqft in Q1FY22 and materially above INR 4,622/sqft achieved in FY22. Average realisation for plotted development were marginally lower at INR 3,011/sqft, largely reflecting change in geographical mix of plotted units.
Consistent with expectations of season improvement, the second quarter has demonstrated strong overall volumes and realisation, benefiting from auspicious months and festive season. Given continuing strong momentum, the Company expects to see further improvement over the next two quarters, with H2 being seasonally strong as observed historically.
As at the quarter end, SPL had near-zero inventory in completed projects. Nearly 80% of inventories in its ongoing projects have already been sold. The Company is thus focused on new launches to sustain growth momentum and has a strong launch pipeline for the upcoming quarters.
The Company remains positive on its immediate and long-term prospects. Promising demand outlook and multi-decade high affordability augurs well for the Company. Mid-market and affordable housing segments are likely to remain strong performers within the residential markets where SPL remains focused. Supported by strong operating platform, SPL is well positioned to benefit from ongoing consolidation in the industry.
The Company is focused on accelerated ramp-up and timely completion of its ongoing projects. Its strong pipeline comprises of 53 projects with aggregate saleable area of 53msf, including 24 msf of saleable area across 26 ongoing projects. SPL intends to complete and deliver over 10 msf over the next 3 years. While supporting income recognition and free cash flows, it should help sustain growth momentum and deliver significant value for its stakeholders.
Commenting on the performance, M Murali, Chairman and Managing Director, Shriram Properties Limited said: “We are encouraged by the strong performance on key operating parameters and expect to see further momentum in the seasonally strong periods of H2FY23. We are on track to deliver full year targets in terms of sales volumes, collection and construction, apart from profitability in line with guidance.”
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