Arkade Developers (NSE:ARKADE) Q1 2027 Earnings Call

0:02 Ladies and gentlemen, good day, and welcome to the Arkade Developers Limited Q1 FY twenty twenty seven Earnings Conference Call hosted by Valorum Advisors. As a reminder, all participant lines will be in a listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Ms. Pulwangki Cheyenne from Valorant Advisors. Thank you, and over to you, ma'am. Thank you. Good evening, everyone, and a very warm welcome to you all. My name is Prasangvi Chen from Valorum Advisors.

0:47 We represent the Investor Relations of Arkade Developers Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the first quarter of the financial 2027. Before we begin, a quick cautionary statement. Some of the statements made in today's earnings conference call may be forward looking in nature. Such forward looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's belief as well as assumptions made by the information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward looking statements in making any investment decision. The purpose of today's conference call is purely to educate and bring awareness about the company's fundamental business and financial performance for the period under review.

1:40 Now I would like to introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks. We have with us Mr. Amit Jain, Chairman and Managing Director Mr. Samshit Chetty, Chief Financial Officer and Ms. Dipti Nair, Head of Marketing. Without any further delay, I request Mr. Amit Jain to give his opening remarks. Thank you, and over to you, sir. Good evening, everyone, and thank you for joining us for Arkade Developers Quarter one Financial Year twenty seven Earnings Conference Call. I hope all of you have had the opportunity to review our financial results and investor presentation, which have been shared with the stock exchanges.

2:26 Let me begin by sharing an overview of our performance during the quarter and how we see the business evolving going forward. The Mumbai residential market continues to present attractive long term opportunities, and we remain focused on converting these opportunities into sustainable value creation for all our stakeholders. Against this backdrop, we delivered a steady operational performance during the quarter, supported by healthy customer demand and continued progress across our strategic priorities. Our free sales for the quarter grew by 9% year on year to INR 155 crore, reflecting the strength of our project portfolio and continued customer confidence.

3:18 In addition, we made significant progress in business development and project execution, further strengthening our platform for further expansion. One of the biggest trends of ARKADE today is the visibility of our future growth. Our development pipeline has now reached an estimated gross development value of approximately INR 12,800 crores spread across nearly 42 lakh square feet of saleable carpet area. Of this, projects with an estimated gross development value of nearly INR 3,000 crores are planned to be launched during financial year 'twenty seven, providing strong visibility for near term business momentum while creating a solid foundation for sustained growth in the years ahead.

4:15 Alongside our residential portfolio, the company's planned commercial development vertical is expected to provide an additional revenue for business diversification while creating a steady stream of annuity income over the long term. Our disciplined approach to business development continues to differentiate Arkade. During the quarter, we strengthened our business across key micro markets within the MMR through strategic land acquisition. As always, our focus remains on identifying opportunities that offer attractive project economics, efficient capital deployment and long term value creation.

5:04 Beyond project development, we continue to strengthen our home ownership ecosystem through customer centric initiatives such as ARKADE FINRATE, our banking assistance platform and Assist three sixty, our comprehensive facility management offering. These initiatives enhance the overall home ownership experience while enabling us to build deeper and long lasting relationships with our customers. Execution has always been one of our ARKADE's force spread. We continue to maintain our track record of timely project delivery while investing in our people, system and organizational capabilities to support our expanding project portfolio.

5:54 Combined with prudent financial management and the continued focus on operational excellence, investment options position us well to sustainable growth trajectory. With a healthy balance sheet, a robust development pipeline and a disciplined execution led approach, we remain confident in our ability to deliver sustainable long term growth and create lasting value for our shareholders. With that, I would now like to invite Ms. Jipti Nayar to share her perspective on the industry and market environment. Thank you, Vasit Jain. Good evening, everyone. Let me begin by sharing a brief perspective on the industry backdrop against which Arkade delivered its performance during this quarter.

