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00:00We have Amit Jain, MD and Chairman, Arcade Developers to speak to us about how Q2 is

00:06essentially going to play out, what trends are playing out for Arcade.

00:10Welcome Mr. Jain.

00:12Just talk to us about how volume is essentially holding up, how you sense demand continues

00:20to be strong, is that how it is?

00:22And just for viewer context, largely Bombay based Arcade Developers, so the kind of possible

00:30commentary coming through will largely be Bombay based.

00:32But Mr. Jain, over to you.

00:35Yeah, so, good morning.

00:38This year, like year on year basis, our revenues have grown up 103%, more than 100% and quarter

00:44on quarter basis as well they have grown slightly.

00:48So this shows the continuous demand basis, residential premises in Mumbai, it continues

00:55to be upswing.

00:57Mr. Jain, if you look at your FY24 performance, you had about a 12 to 13% of a pre-sales growth

01:04at 617 crore, collections also reported a healthy growth over 50% growth that we are

01:10looking at.

01:11I want to understand how the trend shaping up and not only just Q1, but even Q2, if you

01:15have to take the pre-sales and collections in consideration.

01:20There is a constant demand for new homes, new homes with amenities is always in demand.

01:25So that is reflected in the revenues as well pre-sales and the collections.

01:32The kind of growth that we can expect for this year, we can look at a 20 to 25% of growth?

01:38Yeah, 25% is what we are targeting at CAGR.

01:44Do you believe that a lot of the numbers also are due to the kind of new launches you had?

01:50You had two big new launches this quarter?

01:52Yeah, we have had two new launches and we are launching one more project in eastern

01:57suburb of Bandhu.

02:00And when will that happen?

02:01How quickly?

02:03This month itself, like in October we are launching a new project.

02:06Okay, and how many more projects to go through the rest of this financial year?

02:13In this financial year, by the last quarter, we should come up with two more projects

02:17in western suburbs.

02:19So three in all is what you are suggesting, over and above the two which you have launched

02:24in Q2?

02:25Yes.

02:26Okay, and how much of those, sure, and how much of the sales is contributed by the new

02:33projects versus your older ones, what is the split like?

02:40So new projects will contribute to say in and around 50% versus 50% by the old projects

02:47and by the end of this financial year.

02:50Okay, Mr. Jain, you mentioned about the Bandhu project which we can anticipate in the next

02:55month or so.

02:56I want to understand what is the kind of size that one should anticipate from this and even

03:01in your launch pipeline, I want to understand your launch pipeline, what is the kind of

03:05million square feet land that we are looking for, not just this year but in your three

03:10year perspective, what is the kind of land bank that one should be looking at for?

03:14So Bandhu project is a three acre land parcel, it has seven buildings and the configuration

03:21is two and three BHK flats.

03:24The ticket size is 1.5 crore onwards and it has a top line potential of 800 crores and

03:33on a regular basis, on a year on year basis, we are targeting at three to four projects

03:38and growing at an average of 20 to 25% year on year.

03:43Three to four projects is your target for the year, I want to understand in this, what

03:48is the mix between the redevelopment projects that we are looking at and the new land development

03:53projects that you are seeing and how does profitability between these two differ?

03:58So last financial year, our revenues were two-third from new projects and one-third

04:03from redevelopment project and at any given moment of time, our wishful split would be

04:1150-50 from new projects and redevelopment projects, that's the balance we wish to maintain.

04:19Okay I want to quickly, you know before I come back to you sir, I want to quickly look

04:24address the flashes at the bottom of your screen, complete waiver of five entry points

04:32from toll is what the Maharashtra cabinet has taken in terms of a decision for Mumbai.

04:38So toll of course being waived at five entry points, decision comes into effect from midnight

04:43tonight, couple of stocks that would likely get affected, MEP Infra of course already

04:48flashing at the bottom of your screen but let's pull that one up okay, on lower circuit

04:51that one, can we also pull up IRB Infra, try and see if there is absolutely any impact

04:57on some of these toll road players, there you go, seeing a bit of an impact on the stock

05:03on the back of that, around a percent and a half lower.

05:06Of course the cash was lower, it's recovered a little bit post that but nonetheless we

05:11are lower than where it was prior to this announcement coming, so that's how it is.

05:17Mr. Jain, I want to try and understand realizations, how is it playing out?

05:22Because if you are suggesting demand is strong, realizations only get better, is that how

05:27we see the trajectory for realizations?

05:37Mr. Jain, not sure, just want to quickly understand your view on realizations, demand you believe

05:44or rather you are suggesting remains upbeat, so how are realizations essentially playing

05:49out?

05:50Profits are pretty healthy, our profit margins like our bottom line is 40 crore rupees before

05:57tax and post tax is 30 crore this quarter.

06:03No right, but sir, per square foot realizations is what I am trying to get to, give us a flavor

06:11as to how that's evolving, is there consistent growth on that count as well because the base

06:16is getting higher?

06:19So no, margins are pretty much consistent, they are not growing, in fact the margins

06:26in redevelopment are squeezing day by day because of competition.

06:34Okay but sir, with regard to what are you seeing on ground, earlier the projects you

06:40were launching versus now, is the per square foot cost of the sale price of the projects

06:48you are launching now higher, are you seeing those incrementally higher realizations for

06:53the same value?

06:54Prices are going on increasing and because we are able to get premium or margins in new

07:01projects are going on increasing as well.

07:04I understand and how much higher is that sir because last couple of years there has been

07:08a steep rise, I know not as steep as maybe a Bangalore but Bombay has still seen a rise,

07:14so how is it being seen now, what's the kind of jump up in realization you are seeing?

