Kolte-Patil Developers Ltd
NSE:KOLTEPATIL
Earnings Call Analysis
Q3-2024 Analysis
Kolte-Patil Developers Ltd
Kolte-Patil Developers Limited showcased their confidence in the evolving real estate market during their Q3 and 9 Months FY '24 earnings call. The Indian real estate sector displayed resilience despite rising mortgage rates, with increased sales volumes and property values indicating robust demand. Government support through schemes promoting affordable housing has also reinforced the market's strength.
The company has launched an impressive 4 million square feet in the year to date and plans to add another 2 million square feet to their portfolio. Kolte-Patil's approach to customer-centric offerings in both mid-income and luxury segments has translated into a year-on-year sales area increase of 26% and revenue growth of 36%, with new sales reaching 2.89 million square feet worth INR 2,079 crores.
Collections from customers showed a growth of 13%, amounting to INR 1,478 crores, which provided liquidity for future project acquisitions. Notably, the company has recently acquired two new projects in the Mumbai Metropolitan Region (MMR), envisaging a combined top-line potential of INR 545 crores, enhancing their strategic positioning for sustained growth in metropolitan markets.
Kolte-Patil is on track to meet their presales target of INR 2,800 crores for FY '24 and projects closing the year with revenues of about INR 1,500 crores. They anticipate a significant pipeline of new launches worth INR 8 million square feet valued at INR 7,000 crores for FY '25, as part of their more robust project portfolio valued at INR 25,000 crores.
The quarterly margins were affected due to three main factors. First, there was lower revenue recognition tied to deliveries. Next, gross margins shrank owing to revenues realized from low-margin projects. Lastly, financing costs improved due to the provisioning for repayments aligned with receipt from project-specific financial partners.
With the company's net debt totaling a negative INR 32 crores and an operating cash flow of INR 69 crores for the nine-month period ending December 31, 2023, they are well-positioned to pursue ambitious growth plans. The momentum is expected to increase across projects, ensuring value delivery to customers and stakeholders alike.
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Ladies and gentlemen, good day, and welcome to Kolte-Patil Developers Limited Q3 and 9 Months FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Smith Shaha from Adfactors. Thank you, and over to you, sir.
Thank you, Rea. Good afternoon, everyone, and thank you for joining us on the Q3 and 9 months FY '24 Results Conference Call of Kolte-Patil Developer Limited. We have with us today Mr. Rahul Talele, Group CEO; and Mr. Dutirasku, Vice President, Investor Relations.
Before we begin, I would like to state that some of the statements in today's discussion may be forward-looking in nature and may involve certain risks and uncertainties. A detailed statement in this regard is available in Q3 and 9M FY '24 results presentation that has been shared to you earlier. I would now like to hand over the call to Mr. Rahul Talele to begin the proceedings. Over to you, sir.
Thank you, Smith. Good afternoon, and a very warm welcome to everyone present on this call. Thank you for joining us today to discuss the operating and financial performance of Kolte-Patil Developers Limited for Q3 and 9 months FY '24. I would like to begin by sharing with you our views on the real estate environment, followed by an overview of key developments of the quarter. After my comments, Viti will take you through the key financial highlights. We then look forward to an interactive session with participants where we will take your questions and suggestions on today's call.
Let me begin by talking about the broader economy and the real estate market along with our outlook on the key markets that we operate in. Over the past few years, India has undergone a transformative journey marked by a substantial increase in the value of financial and physical assets. This economic evolution has not only generated well, but has also positioned India as a stable market for products and services, presenting an attractive destination for business seeking long-term growth prospects.
The structural reforms and investments implemented in the recent years have played a pivotal role in shipping India economic narrative. Notably, in the real estate sector, a key indicator of economic vitality has displayed resilience with increased sales volumes across key demand markets and segments. Even in the face of rising mortgage rates increasing by over 200 basis points from the lows of 2021, the sector has seen expansion in property values, emphasizing the robustness of demand in the housing cycle.
Stabilizing interest rates will further improve affordability criteria. This also showcases the intrinsic need for people to own their homes supported by an expanding affordability paradigm. A significant driver of this growth has been government policies and legislation with schemes that support affordable housing, gaining prominence, while some of the schemes, including [indiscernible] subsidies can further boost demand.