6:47 India's real estate segment, the residential segment continues to demonstrate remarkable resilience despite a dynamic macro market environment. During the April to June quarter, housing sales across the country's top seven cities remained healthy at over 90,000 units, while sales volumes moderated as the geopolitical tension in The Middle East prompted some home buyers to defer their purchase decisions. The underlying demand momentum remained intact. What is particularly encouraging is that the developer confidence continues to remain strong. New launches increased by 7% year on year, reflecting developers' confidence in the long term demand outlook, while residential prices continued to witness healthy appreciation across most key markets.

7:40 At the same time, premium and luxury housing segment continues to gain market share, highlighting a structural shift in buyer preferences towards larger, better quality homes with superior amenities. Mumbai continues to remain India's largest and one of the most resilient residential markets. The city witnessed heavy demand during the quarter, supported by steady price appreciation, sustained new launches and gradual reduction in unsold inventory. These trends reaffirm the strength of general end user demand and long term attractiveness of MMR wages. While the most compelling opportunities within the Mumbai market continues to be redevelopment.

8:25 With the availability of greenfield land becoming increasingly limited, redevelopment has emerged as a key driver of future residential supply. The segment continues to benefit from the supported governmental policies, improving redevelopment framework and increasing acceptance among housing society. As redevelopment gradually shifts towards larger, cluster led project, it presents a significant long term opportunity for experienced and execution focused developers. At Arkade, redevelopment has been a core part of our business for many years. Our deep understanding of this segment, long standing relationships with housing societies, disciplined project selection and consistent execution capabilities position us to capitalize on this structural opportunity while continuing to deliver sustainable growth over the long term.

9:18 With that, I would now like to hand over the call to our Chief Financial Officer, Mr. Shamshesh Kade, who will take us through the business and financial performance. Thank you, Dipti. Good evening, everyone. Let me take you through our operational and financial performance for the fourth quarter of FY 'twenty seven. During the quarter, the company reported revenue from operations of INR 147 crores. Gross profit margin remained resilient at 29.1, demonstrating the strength of our project economics. Operating EBITDA stood at INR 28 crores, reflecting an EBITDA margin of 18.9%, while net profit for the quarter stood at INR 19 crores with a PAT margin of 13%.

10:05 The year on year modernization in profitability was primarily driven by two factors. Firstly, other income declined due to lower investment income as the company had earned higher return from the investment of unrealized IPO proceeds during the corresponding quarter of the previous year. Secondly, employee costs increased as we continue to strengthen our capability, with our employee base expanding from two thirty one two thirteen employees as of June 25 to two seventy seven employees as of June 26 to support our growing business and expanding project pipeline. From a business perspective, collections remained healthy at INR 164 crores, while INR $0.03 increased by 9% year on year to INR 155 crores, reflecting continued customer confidence and the strength of our project portfolio.

11:04 Our balance sheet continues to be one of the key strengths of our company. As of 06/30/2026, net debt stood at only INR 5 crores with a net debt to equity ratio of just 0.01x. This conservative capital structure provide us with significant flexibility to pursue attractive business development opportunities while maintaining prudent leverage level. Looking ahead, we remain confident about our growth trajectory, our robust project pipeline, expanding presence across strategic Mumbai micro market, commercial development opportunities and healthy financial position provide multiple avenues for sustained growth. We will continue to focus on disciplined capital allocation, operational efficiency, timely project execution and strengthening our organizational capabilities to create long term value for all stakeholders.

12:02 With that, we conclude our opening remarks and would now be happy to take your questions. Thank you. Thank you. We will now begin the question and answer session. And answer session. First question comes from the line of Ranjan Mishra with Handsome Broking. Please go ahead.

13:01 So this year, we are targeting close to 3,000 more launches. And also, we have 700 for our ongoing inventory. So what kind of pre sales number we are looking from the launch pipeline and also from the And then you wanted to what we have something about INR 3,000 crores during this financial year. So we expect about INR 500 crores of presales from these projects. And from the own home projects, we expect about INR 500 crores of the presales in balance balance sheet, which is unsold value as of thirty eight June is about INR 700 crores.

13:49 Because last year, we did about INR 900 crores. And so So yes, yes, so we understand that projects are bit delayed for the launch, but we expect to generate INR 1,000 crores of the operational revenue this time period. But next year number will be much better number in terms of Yes, yes, obviously.

