Signatureglobal (India) (NSE:SIGNATURE) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Signatureglobal (India) Limited Q2 FY 'twenty seven Results Conference Call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the 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 mister Adi Dev Chatopatthia from ICICI Securities Limited. Thank you, and over to you, sir. Yeah. Good morning, everyone. On behalf of ICICI I'd like to welcome everyone to the Signatureglobal (India) Limited con call today. As all... As always, from the management, we have with us mister Pradeep Kumar Agarwal, the chairman and hold time director mister Lalit Kumar Agarwal, vice chairman and hold time director mister Ravi Agarwal, the managing director mister Devinder Agarwal, the joint MD and whole time director mister Rajat Kattoria, the chief executive officer mister Sanjeev Kumar Sharbha, the chief financial officer and mister Pritika Singh, head of investor relations.

1:14 I would now like to hand over the call to the management for their opening remarks and comments. Over to you. Thank you. Yes. Thanks, Aditya. Good morning, everyone. It is a pleasure to welcome all to the quarter two FY 'twenty seven earnings conference call of Signatureglobal. Thank you for joining us today. I hope you have had the opportunity to review our financial results and investor presentation shared yesterday. India's economy continues to grow strongly and real estate is growing with the sector support about INR 7 crore jobs today, and this is expected to reach nearly 10 crore by 2030.

2:12 According to a KPNG and Neredco report, better infrastructure, supportive government policies and fast growing cities are driving long term demand for homes, creating big opportunities for organized developers. The strength of housing sector is very clear from the latest number according to the report. Home sales across the India's top seven cities crossed one lakh units in quarter three twenty twenty six, up 10% from the previous quarter with the growth in all seven cities. New launches rose 18% and prices rose 7% over last year.

3:05 Delhi, NCR and Gurugram stand out even in this strong market. NCR saw the fastest price rise among the top seven cities at 12%. Cushman and Wakefield recorded about the 8,700 new launches in NCR during this quarter led by the Gurugram with luxury housing gaining momentum. GIL data shows Gurugram accounts for 43% of NCR housing sales. Growth is led by micro markets like Dwarka Expressway, Southern Periphery Road, New Gurugram, Sona, where the better connectivity is growing more by Against the backdrop, Signatureglobal strengthened in the presence across the key residential areas while growing its premium and branded residence business backed by strong profitability and a healthy balance sheet.

4:18 The strong response to our Tonno Limborghini residents of Southern Periphery Road Sector 71 Gurugram has made us more confident in this segment, driven by rising demand in premium and experience led living, and we will continue to look for similar opportunity. Recently, we also added significant land parcel in Faruk Nagar, Gurugram, giving us a strong pipeline for upcoming launches. The quarter saw strong progress supported by healthy customer demand, better sales relation and strong revenue growth.

5:05 Our focus on disciplined execution, efficient operations and careful financial management helped us deliver a profitable quarter and built a strong base for long term growth. Looking ahead, we are optimistic about the housing sector, especially in Gurugram and wider NCR region. We will stay focused on timely delivery, customer satisfaction, financial discipline and long term value for the all stakeholders. With that, I would now like to invite our CEO, Mr. Rajesh Kathuria, to take you through the company's financial performance in a greater detail.

5:56 Thank you once again for joining us today for your continued support for Signatureglobal. Thank you. Yes. Thank you, Prateep Ji. Good morning, everyone. Thanks for joining this call, which was we didn't get a later slot, so this was scheduled a little early. So thanks a lot for all of us who joined this call a little early and wishing each one of you and your family members a very happy and prosperous Diwali. Starting with our performance over the last six months, we've got through half of this year. So for the first half, I think we've made some good progress in multiple areas, and I'll try to bring up all these four or five key performance stroke growth areas where the company has done quite well over the last six months.