In the midst of this economic landscape, we have strategically positioned ourselves to capitalize on the burgeoning opportunities. We have been delivering progressively expanding operating milestones over the last few years and are continuing the momentum in FY '24. Positive visibility in next from sustained customer traction across projects.
During the year, to date, we have launched 4 million square feet and another 2 million square feet is in the pipeline for the remainder of the year. With a diverse customer-centric portfolio covering mid-income and luxury segment, Kolte-Patil has recognized and catered to customer expectations, building trust and confidence in its brand.
For the first 9 months of financial -- fiscal year 2024, we registered new sales -- new area sales of 2.89 million square feet with an aggregate code of INR 2,079 crores, reflecting a significant year-on-year increase of 26% and 36%, respectively. Collection from customers during the 9 months expanded by 13% to INR 1,478 crores, providing liquidity for project acquisition.
I'm pleased to announce that we have recently acquired 2 new projects in MMR, we just with an aggregate top line potential of INR 545 crores, further boosting our business development initiatives in Mumbai. With this, during FY '24 to date, we have acquired projects with a top line potential of about INR 4,000 crores, of which our Mumbai business development stands at about INR 2,700 crores. This strategically positioned Kolte-Patil for sustained growth and solidified its position as one of the key players in metropolitan areas.
Looking ahead, we are confident in meeting our presales guidance of INR 2,800 crores for the fiscal year 2024. The company's [indiscernible] extends beyond immediate target aiming to close another record-breaking year that surpasses all the way operating benchmark in terms of sales, realization and collections.
We are confident of achieving our business objectives on the back of enhanced contribution from existing projects, a robust pipeline of new launches to the tune of 8 million square feet valued at INR 7,000 crores for FY '25, which is a part of a strong project portfolio of INR 25,000 crores.
With regard to deliveries for the year, we are confident of closing the year with the revenues of around INR 1,500 crores. Margins for the quarter have been impacted on 3 counts: lower revenue recognition based on delivery, gross margins are lower, owing to the revenues realized for the certain low-margin projects, finance costs improved the provisioning for repayment against the point receipt from the project specific financial partners.
The broader industry trends of consolidation and formalization further supports KPDL trajectory. As the real reset sector witness a set towards quality developers, buyer and land owners are increasingly turning to reputed bank. Kolte-Patil receives strong market position and customer relationships. It's well positioned to deliver value across the entire ecosystem of stakeholders. Thank you. I request [indiscernible] to share the financial highlights.
Thank you, Rahul. Good afternoon, everyone. I will now briefly take you through our financial performance for the third quarter and 9 months ended 31st December 2023. Based on PCM-based accounting, we lose revenues of INR 845 crores for 9-month period and INR 75.8 crores for Q3 FY '24. EBITDA for 9 months stood at INR 58 crores that stood at negative INR 42 crores during 9 months FY '24.
Here, we would like to remind you that recognition of revenue and profits are dependent on the timing of project completion based on statutory accounting guidelines. Our net debt totaled a negative INR 32 crore as on December 31, 2023 and the operating cash flow for 9 months FY '24 stood at INR 69 crores. This positions us with ample capability to expand our ambition for future growth.
As we foresee gathering increased momentum across projects and achieving further milestones, we are assured in the value we deliver to the customers and the corresponding advantage is expected to reach all our stakeholders. On that note, I conclude my opening remarks. I would now like to ask the moderator to open the line for Q&A. Thank you.
[Operator Instructions] The first question is from the line of Viraj Mehta from Equirus PMC.
My first question I wanted to ask is, as you can throw a little bit of light on the BD pipeline. You mentioned we have launched 4 million square feet and you are planning to launch 2 more million square feet this year. What does the BD pipeline look for next year?
Viraj, we are confident. So there are multiple projects which are in our advanced level of PD closures across Pune and Mumbai. So certainly considering that we can consider a strong BD closures in the coming few quarters. So having said that, around INR 6,000 crores to INR 8,000 crores of BD closures we are expecting in the next financial year. And on top of that, see, currently, we are sitting with -- we have already done INR 3,200 crores of launches in the first 9 months. In this quarter, we are planning to launch around INR 1,800 crores worth project. And it next financial year on top of that, we are planning to launch INR 7,000 crores what projects for that, the business development has already been done. So we are strong in terms of the launch pipeline, at least for the next 4 to 6 quarters.