14:36 Obviously, next year, we plan to launch Silmistan as well as two more projects. So next year, obviously, it will be better. Okay. And secondly, in terms of EBITDA margin, I mean, which is obviously given the reason that you have included the employees and that is the reason it has come down. But going ahead, because we will be launching this outright project, so what kind of EBITDA margin we should look at? Because earlier, used to do 26%, 27%. Now it has come down below 20. So what is the relating EBITDA margin we should model? So Gulenj, if you see our gross margin, it has remained stable at 29%. So EBITDA margin, this is basically because of the lower other income and with higher employee costs.

15:25 So that's why it is at lower level. But we expect to maintain an EBITDA margin of about 25% to 26% over the year. And lastly, in terms of overall cash inflow for next four, five years, like we have if we consider the upcoming projects of close to 700 crore and amortizing from the overall portfolio? So we expect to generate as we have been telling all the time, we expect to generate about 18% to 19% of that.

16:19 So that will translate into the cash flow. Okay. So operating cash flow will be about 18% to 19% Yes, of the yes. So EBITDA level, we are looking at 25%, 26%. Okay. And in terms of BD side, are you looking for more equities in this year? Or just we will only focus on launches? No. So the BD team is always active and the launch team is different and the BD team is different. So they keep the BD team is always on the lookout for future opportunities, and the launch team is separate. So it's very cyclical, like we keep on looking. Redevelopment is not capital intensive. So that is one area which is always on.

17:18 Thank you. The next question comes from the line of Kedar with MAN Partners. Please go ahead. Yes. Hello, am I audible? Yes, Kedar. Go ahead. Yes. Thank you, sir, for the opportunity. Sir, I had one question on your Anand Nagar project. So I can see that you have mentioned FY 'twenty nine as the expected launch timeline. But my question is that it's one of the top three in terms of our GDV in the portfolio. So why are we not planning to launch it earlier? Are you is it a deliberate strategy or is there some delays you're facing in that project? No, there is no delay before organically and originally planned only in 'twenty nine because there is some restriction ongoing currently. There is a wireless station currently in Dayser because of which there is high the of of Karabe, So that is why the deferment.

18:34 So you The portion foresee that that by...... Acquired only was acquired with the forward looking view. Okay, sir. Understood. So you foresee that by FY '29, those approvals or that aviation issue So we are expecting the wireless station to be shifted in '27, and in '28, we plan to get approvals and launch it in '29. Okay. The work is already going on for shifting. Okay. Okay. But there is no... In terms of the society and all, I mean, you have... Everyone is We've already entered into writing with the society. We we have a MOU with the society. Okay, sir. Understood.

19:21 Yeah. Thank you, sir. That's all from my side. Thank you. The next question comes from the line of Sahil Patani with Stokes Capital. Please go ahead. Hi. So I wanted to understand in your message you've written that we are expecting accelerated growth over the coming quarters of this year. So could you quantify that? What does accelerated growth really mean for the rest of the year? So with the launch of INR 3,000 crores in itself is something which is much more than what we have ever touched until now in a single financial year.

20:11 So the launches in the past may not have been more than INR 1,500 crores in one financial year. Now a shift from INR 1,500 crores to INR 3,000 crores, which is a 100 growth is definitely qualifying for the word accelerated growth. Got it. Got it. Next year also, we are like banking on a INR 5,000 crore plus launch. So all these membership growth at INR 1,500 to INR 3,000 to INR 5,000 crore launches, these are good growth, like these are you can see a spike in growth. Got it, got it. Understood.

20:58 And the other services, right, that we provide, like the facility management, are these services specific to only Arkade? Like are you like monetizing it? Like if you could just shed some light on how are these other services like contributing to the revenue? So own loan division, that is PINRO, is not restricted to ARKADE projects. As in we have the loans, and we are open to doing loans for projects other than Arkade as well. And it does get revenue in terms of commission payouts, and it is a very healthy business as of now making money for the company. The three sixty division, that is the facility management, is currently catering to only ARKADE projects, which are completed recently.