6:59 So starting with the primary theme, just to recall it, CVR, by and large, a mid income housing company based out of Delhi and CR, fairly relevant in the micro market given the quantum of supply, which we've been creating on a very sustained basis. So it's a very well accepted mid income housing brand and production enterprise. We've also done recent launch where one can say that we've entered the upper middle segment or entry level premium segment when we launched our first branded residences project by the name of branded as Tonino Lombogany. The project had more than 800 units. I think it has performed quite well. We've seen a good response on this project.

7:52 And if we were to look at the last six months sales performance, we've recorded sales to the tune of about 38,000,000,000, which is effectively close to about six seventy five odd units, which are being sold by the company and about 1,600,000 square foot of underlying area has been sold by us. So the way we look at this number is that as part of our business plan at the start of the year, typically is to do about 40% of the sales in the first half and try to do about 60% of the sales in the second half. So our overall guidance for the year at the start of the year was $100,000,000,000 which still remains $100,000,000,000 and we are more confident about it because we've managed to achieve about 40 of the annual sales target during the first six months, $8,000,000,000 is almost like 38%. So about 40% we've managed to achieve.

8:54 This is despite doing just one launch, which was one larger launch, which was Visa Residences and Sector seventy one. But there are more launches planned in the second half of the year, both on the Southern Peripheral Road and along the Dwasek Expressway corridor. So we are reasonably confident, can't predict future, but we are reasonably confident that the output is going as planned, that about 40% gets achieved in first six months and the balance 60% gets achieved during the second half of the year. A couple of other just performance indicators.

9:41 Overall realizations have crossed 17,000 at a portfolio level. This will look higher than the entire previous year realization. This is a little in the line with the market, wherein prices continue to rise but at a much slower pace as we're still seeing like single digit sort of escalations on a side to side basis, which is healthy from both supplier and customer perspective because it gives us an inflation hedge. At the same time, customers know that prices are not moving very significantly in either direction. The realizations crossed about 17,000 per square foot, which is encouraging. Collections also stood at about $17 odd billion.

10:30 The last quarter was a bit of an aberration where the collections were slightly lower. But if we look at the trend of the last eight to ten quarters, I think collections have been staying steady at about INR 10 odd billion per quarter. So even this quarter, we've managed to achieve good collections and overall basis our H1 collection stand at about INR 17 odd billion. But what's more important to focus here are two aspects. One is the cash surplus and the business development, which we have done during these six months. So if you look at the cash surplus, we've created about INR 4,800,000,000 surplus during the first six months. This is tied to investments into land and approvals for upcoming projects or any debt repayments.

11:22 So out of the by and large operating cash flows, we achieved a surplus of about INR 4,800,000,000, which was roughly about 28% of the cash collection of the collections done by us. And we are fairly hopeful that with more launches and project completions planned for the second half of the year, our collections are expected to improve significantly in the second half and hence this cash surplus number should increase significantly. So this can land up anywhere between billion to $15,000,000,000 by the end of the year. Now as far as business development is concerned and the way Unpadivji talked about one large acquisition, which acquisitions through collaboration, which we've done.

12:14 For the six months, we've sold about 1,600,000 square foot. But in terms of new business development, we've added almost close to 10,000,000 square foot of developable area. So there's a net addition of about 8,400,000 square foot of developable area. The two primary acquisitions are in Faruknagar and in the Sona Market. As far as Faruknagar is concerned, it is like it could be termed as a new micro market within Gurgaon. The location is just about fifteen minutes from the Dwarka Expressway. And the connectivity is very good as in the road infrastructure leading up to this project is fantastic because just of the Dwight Expressway, there is a Patojee Expressway, and this is just off that particular highway.

13:03 So honestly, infrastructure has been growing in the region at a very good pace, and it is kind of paving way for newer locations and more developments. And Farooq Nagar is a good example where we've got like a massive 194 acre land parcel now, wherein about 25 acres was acquired by the company and about 169 acres came in the form of collaboration. Now the land can be utilized for doing farmhouses to low density developments. It is not it is outside the zone area, we cannot do high rise developments over there. So the intent is to develop this as one of its kind farmhouse community alongside a small but very high quality resort sort of development. This is just of Gurgaon, but at the same time, this is very close to Delhi.