07:22Prices are beating inflation, say on a year-on-year basis they are going up at the rate of 10%

07:28on an average.

07:29Sir Jain, you said that we are still seeing a 10% of a price increase in the realizations,

07:36I want to understand, so one is the realization plus the strong demand trend that we are looking

07:40at, so of course in real estate revenue, CHR cannot be taken into account but if you

07:45have to look at the average profitability margins that one can maintain, what are the

07:49type of margins one should see for the business going forward?

07:53So 25% bottom line is what we are looking at, 25% of the top line is the margins that

08:01we are achieving currently.

08:03And you expect to maintain this for the next 2 to 3 years as well as we go forward, correct?

08:08Yeah, we expect to maintain it.

08:10Okay, and coming to the debt picture, I want to understand how is the debt shaping up,

08:15in the last conversation you mentioned that we expect to be debt free, so are we at that

08:22position yet or is this, are we going to wait for another few quarters?

08:27We are very light on debt, we have taken construction finance for one of our projects and that is

08:33a very nominal debt, the debt to equity ratio currently is 0.3% including promoter debt.

08:40No further debt coming through and likely realizations from the new launches from the

08:453 projects that you have should take care of debt by the end of this year, is that how

08:49one looks at it?

08:50Yeah, no further debt we are looking at because we also have funds from the IPO raised up.

08:56I was just going to come to that, so how is that, what is the pipeline like for the utilization

09:01of that?

09:03So, we have a lot of problems, so I believe there is an audio issue, we will just quickly

09:14check on that and come back to you, but of course, arcade developers, market debut in

09:20September of 2024, the fresh issue was roughly 400 crore for developing ongoing projects,

09:28stock is up 22.5% from the issue price, largely a Bombay based developer, market cap is roughly

09:353000 crore, so, right, so sorry, you know, there was an audio issue, please, if you could

09:42reiterate what you were saying.

09:44No, so we also have funds from the IPO to deploy, we have identified new land parcels,

09:51new opportunities and new markets of Thale, that apart we will be deploying the funds

09:56for approvals and construction of ongoing projects.

10:00Okay, and how many parcels are you currently looking at, what would the ticket size be

10:05like, how much of this 410 crore will go and how quickly?

10:10So we have identified a land parcel in the range of say 175 crore in Thale, and that

10:16apart the remaining 250 crore will be deployed for approvals and constructions of ongoing

10:23projects.

10:25Okay, and of these land parcels that you are acquiring, in which ticket size are we looking

10:30for, is it more leaning towards the luxury side or the upper scale or mid-income side,

10:35I don't know, understand, yeah, value premium segment, again, 2 and 3 BHK apartment is what

10:41we are looking at, and starting from somewhere around 1.5 crore rupees.

10:49If you have to look at even the existing projects, what is the current mix that we can, one can

10:53see between the luxury side and the premium side of it?

10:58We are in the value premium segment, in current projects also, majorly we are having 2 and

11:033 BHK inventory, in eastern suburbs it starts from 1.5 crore, western suburbs is 2 crore

11:11onwards.

11:12Right, and sir, with regard to your accounting, you have suggested 25% revenue growth, largely

11:20project completion, right, that will, it will be linked to project completion, your

11:25top line.

11:26Completion, all of it is percentage completion.

11:28Right, okay, it is percentage completion, right, so sir, how do you expect some of these

11:33projects to start to unwind, how many projects do you believe will get closed this year?

11:40This year we have already got occupation for 2 projects and we are expecting 2 more OCs

11:45by this year and for Santa Cruz and Marol project.

11:49And how many projects do you have live, sir, just for your context?

11:52Currently we are having 7 ongoing projects.

11:56Right, and plus the 3 that you will add both, 1 this quarter and another 2 rest of the year,

12:03right?

12:04Plus 1, 2, yeah, plus the 3, yeah, so 1 we are recently launching and 2 by year end.

12:10So okay, yeah, right, so by year end you will have 10 projects in the pipeline.

12:14We will also complete 2 projects, no, we will complete 2 as well, as I said.

12:18Yeah, yeah, yeah, understood, so you will have 8 again, understood, understood, understood.

12:24And sir, of course, you know, you will also have good cash flows coming in, you have identified

12:311 project, any others that you are looking at, because you will very quickly start looking

12:36at F526 in terms of how that is going to play out, you have got clarity on F525.

12:40It is an ongoing project, our business development always is on a lookout of new opportunities,

12:46it is an ongoing project.

12:48Okay.

12:49To summarize, in a year we identify 3 to 4 projects to close, you know, and launch.

12:55So it is cyclical, yeah.

12:57Right, sure.

12:58Mr. Jain, you mentioned that you have 8 projects currently in pipeline and which are also ongoing.

13:04Want to understand what is the gross development value of these projects and even if we go

13:09forward, last I mentioned that you are not looking to expand beyond the MMR region, is

13:13that the stance currently also or are we looking for opportunities beyond the MMR region?

13:19No, we are looking at options in MMR region only.

13:24Okay, and the gross development value of these projects if you should look at it?

13:29Say, 4000 crore.

13:314000 crore for 8 of these projects?

13:34Yeah, for projects which are targeted to be completed in around 3 years.

13:38Okay, fair to understand.

13:41Okay, thank you so much, sir.

13:43It's been a pleasure speaking, breaking this down in terms of numbers.

Arkade Developers Q1 Profit Spurts Over 4x | NDTV Profit

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