Highest Ever Qtrly Sales in Q2FY24 For Shriram Prop, Q2 Sales Value Up 32% QoQ

BENGALURU, November 12, 2023: Shriram Properties Limited announced its financial results for the second quarter and half year ended September 30, 2023 (Q2FY24 & H1FY24). 

Operational Highlights

The Company has achieved Q2 sales volumes of 1.15 msf^[1] (+48% QoQ; +14% YoY) and Q2 sales values of Rs.608 crores (+32% QoQ; +40% YoY). For H1FY24, SPL has achieved sales volumes of 1.9 msf (+14% YoY) and sales values of Rs.1,066 crores (+43% YoY).

The Company’s average realisation has grown by 14% so far in H1FY24, on top of an 8% growth in FY23. On a comparable basis, realisation in the affordable category averaged at Rs.4,868/sqft while mid-market unit realisation averaged at Rs.6,378/sqft in H1FY24. Current average realisation in mid-market category has grown remarkably from sub-Rs.5,000/sqft levels in FY21, reflecting the success of SPL’s conscious efforts to move up the price curve over the years.

Gross collections stood strong at Rs.430 crores in Q2FY24 (+48% QoQ; +37% YoY), creating a new record in quarterly collections. Aggregate gross collections rose to the highest ever half-yearly collection levels of Rs. 721 crores (+13% YoY) in H1FY24.

The Company handed over 470+ units during Q2, pushing aggregate customer handover to 830+ units during H1FY24. The Company is on-track to handover nearly 3,000 units in FY24, supported by targeted completion of 5 key projects/phases during H2FY24.

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Launch Activity

During the quarter, SPL launched 2 new phases in ongoing projects viz., ‘Shriram Imperial Heights’, premium towers in Shriram 107 South East and ‘Sovereign Plots’ in Shriram Pristine Estate. Both launches have received encouraging initial response and achieved intended price appreciation and desired product differentiation.

The Company successfully pre-launched “Shriram Paradiso” (1 msf residential project in Chennai) towards the end of Sep’23. Ongoing efforts have received encouraging initial response and should positively impact sales volumes in H2FY24.

The Company is on-track to pursue 3 new launches during Q3FY24.

Financial Performance Highlights

SPL reported excellent financial results for Q2FY24, with strong sequential growth in key metrics.

∙         Total Revenues up 47% QoQ to Rs. 231.2 crores. DM Fee accounted for 11% of revenues, reflecting the DM business model maturity.

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∙         Total Operating Expenses increased by 60% QoQ to Rs. 166.1 crores, reflecting changed product mix and increase in employee cost associated with normal increments.

∙         EBITDA has grown 22% QoQ and EBITDA margins stood strong at 28%.

∙         Interest expenses are down 7% QoQ and overall finance cost is lower by 20% QoQ. Remarkable reduction in finance costs reflects success of ongoing efforts to reduce debt and cost of debt.

∙         Net Profit at Rs.20.2 crores reflected a growth of 21% QoQ in Q2FY24.

On a half yearly basis, Total Revenues are marginally lower, reflecting a higher base of last year when SPL recognised revenue at one of its key project (Shriram Southern Crest, Bangalore). Operating expenses are lower by 19% YoY in H1. Accordingly, EBTIDA has grown 37% YoY to Rs. 118.6 crores in H1. Recurring interest costs are down 18% YoY. Profit before tax is higher by 41% YoY and accordingly, despite higher tax provisions, net profit has grown 23% YoY in H1FY24.

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Summary financial highlights are as below:

Strategic Developments

During the quarter, SPL re-acquired economic interest in “Shriram Park63” Chennai from Mitsubishi Corporation (MC), its project level equity partner since 2018. SPL has decided on early exit to MC since the project is significantly de-risked now with receipt of partial completion for Phase-1 and the Phase-2 has sold well and is progressing ahead of schedule. The exit involves 3 tranche payment, starting Sep’23. The exit will be value accretive to SPL, due to savings in return on MC’s investment.

The Company has also completed the transfer of Shriram 122 West, acquired in May’23. This is the second investment by the SPL-ASK Co-investment Platform, and was completed during Aug’23. With this, SPL-ASK platform has used 60% of its committed capital and is evaluating further opportunities for investment during FY24. The platform’s maiden investment (Shriram Pristine Estates) is performing well exceeding expectations on volume and pricing since its launch in Feb’23.

Shriram 122 West is launch ready. Market seeing activities have already begun and is targeted for launch during Q3FY24.

Outlook

The Company’s growth outlook remains positive, supported by favourable market conditions and encouraging long term prospects for the sector. SPL’s strong outlook is backed by inventory in ongoing projects and new supplies from targeted launches in the forthcoming quarters.

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With key projects nearing completion, construction activities are likely to gain further momentum in the coming quarters. With key projects reaching revenue recognition threshold, SPL expects strong handover & revenue recognition momentum during H2FY24.

The Company’s remains bullish on its long-term prospects. Promising demand outlook, especially in the mid-market and affordable segments and favourable market trends augur well. Supported by a strong operating platform and strong project pipeline, SPL is well positioned to benefit from ongoing consolidation in the industry.

SPL intends to complete and deliver ~7 msf over the next 2 years. While supporting income recognition and free cashflows, this should help sustain growth momentum and deliver significant value for its stakeholders.

Commenting on the performance,  Murali Malayappan, CMD, Shriram Properties said: “We are encouraged by the continuing strong performance that exhibit consistent and remarkable growth trajectory. The strength of our operating platform and its resilience is evident and raised confidence on our ability to sustain growth momentum. The strong positive under-current in the markets and our demonstrated ability to grow rapidly in a consolidating environment will add further strength. We remain focused on ensuring profitable growth with increased efficiency and superior returns for our stakeholders”.