21:52 And they are looking after the upkeep of the project, the Arkade projects only. Okay. Got it. Great. That's all from me. Thank you. Thank you. The next question comes from the line of Rohit, an individual investor. Please go ahead. Yes. Hello, am I audible? Yes. Thank you for the opportunity.

22:39 I had first question regarding the launch pipeline. So how much of the launch pipeline has been already secured in terms of approvals and execution readiness? So it is all at various stages. It is like domino kind of thing. The BD starts first and after which follows the approval and after which follows the launch and the construction execution. So all the projects are at various stages. It is like one after the other. It is not all simultaneously. As mentioned, we are having a visibility of around INR 12,800 crore projects lined up and another project equivalent amount are in the nascent stage of being acquired, like are in the stages where we have LOIs and all issued by societies for redevelopment.

23:34 But including the unsold inventory of around INR 1,000 crore plus and new launches of INR 11,000 crore, there is a clear visibility of 12,000 worth of projects getting launched in near future, plus a separate pipeline of projects which are being acquired. Okay. Second question I had regarding the project launches, have any delays over there? And if so, can you tell me like what is the expected time line over there? So third quarter of this financial year, we are launching a redevelopment project in Malad and which is having a top line prospect of around INR750 crores.

24:21 And last quarter of this financial year, we are launching project. Both are in pretty certain stages of now. The project is having same potential of around INR2000 crore. And we've already launched the projects in Santa Cruz last quarter. So all three projects combined have a sales potential of INR 3,000 crores. Okay. And I also wanted to know, are you like witnessing any moderation in maybe customer inquiries or pricing or conversion across the key markets that we are present in? So last quarter, as mentioned, we have seen a growth of around 910% in free sales, so which does not indicate to any slowdown as such. And we have managed to sell more than what we did in the preceding year quarter on quarter basis.

25:16 So it is better. Okay. Okay. That's all from my side. Thank you. Thank you. The next question comes from the line of Rahul Shah with Eternet Capital. Please go ahead. Yes, hi. So thank you so much for the opportunity. Just wanted to get a understanding. So how is the company managing the construction cost inflation and specifically within that labor material costs across the ongoing projects? So normally, cost inflation is absorbed by the incremental rate in the residential units, and it balances out normally.

26:14 That's what happens. Okay. Understood. And will the company require any incremental debt or equity funding to support its planned project acquisitions and launches in the near term or at least the medium term, let's say, three to four years? So we may look at construction finance like all the projects, the outright projects are already paid for. We are currently at almost nil net debt. And if required, we'll offer construction financing, which is coming at a much better interest rate and which is normally very healthy and sustainable. Great. Okay. And one last one. So is the company seeking any change regarding the locations, configurations and ticket size? So are you trying to target any higher ticket size value project? We are open to newer markets. We are open to a wider range of avenues, and we are in the process of getting new and new projects in new geographies.

27:23 Okay. Perfect. We are bidding for projects in South Mumbai as well with bigger ticket sizes, and we are hopeful of lining up few projects too. Okay. That answers my question. Thank you so much. Thank you. The next question comes from the line of Suham Ghoshie, an individual investor. Please go ahead. Hi, sir. Thank you for giving me the opportunity. Sir, actually, I just wanted to ask that given the current competitive landscape in Mumbai, have you seen any increase in the client acquisition cost, like any impact on the ongoing project economies? No, no. We are very disciplined and we are very stringent in our acquisition.

28:11 We don't get into fancy acquisition. And we get into value transaction and we... Which which have a healthy margin and it's a change. You know, we don't get into fancy acquisition. Okay, sir. And sir, on this line only that... As you said, you don't get in... Get into much of the fancy acquisitions. So how does the management balance things between, like, redevelopment projects, outright land acquisitions, JV opportunities? Like, how will it be going forward? So the role is divided amongst the management, you know, redevelopment, outright JVs and all that. Each one focuses into what is their role and responsibility. So which is very clear and good for the company.