Right. And my second question is if -- with such a strong launch pipeline of, let's say, INR 1,800 crores in Q4 and close to INR 7,000 crore you mentioned next year. So close to INR 8,000 crore, INR 9,000 crores that you will launch next year, -- should we expect significant ramp-up in our presales considering that newer products are much faster in the early stage?
Yes. So we are expecting a 25% CAGR growth in terms of presales number for the next financial year. But it will be too early to comment beyond that and we are confident of accruing that kind of number. And simultaneously, we are confident of launching this kind of inventory also in the next year. So our endeavor, along with the volume of Endeavor H2 go for the better price realization, so that the margins for the -- these ongoing projects will be better. So it will be a conscious call between volume and value and accordingly, we'll post our presales number.
What will be the realization growth this quarter over last quarter, both in LR and LR, obviously, was much or portion this quarter in your press release that you have written? So what was realization growth in LR and why was sales much lower this quarter compared to the first 2 quarters? And what was -- and obviously, I understand the real combined realization was much higher because of [indiscernible] because of the 2 projects that we launched in Pune. But in general, like-to-like basis, what's the realization growth for our company in LR and on half?
So -- see, again, our realization is a function of which project is contributing in that specific quarter. So it will be difficult to predict a quarter-on-quarter basis realization. But on an annualized basis, realization we are expecting for next year around 10% improvement as compared to the ongoing financial year is what we are targeting. And on top of that, how quickly we can launch our Mumbai project, that will be -- so that would be more than 10% because the Mumbai per square foot realization is pretty high as compared to Pune projects. So if we launch those projects, if we consider those projects, then certainly, we are confident of reaching somewhere around 7,500 to 8,000 in terms of per square foot realization. To answer in terms of the LR, so it was a journey of 4,800 -- 4,500 square feet 2 years back to now around 6,400 square feet. And recently launched 2 sectors where we are planning to launch at around 6,500, so which are planning to get launched in this quarter itself. So -- and we are planning to launch one luxury segment sector in LR with the price realization -- during the launch price realization of around INR 7,000 crores for that presales number will start coming in from Q1 of next financial year. So we are confident of we have taken multiple price hikes at LR. So we have classified our LR inventory into a historical inventory and whatever that we have launched a new sector in the last 2 years. So in whatever that we have launched in the last 2 years, there is a significant betterment from around 15% to 20% price hikes. It's been seen in the last 4 to 6 quarters.
Got it. Got it. Just last question and more accounting. So you mentioned this...
Mr. Viraj, I'm so sorry to interrupt. Could you please return to the question queue for the follow-up question. The next question is from the line of Parikshit Kandpal from HDFC Securities.
Congratulations on a decent performance, especially on the presale side. I missed this number. So what is the Q4 -- for the rest of the year, how much is the business that you are targeting?
Sorry, Parikshit. Can you please repeat the question?
So into the financial year, how much is the business coming up that you are targeting?
Mr. Parikshit, your line is not clear. We're not able to hear you clearly.
Now is it better now? Hello.
Yes.
Yes. So as I was asking how much is the balance -- the balanced financial year Q4. How much is the business development you're targeting?
See, around to INR 10,000 crores when projects are in very advanced stages of discussion. But as we discussed earlier through earnings call, so we are very conscious while closing the business development opportunities. So till the time we don't get through our due diligence process. So we are not in a hurry to clear that project or achieve the project trial closure for the specific project. Having said that, yes, certainly in the next 3, 2, 4 months, around INR 3,000 crores to INR 4,000 crores, that project will get closed.
And if you can help give us breakup on the Bangalore we've not been adding projects there. I mean I think Ragan project, which has been a legacy project. So how do you look at Bangalore in terms of growth and business development because we have been operating there for many years now, but in the size and the scale of the company, it has been lagging a lot.
So see, for the balance of this financial year closures will happen at the full. And there are a couple of opportunities which are at advanced stage of discussion at Bangalore as well. And having said that, we are launching 1 project so Veris already applied, and we are expecting a reacertification in the next 10 to 15 days. That project will get launched at Bangalore. The name of the project is Rather. It is a large phase of our ongoing projects. And yes, certainly, we are giving attention to Bangalore as a geography. And in next financial year, you can see a couple of closures in Bangalore as well.