14:04 And the added advantage came when in the Delhi master plan, the government has announced that only in Delhi, farmhouses can happen, which are of at least 2.5 acres. Whereas in Gurgaon, we can do farmhouses, which are upwards of Manik. Whereas in there's a lot of these developments which are mushroomed in and around Delhi as in the quantums are huge. But any farmhouse within the Delhi premises, which is less than 2.5 acres become not a legal sort of dwelling unit. So it is a kind of a tailwind for us when we've acquired this project that less than 2.5 acres is not workable in Delhi.

14:54 A lot of people who want like legit, good, gated, well serviced, high quality development just close to Delhi and Delhi Airport would be less than an hour away, like within forty five to fifty minutes from the airport, you can probably reach the Faruknagar as a destination. So we are very bullish on this particular product, which will take some time to be launched, but this is a large land which has come to us. Besides this, we've added about 31 acres, again, the form of a collaboration in the solar market. We've earlier done project Dakshin, which is about 125 acres. So in and around Dakshin, we've added about 31 acres. There's more coming during the second half of the year, which has a developable potential of about 2,700,000 square foot.

15:49 And there are some additions, smaller additions in Sector 71 and Sector 3070. Put together, I think it's about 10,000,000 square foot, which has been added and about 1,600,000 is something which we have sold. So there's a good addition to the development under our portfolio as of today. It's also important to look at this alongside the fact that our net debt hasn't shot up while this development has happened all this business development has happened because a lot of the business development is being funded either through our operating cash flows or the fact that a lot of it has also happened in the form of collaboration agreements due to which our debt remains within very comfortable limits. Our net debt number, if you look at it, stands at about INR 4,500,000,000, wherein gross debt remains high at INR 28,700,000,000, but there's a lot of cash sitting in the balance sheet of about INR 24 plus billion INR.

16:57 So alongside this massive business development, the debt stays in very comfortable and lower side limits, so to say. Our rating remains similar as previous year. It's here rated as A plus and with a stable outlook. So that's another sort of important parameter. Just allow me a second. So post this business development, looking at the overall portfolio numbers, we've delivered till date about 19,000,000 square foot. There's another 9,000,000, which is reaching the delivery stage fairly soon.

17:45 And besides that, we still have about million to 51,000,000 square foot, of which about 23,000,000 has been launched over the last two point five years. Since February 24 till date, we've launched about 23 odd million square foot. And there's another 27,000,000 square foot now, which is again in preparation of launch over the coming two years. If we look at the recently launched portfolio, the GDV stands at about close to INR 35 odd INR $3.50 INR. And for the forthcoming projects as well, which is 27,000,000 square foot, the number will stand anywhere between INR 300,000,000,000 to INR $350,000,000,000 INR. So this is like a massive, massive land situation which we've created in the company and the balance sheet still looks very hailing hearty. So we are fairly satisfied with the current position.

18:53 Just another update, I think at the end of the previous year on March 30, we had consummated the transaction around a mixed use development along with the R and D group. Just to recall, that's about 5,600,000 square foot of development, which comprises primarily of office space, but will have two hotel developments and a design district as in a high street retail format, which is being introduced into the development. So this is, again, one of its kind development coming up in Gurgaon at a very prime spot on the Southern Peripheral Road. And we partnered with the RMV Group on this and not reaching any launch construction start stage, but we are doing good progress in terms of concluding on the overall design and development of this project. We had appointed APF as an architect for this. It's one of amongst the best architectural forms in the world.

19:58 So KPF has been doing the overall master planning and layout, masking of this project. And I think we are progressing well on the approval side. There's good coordination happening alongside along with the RMV team to see that this project kicks off sometime soon. The bulk of this project will be in the form of a yield portfolio. There'll be a small portion of this project, which can come in terms of build to sell portfolio. But by and large, this would be a yield portfolio, but it's progressing quite well. If we look at the financial progress during the first half, I think we've completed close to about INR 14,000,000,000 odd INR 4.