29:00 Okay, sir. And sir, my last question would be that when you're evaluating new opportunities, new projects to take on, like, what kind of IRR or the margin side hold to the company fee? We are going at IRR of 20% or around, and that is what we are looking forward to as well, 20% plus. That is what our historic growth has been. Okay. Sure. Thank you. Thank you. That's all from my side. Thank Thank you. You. The next question comes from the line of Gaurav Patil, an individual investor. Please go ahead. Hello. Am I audible, sir?

29:47 Yes, sir. You are. Thanks for the opportunity, sir. Sir, my question is on the front of FY twenty twenty seven pre sales outlook. So in one of your answers, you mentioned that this year, we are targeting close to INR500 crores of presales from the new launches of this year. So why is the presales outlook remain a little bit flattish despite of INR3000 of fresh launches being done this year? So INR 3,000 crores of projects will be completed over a period of four years on an average. So that gets us a free sales of on an average INR $7.50 crores per year. And these projects being launched in the third and fourth quarter, we are not getting the complete calendar year. That is why we have targeted a reasonable figure of INR 500 crore from two launches.

30:43 So in generally, sir, across our historical projects, how much pre sales do we expect on the launch phase only, sir? And how much remains on the sustainance and on the completion front? So you can expect at around 20% sales upon launch. So out of INR 3,000 crores, that's close to 600 crores. And because we are not getting the full year out, maybe conservatively, we are giving an indication of INR 500 crores. Okay, sir. And sir, my next question is on the land cost, sir. Generally, for example, if any of the project is having, like, INR100 crores of GDV, so how much of this, basically, land acquisition cost, how much remains for us for that XYZ project?

31:48 So I think it is it will always keep on varying. Higher the cap this ticket size, more will be the percentage towards the land cost, say, in South Mumbai, out of this INR 100, INR 50 may go towards the land acquisition. And if it is towards further northern, some of it may be as low as 15% or 20% also. Okay, sir. Okay. Thank you. That's it from my side, sir. Thank you so much. Thank you. The next question comes from the line of Pranam, an individual investor. Please go ahead.

32:40 Hello. Am I audible? Yes. Yes, Pranang. So I have a question particularly on the ticket sizes and all. So my question is how sustainable is the current demand environment in Mumbai? What are your thoughts about it? So our presence is never into experimental or immature market. We are present in mature markets, and our location is always more neater and cleaner. Say, for example, we are not into projects in and around SRA or weaker markets or anything that is very unestablished. So we are into mature markets where the demand is always there and most of our premium and established players, it is always there.

33:31 So you can call it like paper markets. You know? And we are into a firing segment. We are not into any extreme segment where there may be a little uncertainty. We are in the middle, you can say, virtualizing between size. Okay, sir. Got it. Got it. My other question is that, like, how does you guys see the opportunity in redevelopment evolving further? Like do you see that the mix of overall pipeline of like new redevelopment will be higher? Or you see lower? Like, what is the condition on the redevelopment development side? So redevelopment will be higher because there is a scarcity of land in MMR and also the availability of older dilapidated building is much more in abundance who are looking out for new amenities and new buildings for a better social health of people. Yeah.

34:38 Okay. So like moving ahead, will be there like larger tickets as expected to be redevelopment projects as well? Or will it be the same on the macro front? Yes. Pranav, can you repeat the question? My question is that, as I mentioned about the currently on the side of redevelopment projects. So the ticket sizes for the redevelopment will also increase in the market? Or will it be the same as it is? No. So the ticket sizes will vary as per the segment of the project, like the premium projects and the premium developers.

35:23 We'll definitely get a much better premium in comparison to a medium category developer or the product. And the rate will vary as per the product and the brand of the developer, two things. So there is stand alone building and there is a project with amenity. So the amenities one will get a much better premium than a stand alone building. All right, sir. Got it. Got it. Understood. Thank you. That's it from my side. Thank you. Thank you.

36:20 As there are no further questions, I would now like to hand the conference over to the management for closing comments. Thank you all for participating in this earnings conference. I hope we were able to answer your questions satisfactory and at the same time, offer insight into our business. If you have any further questions or would like to know more about the company, please reach out to our Investor Relations Manager at Valaram Advisors. Thank you. Thank you. On behalf of Arkade Developers Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.