So out of this INR 10,000 crores of active discussions on the DD, how much would be the split between Pune, Bombay and Bengaluru?
So Pune will be around 70% pooling around 20% Mumbai and rest 10% Bengaluru. These are very approximate numbers.
Got it. And just the last question, no. This -- in the presentation, we have been seeing these land parcels, I mean, being there for companies for more than 10 years now this on Kalana, Woodard road, which is like value-wise, premium housing and luxury housing can be done. So what's the view here? When do you expect to launch these projects? They've been sitting now a land bank for quite some time now.
So out of this land bank projects, if you've seen the downtown project, we have moved to our priority launches. Likewise, the Botany project, which is around 80 acres of land parcels. So we are waiting for PMR to get sanctioned. Once that DP gets sanctioned. So it is a very massive development on lines of life recabling. We can have a project over there. So that is again a west part of Pune. So we are waiting for a DP to get published for this Gudauri project and how there are certain the compliance things that we are addressing. So post that, that project can be from a launch perspective in terms of the Boat Club. Since it is a very prime land parcel, both club and Kalana, we are accessing what kind of the product that we can offer over there. And we are evaluating whether to go for a commercial or residential kind of portfolio. So we are taking a conscious call to with and watch at least for next couple of quarters before we launch Boat Club and Kalangar where we have a good amount of clarity in terms of the legal and other things.
The next question is from the line of Bharat Sheth from Quest Investment Advisors Private Limited.
Congratulations. I will now taking forward to previous participant question on Kalyani Naga and Boat Club. Whether we'll go for resident or commercial, we are evaluating. Would it be -- can you give a toll, for commercial, then it will be outright sales or annuity project we would like to develop.
So see, we are currently -- as I communicated a dear, we are assessing whether to go for a strata or whether to go for some kind of the commercial portfolio. But it is too early to comment on that. So it is just an assessment that we are doing internally. See, there are many multiple things are happening on the super prime luxury residential properties are getting good traction. So we are evaluating on those lines.
Okay. And second, I mean, normally, our traction is that showing that 50% of minimum I mean, presales booking and the time of launch only. So I would just to get sales when we are talking of, I mean, now around INR 1,800 crores, INR 1,900 crores launch on Q4 end, plus some sales from the unsold inventory. So why we are still restricting our guidance to INR 2,800 crores? Is it fair to assume that it can -- should go above, I mean, INR 3,000 crores, what are the possibility?
See, I would like to share an example of our Baner project, which got launched around 8,500 and upper level inventory at around INR 9,000 square feet. Now since we are launching the subsequent phases of that project, we have improved our price and we are commanding our prices beyond 10,000 for the upper stores in that specific project. So it -- this kind of strategy varies from project to project where we are sitting with a limited kind of inventory where we want to achieve a better and better price realization. And in case of the mass volume project like a life Republic or any midsize project mid ticket size project over our endeavor is to achieve a good volumes, so that there is enough new inventory that can be launched very quickly. So it is a judicious call that we are taking and to answer your question in terms of guidance. As we speak, we are confident of achieving INR 2,800 crores. But yes, certainly, there can be a possibility of positive surprises.
And again, net to say my next question. Sorry, I'm connected with that.
Could you please return to the question queue as the several participants waiting. The next question is from the line of Pritesh Sheth from Motilal Oswal.
So first question is on the execution side, while we're talking about big numbers on sales and scaling up our business to a lot more. On the execution side, how are you preparing your organization to take up at least 1.5 or 2x of projects versus what you were doing earlier. Probably not just for you but from the industry perspective also, if you can say. And what are the key monetary how easily can an organization scale up to take up more projects? And what would be the key monitor in terms of the team size, et cetera, suggests your comments on that.
Thanks, Pritesh. Interesting question. So see, our sales event, we call in a real estate sale is an event. It is a onetime process, onetime event, but construction is the process. It is a journey of 2 to 4 years, depending on the project size and the height of the project. So over the industry perspective, since everybody is achieving a good sales number. So most importantly, there can be a possibility of some kind of the rate element in terms of the labor and in terms of the supply of the material.