20:57 Revenue got recognized out of the projects which got completed. This is again in line with our business plan. I think there are some large projects getting completed during the second half of the year and hence, we stay confident with regard to our overall annual guidance of about $50,000,000,000 of completions for this particular year, which will also give a good push to the collections. So by and large, all these projects which we had planned for completion during this year are in line is something, which and some of these projects tend to be lumpy and hence have bigger impact on the revenue recognition aspect as soon as they get completed. But for the first half, we completed projects close to about INR 14 odd billion worth.

21:51 The gross profit for the entire six month period stood at about 31%, whereas for the second quarter where we saw more mid income completions rather than affordable housing completions was almost close to 36%. Likewise, EBITDA margin for the full half year as in for the half year was 13%, but for the second quarter, it stood at about 18%. We also are recognizing a part of close to about 50 odd groups. So overall, a healthy situation, but much more to happen during the second half and very much in line with our stated guidance. So on all four parameters, whether it is launches, sales, collection or revenue recognition basis completions, we stay put to our guidance at the start of the year.

22:39 So that's it from my side. Happy to take any questions in this regard. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Parvias Kasi with Nuvama Group. Please go ahead. Hello.

23:24 Hi. Good morning, team, and thanks for taking my question. So couple of questions from my side. First, you alluded to significant launches in H2, Vukin, SPR and to archive. So just wanted to get some more color on it. What kind of launches do we foresee in Q3 and also in Q4? And what could be the GDV of those? Sure, Parviz. Anything else besides the launches you want us to address? The second question is on the Gili spend. So our overall BD activity has been very strong in H1. I think overall, including approvals, we have spent something like INR $5.60 crores in H1.

24:13 So what is this number going to be for the year as a whole? That's my second question. And the third is, I mean, we have seen over the last one year launches in our Q4 market. But beyond that, when can we see the next launch in SONA? Maybe sometime when can we see next SONA launch? That's first question. Sure. For which, in a way, launches, I think technically, there'll be launches on all three fronts. Sector 71, we intend to come up with another 2,000,000 plus square foot launch.

25:01 So the last one was in May. I think I can't put an exact month to it right now, but it is at very advanced stages of prelaunch stage work. So there's another 2,000,000 square foot launch, two plus million square foot launch just next to the Tonino Limbogany residences, which is going to be the next large launch, which is coming up. Then on the Dwarka Expressway, there is a project which is just on the Dwarka Expressway, it has frontage on the Dwarka Expressway. It's not very large, but it will be like kind of an iconic single tower, which is expected to get launched again sometime soon.

25:48 And even in Sona, see, there's a phase of launch, which is pending some approvals and some prelaunch stage. So while we may not do like a full large launch, but there's about 400 odd units, which are again not to commit to an exact month, which are expected in some time to come. They'll also get launched. So a small portion of the overall to put it into perspective, in induction, we have overall about 2,800 odd units, about 400 odd units is something which is still pending launch. So that is something which may happen within this year again.

26:33 So in terms of form launches, I think a 2,000,000 plus square foot in in Sector 71 and about less than zero five million square foot, about 300,000 or 400,000 square foot in Sector 3070 something which are the immediate next launches which are getting planned. As far as the business development is concerned, the activity is quite high. We are in the middle of seeing quite a few transactions and we are hopeful that the business development pace will continue for the balance portion of this year. As a very broad benchmark for Yahstik, which you can expect for the entire year is that to the tune of our operating cash flows, we may end up doing that much business development. So while this new business will get added, it will not have any significant impact on the debt level of the company. So if the OCF is going to cross be anywhere between 12,000,000,000 to 15,000,000,000, you may also expect business development to that tune for the current year.