So labor, so to address the labor, so we are moving towards the Anupam. So most of our projects are to former technology that reduces our dependency on the labor significantly. Second is, in terms of the procurement, since we go with the long-range contracts with the company. So we have a very limited deviations in terms of deliveries of our material and that is what we have seen in last 2, 3 years. Though the industry were struggling in terms of the procuring the material. But because of our strategy, that was very helpful. So just in order to give you example, we don't order a lift below, say, 50, 70 on our lift to ordering value and cost will be more than 100 units for 80 units. So that is how we operate at the company level. And in terms of scaling up the business, we have nurtured the relationship with the contractors. So in the industry in last 30 years, and there are many such contractors who are working with us since last couple of decades. So we give most of the contracts on labor and material basis. So material is centrally procured by us, and that is kind of a free supply to our contractors. So mostly, we are relying on the labor contractors and these labor contractors, there is a supervision. So supervision team is completely in-house. Whereas the sourcing and the labor, the coordination is only outsourced. So this is well proven within the company and in terms of scalability, so we were talking about those deals citing a sale of a INR 1,500 crores 3 years back. 3 million square feet and now we are achieving a sale of, say, 4 million square feet. So to rates going up significantly, but not the volume. So volume is going by because per square foot petition has also gone up significantly. So considering that, we are ready to take the challenge of even a 1.5, 2x of volume and we are completely ready. So if you visit most of our sites, we are achieving a 10- to 12-day cycle across the projects, and that is prominent. And that is one of the good parameters that we are tracking, which is most of the cash flows are linked to that parameter. And we have not seen any kind of delays in our RERA projects, so RERA guidelines. So we are confident on actually the scalability through our internal teams and through our -- the external stakeholders in the form of contractors.
Got it. That's very detailed and very helpful. The second question on -- since we are already halfway through the quarter, how confident are you in terms of making all those INR 1,900 crores of launches in this quarter? Obviously, a few of them are probably already launch, you have allied. But for rest of them, any spillover you expect? Or you are pretty much confident of launching all of those in this quarter?
So we are confident of launching all these projects in this quarter.
The next question is from the line of Shreyans Mehta from Equirus.
Sir, my few questions might be repeated as I joined late, apologies for that. So first, if you could just take me through in terms of the new launches, could it be closer to INR 1,100-odd crores during the quarter?
Yes, you're not audible. If you can use the handset, it will be easier for us to understand.
Sure. Am I audible now?
Much better.
Yes, sure. So just wanted to check on the launches during this quarter. If you could help us the key projects besides Kibali, Pimple and Manes, that is closer to INR 1,000-odd crores. Is that the right way to look at it? Hello?
Hello. Sorry, you're on mute, I guess.
Sorry, Shreyans, but I could not get through your questions.
Am I audible now?
Yes.
Sir, just wanted to check on the launches during this quarter, which is close to INR 1,100-odd crores. Is that the right number?
So we are talking about around INR 1,800 crores for this quarter. So around INR 400 crores of Bauli launch, around INR 1,000 crores at Life Republic and 1 project at Mumbai and 1 project at Bengaluru.
Third quarter launches. How much did we launch during the third quarter?
Okay. So third quarter, so around -- see, in first half, we have launched around INR 2,000 crores worth projects. So in the third quarter, the rest of the projects were launched. So some part of Q&A, some part of Manor and some part of Altura launch in Q3. And a couple of the buildings at Life Republic.
Sir, secondly, in terms of our margins, if you could help me reconciling those we were guiding for a closure to INR 1,600 crores in terms of top line and closer to, say, EBITDA margin guidance was closer to 15 to 16-odd percent. So if I do a rough math to achieve that, we will be requiring closer to 20%, 25% EBITDA margin for the fourth quarter.
Yes. So Shreyans, I mean, since there are we were assessing that kind of situation. So some of the OC we are expecting in the month of March for that maybe a spillover of the revenue recognition for the first quarter of next financial year. And because of that, some INR 1,600 or INR 1,700 crores or revenue recognition will be around INR 1,500 crores. If that happens there, then we are expecting early times margin. But yes, so some of the low-margin projects the part of that is getting recognized through the left or inventory of that project. So there can be a dent. So in terms of -- there are low margin projects like Gene, Stargate, G Building and a couple of projects with a later value, which will get recognized in the coming quarter.
Okay. Okay. Sure. During the year, we've done closer to INR 4,000-odd crores, and we are guiding for closer to INR 8,000, INR 10,000 crores. So are we still maintaining that number?
See, we have done INR 4,000 crores plus business development opportunities. And on top of that, we have won multiple land aggregation around the life Republic. So if we add that over that the potential of that additional land is close to INR 2,000 crores. I'm not -- even after considering that, we are confident of closing INR 3,000 crores to INR 4,000 crores worth BD potential. That is what I have answered earlier in this call in next 3 to 4 months.
The next question is from the line of Dhananjay Mishra from Sunidhi Securities.
Yes. So what was the amount we paid to this minority stakeholder for this 5% stake in RERA?
So we have paid around INR 60 crores for that for this minority stakeholder Biotec Life Republic.
Okay. And in terms of launches, you said that till H1, we had 2.73 million square feet launches and in Q3, we did about close to 1.3 million square and 2 million more start we'll be launching in Q4.
Yes, yes.
The next question is from the line of Biplab Debbarma from Antique Stock Broking.
So my question is you mentioned about some low-margin projects and high-margin projects. So just wanted to know what would be those EBITDA multi low-margin projects? And what would be the dose BDA margins in high-margin projects around ballpark number?
For the low-margin projects, the GPs are in the range of, say, 25%, plus or minus. And if you minus the overhead, then the rest will be the EBITDA margins. Because the project-level EBITDA margins are different and the corporate level because of this revenue recognition methodology, the EBITDA overheads are different for that specific quarter. But GP will be around 25% plus or higher.
For the low margin projects?
Yes.
And for high-margin projects, how much GP can grow?
For -- as I discussed in the earlier calls also, whatever that we are selling in last 2 years, we are confident of achieving EBITDA margin, the EBITDA margin at the project level of around 25% to 27%. So earlier, what I said, 25% of GP margins for these low-margin projects. And when I'm talking about the EBITDA margins of 27%, 28%, that is for the last 2 years sales that we have achieved.
Those are high month in contracts? Yes.
And in the few projects where we are sitting with the historical cost, our EBITDA margins are beyond 35% or so. At the rollout project at Lar, our EBITDA margins are beyond 40%. Project-level EBITDA margin.
Okay, okay. And my second question is, see, you are going well. And now I see that you have a huge launch pipeline in this year itself. In this last quarter, in fourth quarter, we will have 18 billion -- the INR 1,800 crore of launch pipeline -- and then in next year, FY '25, you will have a INR 7,000 crore of launch pipeline. So -- and the kind of offset that's happening. So I know I don't -- I'm not asking for guidance, but we can -- if this offtake is same, absorption rate is same as we saw in FY '23 or '24 that we are seeing. Then the number will be more than 25% growth in sales booking. And I mean, I'm asking your digestion would be more than 25%. I don't know why you are giving the growth of 25%. Should a little higher -- much higher since we are launching so much and absorption rate is quite high.
Biplab, in last financial year, we have launched around INR 2,100 crores on inventory. And this year, we are launching INR 5,000 crore worth inventory. And next year, there is the pipeline of around INR 7,000 crores. So yes, to answer your question, we are getting a refund account. And there can be a number possibility beyond 25% of CAGR, it is too early to comment on that. Once the project gets launched and certainly, we are -- we'll be in a position to communicate this set of numbers if there is any the positive surprise. And we already have an endeavor to beat the market expectations.
The next question is from the line of Ronak Etch from RoboCap.
Am I audible?
Yes, sir.
So do we have any guidance for like FY '25 and '26 and for the EBITDA margin level?
So it will be -- so our EBITDA margins will be improving gradually for the next few years, not next few years, for the next for around next 2 financial year, FY '25 and '26 from current early teens to late teens and from FY '27 first quarter or FY '26 last quarter onwards, where our -- the new set of delivery will start to begin. So over there, we expect a significant jump in our EBITDA margin beyond 20%.
Okay. And on the revenue front, anything?
So revenue around INR 1,700 -- INR 1,600 crores to INR 1,700 crores for FY '25 and similar numbers for FY '26. So having said that -- so currently, we are evaluating a couple of low-rise developments also. If we're able to close those low-rise developments, then certainly the delivery of that can be possible in FY '26. So I'm not counting that as we speak.