27:51 Sure. Thanks. I'll come back in the queue for more questions. Sure. No stress. The next question comes from the line of Pritesh Seth with Axis Capital. Firstly, on the first line sales, I think I would say like a lot of players have done little well on the sustains part. We had a, you know, decline in terms of our usual run rate of 2,000 odd crore. So any specific reason you want to, you know, assign to that? And second on the, you know, if you can just highlight what's the size of that kind of a market, you know, how much share we are planning to capture there on that sense. And lastly, on, again, collections and OCF guidance, how confident you are on meeting that this year, while for now we are tracking a bit behind. So just some sense on that. So three questions here. Sure.

29:11 So Preetash, even on the sales aspect, like I said earlier, we were by and large targeting about 40% of the annual target to happen out of the first half. The first half has also not been very heavy on new launches. We've done launches and by and large, sales have been to that tune. So effectively, if you will see, it's not that we are sitting on any incremental or significantly incremental inventory of unsold units. So it is mix of both new launch definitely has contributed to a lot of sale, but at the same time, we are in line with our target for the full year.

29:58 As far as Farooq Nagar is concerned, see, I can't put a number of the market size because this is not a usual product. A lot of times, this is part of the unorganized market where very high ticket farmhouses are getting sold within Delhi, and these ticket sizes are really high. Farmhouse areas where farmhouses in Delhi are getting sold for upwards of 100 crores as well, and that's like a usual market for those. Of course, our product is not in that range at all. We'll be much, much lower end of that kind of product. But this is like a first of its kind product from an organized developer with all sets of approvals, the typical way, let's say, any organized developer will work on it. So this will be fairly unique in that sense.

30:57 And it is fairly close to Delhi. That's a very important aspect. As far as OCF and collections are concerned, yes, we stay confident on our annual guidance. We know there's fair bit of work to happen in the second half of the year, but we are fairly hopeful that some of these completions, which we are targeting within this year are happening and hence, we'll get a fill up to our collections during the balance part of the year. And as collections grew up, OCF definitely goes in line with collections improved collections. And just one last bookkeeping one, like what's the inventory right now that we will have for the launch projects?

31:45 You give inventory for ongoing projects, but I can see from the recent launches how much inventory is there. So just that number if you have handy. So just just one second. I'll... We'll pull it up during the course of this call. Yeah. Yeah. Sure. Sure. Okay. Okay. That's it from my side. Thanks, and happy to team. Thank you. The next question comes from the line of with ICICI Securities. Please go ahead. Yeah. Thank you for the opportunity. Could you just help us understand the impact of GARP now on possibly the construction progress across projects?

32:30 And in our business plan, how we prepared for it? Because it seems to be a recurring thing now. So just if you could help us understand also construction material availability and our execution timeline, how are you working with the? That is the question. So, Aditi, this is a a a recurring and perpetual sort of an issue the way it seems. So the way we plan is to work for about ten months in a year. And we are always assuming that these NGT ban on construction activity will arise every year. This is not going away anytime soon. So this is kind of planned this is planned within our construction activity.

33:16 As far as construction material availability is concerned, material is available, but yes, during the heavy band stage, you stock it up or you assume that it's not going to be very free movement may get impacted. But all these planning is happening all the time. So we are aware that there'll be certain number of weeks where we'll not be able to actively do construction. At times, certain activities within construction get allowed. So it depends on the level of pollution which comes through. But let's see how it goes. But we're by and large cognizant of this while giving our guidance figures. Yes. Sure, sure. And just on our sales guidance for the year now, we are expecting it with mainly in line or we are hoping to beat the guidance or what is the sort of sense you're getting on the demand side and pricing in our market across the segment? You could help us understand that. Yeah.

34:18 Yeah. This is I'll say we are in line with the sales guidance. Know, market's holding up steady despite whatever, you know, macro headwinds which we've seen over these last six months. The market's still holding up quite steady rather. I think real estate's given a sense of comfort to people because it tends to act like inflation hedge as well. And if you really look at the actual supply, it's still very low because whatever has been launched over the last, you know, three to four years, you could say post 2022 in terms of middle income housing, a lot of it is yet to be handed over to customers due to which there is only limited amount of secondary stock available for purchase, which is driving up prices of the secondary stock and hence having a positive rub off on the primary stock.