Okay. Or can you discuss more about the industry scenario like how the your state going...
Sorry to interrupt, but can you please return to the question queue as several participants are waiting.
So let me try to answer this since you have asked. So industries, so we are getting -- so we track that on a walk into conversion ratio. So that is still a constant for us. In fact, in the month of January, February, the decision what time was getting increased. But very recently, what we have seen, particularly for our premium projects because you can call it a formal effect or what our decision-making is quicker as compared to the past. On top of that, the inventory hanger is very minimal in the geographies where we operate. And particularly for the industry, the affordability is very good from a customer perspective. If you talk about -- in terms of the EMI to household income, so that is in the range of 35% to 40%, so which is very significant and we are expecting some relief in terms of the interest rate in the H2 of next year. So if we -- I mean, if that kind of moves happens, certainly, it will be beneficial for the MIG affordable segment also is not contain though the industry is achieving a newer and newer benchmarks on quarter-on-quarter basis. But still, the affordable and MIG segment is not contributing that much. So once that starts contributing, then certainly, you will see a big jump, quantum jump in the industry side.
[Operator Instructions] The next question is from the line of Rohit from IoT PMS.
Yes. Am I audible?
Yes, sir.
Very Happy New year to you and the team. So now most of the questions have been answered. Just a couple of clarifications. So you mentioned that to an early participant question that the margins in the projects that you've done in the last couple of years are around 25% at EBITDA level at the project level. From a project to a corporate level, what is the flow-through typically? Like what kind of costs are there? And how do you envision that cost going forward in the next 2, 3 years as you sort of launch more projects, et cetera?
So, Rohit, in the CCM methodology for the better understanding of everyone in CPM methodology revenues are back-ended and/or are front-ended. And particularly, it is a classic problem for a growing company like us, where overheads are more and -- at the same time, it is upfront. And against that, the revenue is getting recognized of the past and that too at a lower price realization. So it is the problem of this CCM methodology. So there can be a distortion in the margin. But having said that, when I was talking about the low-margin project, 3, 4 low margin projects over there, the GPs are in the range of, say, 20% to 25% -- and the project level to corporate level, so post GP, these are all about the overhead. So overhead if we manage our revenue recognition, I mean, if we're able to achieve a revenue recognition of around INR 2,500 crores to INR 3,000 crores with the current setup then certainly, this -- or will be a single-digit overage for us. Since some of revenue recognition numbers are lower, this or look like a 13%, 14-odd percent for us.
So if I were to ask in a different way, sir. So assuming there was no -- I mean there is a revenue recognition issue because of the way the accounting works. But assuming that was not best, today, if you were to, let's say, if you were to lock INR 1,800 crores of sales, what would be your EBITDA margin on operate level? Let's ignore the revenue recognition for a minute, just for understanding purposes.
Okay. Okay. So I just tried to answer that.
The EBITDA margin at the corporate level would -- at a project level will be 25%, 27%. So around INR INR, 700 crore, INR 750 crores of project level EBITDA would be there. Is that correct?
We call it the invited EBITDA margin. So project level, EBITDA margin multiplied by a sale of that sale is coming from the sale is coming from that project, summation of all such projects. And on top of that, maybe a 2% reduction at a corporate level. So this number is in the range of 25% to 27%. .
Understood. Understood. And got it, sir, I understood this. And sir, I think a lot of the other participants have also asked is that given that...
I'm sorry to could you please go back to the question queue as there are participants waiting. The next question is from the line of Chintan Chada from Quest Investment Advisors Private Limited.
Sir, my question is that given the healthy launch pipeline in Mumbai, which we have shared for FY '25. So can you just delve a little bit deeper like how will this be spread across the year?
Yes. So we have said that around projects will get launched in next financial year in Mumbai. So Vishwakarma and Gelmonalzev will get launched in the first half of the next financial year. And likewise, Lumia Jennie and Mundra will get launched in the second half of the financial year.
The next question is from the line of Mr. Bharat Sheth from Quest Investment Advisors Private Limited.
My questions have been answered.
The next question is from the line of Jainam Shah from Equirus Securities Private Limited.
Am I audible?
Yes, sir.
Yes.
Yes. So sir, this is more regarding the completion method that we are using. So what I remember is that we have changed the completion ratio...
I'm sorry to interrupt, but you're not audible.
Yes, is this clear now?
Yes.
Yes. So just wanted to thing. In 2017 or '18, we have changed our revenue recognition method as per the [indiscernible] from percentage completion to project completion method. But what I remember is that you've been giving the comparative financial statement as per old method for probably 3 to 4 years' time, so is it possible to share on the annual numbers that would clarify more on the margin side?
Since, yes, I do agree with your segment. But since our this POCM numbers are -- we can create that kind of number and for certain analysis, we also to evaluate from that perspective. But since these numbers are unaudited numbers, we restrict ourselves sharing those numbers in the public domain. But certainly, that can be discussed. So we'll take your suggestion on board.
The next question is from the line of Shreyans Mehta from Equirus.
My question is particularly to -- for Life Republic. So if you see our third quarter realizations, we are closer to INR 6,500, it is clear to say 25%, 30% premium to what we were doing, say, around 2 years back. So one, do you feel that the peak or we will have more room going forward? Second, we would like to restrict yourself in terms of building more inventory in would you like to take more price realizes at the cost of more volumes? How do we look at it?
See, to answer your question, so this price realization is coming from our MIG product and which is a cash cow at LR. So barring the only maybe a INR 200 crore project of -- not in this quarter, but -- that was the only exceptional project premium Roose project. So apart from that, the entire contribution is coming from our mid-segment projects. So -- and in the next few months, we are planning to launch luxury project at Life Republic, where the price realization will be beyond INR 7,000 crores, INR 7,000 per square feet. And so certainly, a blend of both, there will be a betterment in price realization not on a quarter-on-quarter basis, as I mentioned earlier, so there can be, depending on which project specific project is contributing more. But particularly on a yearly basis, certainly, there will be a much improvement in the price realization at Life favorably. And to answer your second part of the question. So for us, 1 year a journey of getting the additional volumes, the next year is a journey of getting the additional value. So we are continuing with this kind of strategy. this year -- I mean fortunately, we got the volumes also while improving our -- the value per square foot basis. So next year, our aim will be on a life revert.
Okay. Got it. Got it. That's...
For the next 4 to 5 years, we are aiming to achieve more than around 2 million square feet of presales from [indiscernible].
Sorry, sorry, sir, I missed that.
2 million feet of presales number.
From LR itself.
From LR itself.
Got it. Got it. Got it. Sure. And sir, second question is there were market news that many of the building proposals were put on hold due to water concerns. So are we seeing any issues out there for any of our projects?
Not actually. So what are the projects that are in pipeline, so we have already addressed that kind of concern. So there is no constraint for our priority launch portfolio.
Got it. Got it. Got it.
The next question is from the line of Rahil Shah from Crown Capital.
I believe one of the early participants you gave a certain revenue guidance for the next like 2 years. Can you just please repeat it for just claimer confusion? I believe you said INR 1,600 crore FY '25, is that correct? Or?
That's correct .
And then moving on FY '26, what expectations?
So FY '26, the similar set of numbers, but having said that, there can be division, the positive deviations in that guidance depending on if we are launching any low-rise developments.
But -- so let's say, FY '24, you think INR 500 crores and then you just upping it by INR 100 crores, but then your pipeline is so big. So twice a small jump .
See, what are the projects drive that we are currently, we have sold in the last 4 to 6 quarters, the realization of that will start in the month of -- in the year FY '20 -- so maybe last quarter of FY '26. We will see -- we have to understand the fact that across Maharashtra, particularly. So there is additional FSI available -- and because of the unified DCR, most of our developments are high-rise developments and high-rise development needs at least 3, 3.5 year years of -- for the completion and our 240 projects, which are beyond 100 meters will need at least 3.5 years for the -- from a revenue recognition perspective.
Okay. Okay, got it. So FY '21 onwards, we can expect a huge jump then -- from then on. Yes.
As there are no further questions from the participants, I hand the conference over to management for closing comments.
Thank you once again for your interest and support. We will continue to stay engaged. And if you have any further questions, please feel free to reach [indiscernible] developers. Look forward to interacting with you next quarter. Best wishes for the Republic in advance. Thank you.
Thank you. On behalf of Kolte-Patil, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.