35:15 So to answer your point, we'll stick to our annual guidance at this point in time. Sure, sure, sure. That is very helpful. Wish you all the best and happy Diwali. Thank you. Thank you. Next question comes from the line of Harish Patok with Motilan Oswal. Please go ahead. Yeah. Hi, sir. Good morning, and thanks for the opportunity. So my first question is on the construction cost. We have seen the cost declining on one as well as q two basis. So can you please highlight, you know, has the existence slowed down or is it something that we are facing on top, if you can please highlight?

36:08 Sorry, Harsh. Your voice is a little unclear. So are you talking about construction escalation, construction cost escalations? Yes. So in the first half, we have incurred, I think, $8.80 crores of construction cost. If I see the line item on the cash flow statement, in 1H, similar last year, it was INR $9.70 crores. Even if I look at the second quarter, there has been a So what's the possible reason for this, please? So it's tough to do a line to line comparison in that sense. But one of the reasons you can allocate to this is that, see, there are two large plotted so one large plotted development where a lot of work is happening, which is our project called City Of Colors in Manasar.

36:59 It requires fair bit of work and activities when you're doing these plotted developments with the construction spend is usually not very high. And second is that within project Dakshin, there's an industrial plotting block, which is again pure plotting development. Both of these are nearing completion. We are expecting completion related approvals from the government in within this year. So and both of these locations, while they'll contribute significantly to the revenue recognition, to collection And even in terms of construction coordination, it is kind of fair bit of heavy lifting is happening.

37:44 But it does not translate into very high construction cost. So that is one reason why construction is going on. We've had like reasonable six months during the first half of the year. But maybe that's one reason why you're not seeing the number surpassing the previous year's number. Sure. So what is the number that we should be building in for the full year? And can we expect that, you know, given how the cost towards construction has been, can we expect collections commensurately catching up? Or how do you see the dynamics playing out? So see, as a longer term trend, you know, if you look at the construction cost, we've seen a late single digit escalation, which happens. So if you look at the last decade every year, see that on a yearly basis, as labor and material put together, the numbers tend to escalate anywhere between 7% to 9%.

38:49 So it usually doesn't cross like double digits and late single digit escalation has always been there, and which we are able to factor into our own models while we are taking up any new project or we are starting any project. So this is the same number which we are anticipating for this particular year. I don't think while costs have gone up on a combined basis, they're not going to the double digits. For the year, I think this number will be more than double for the first half of the year, but it will not probably reach INR 2,000 crores as of full year. Understood. So yes, should we expect the same impact on collections?

39:36 Or like you highlighted earlier in the call, can expect some catch up in the collections and maybe some growth on a year on year basis for the full year? No. This year, I think because some of these plotted developments are getting completed both in Sona, which is Dakshin, you know, extractor as a project name and City of Colors. While construction spends will happen, but I think it will have incremental impact on, you know, collections and revenue recognition. Understood. Understood. And my... Another question is on the project, Lamborghini project that we launched in June. I see there is some revision, very minor change, but some revision in the launch value.

40:22 I think last quarter, we had mentioned 44. This quarter, it's 43. So it is insignificant, but is it that we have taken some price revision here, or why is the value lower? Harsh, we can maybe address that separately. For these minor Sure. For these minor Yeah. I'm I'm not very sure why. Sure. Sure. No worries. Just last question on the, again, the brokerage part. So what kind of broking expense are we incurring on this Lambokini project? Usually, brokerage slabs are in this three to 5% range. You can... TL will be closer to about 4%.

41:10 Understood. Okay, sir. Thanks a lot for taking my questions, and all the best, and best wishes for the festive season. Likewise, Harsh. Thanks a lot. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for the closing remarks. Thanks, everyone. Happy Diwali. Thanks a lot again. Thank you, everyone. Thank you, sir. Ladies and gentlemen, on behalf of ICICI Securities Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.