© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, good day, and welcome to Sobha Limited Q4 FY '22 Results Conference Call hosted by ICICI Securities. [Operator Instructions] There will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Adhidev Chattopadhyay from ICICI Securities. Thank you, and over to you, sir.
Good afternoon, everyone. On behalf of ICICI Securities, I'd like to welcome everyone to the Sobha Limited Q4 FY '22 results call. For the management, we have with us Mr. Jagadish Nangineni, the Managing Director; Mr. Yogesh Bansal, the Chief Financial Officer; Mr. Soumyadeep Saha, who is now the Head of IR; Mr. Ramesh Babu, Senior VP, Finance; and Mr. Vigneshwar Bhat, the Company Secretary and Compliance Officer. I'd now like to hand over the call to the management for their opening remarks. Sir, over to you. Thank you.
Thank you, Adhidev. This is Jagadish here. Good evening, everyone, who have -- who are participating in this call, despite it being a Saturday weekend. We are pleased to interact with you today's post declaration of our unaudited financial results for the fourth quarter and financial year 2022 ended 31st March 2022 through this con call hosted by ICICI Securities. Thank you, Adhidev and team, for organizing this call. We have already shared the operational update of the company in the first week of April 2022. The investor presentation based on the financial -- audited financial results adopted by the Board can be downloaded from the website of our company. To start with, I request Mr. Yogesh Bansal, CFO of our company, to take you through the financials quickly before I make additional commentary and open the floor for questions.
Thank you, sir. I would like to welcome all of you on Sobha earning call. So we are happy to announce that Sobha has shown improvement in sales and achieved a total sales volume of 4.91 million square feet valued at INR 38.70 billion, with a total average price utilization of INR 7,883 per square feet in FY 2022. This [indiscernible] is driven by good sale numbers achieved in Bangalore, Gurgaon and GIFT City. All these 3 region recorded there initial highest averages. For the quarter, we have sold 1.34 million square feet at revenue of INR 11.10 billion and higher average price utilization of INR 8,255 per square feet. Our consistent focus on cash flow and cost management has helped us to reduce net debt by INR 5.15 billion during the last financial year. We are happy to inform you that in this quarter, we were able to bring down our debt equity to below 1, as committed earlier to the investor community in the previous quarterly calls. As of 31 March 2022, our debt equity is 0.93. This has been possible for company achieving highest average cash inflow of INR 12.91 billion. We would like to inform you that our average cost of borrowing has come down to 8.40% as of 31st March 2022. During the quarter, we have launched SOBHA Brooklyn Tower in Bangalore with super built-up area of 197,096 square feet (sic) [ 197,036 ] square feet. Out of our former planned residential launches of 13.53 million square feet across the various cities we are on track. These launches are expected to further boost our sales in the coming quarters. As of 31st March 2022, we have had unsold inventory of 14.09 million square feet in ongoing and completed projects which we consider adequate in the given market scenario. As of 31st March 2022, we had unsold completed project inventory of 0.37 million square feet valued at INR 2.91 billion, which is one of the lowest by industry standards, and it's also showing our capability to sell that inventory before project completion. So we'll talk about delivery, we have delivered 120.08 million square feet of development area, including the residential and contractual project, one of the highest in our sector. We have achieved 70% of sales on the area which is released for sale in the ongoing project. Committed receivable from sold units stands at INR 53.87 billion as of 31st March 2022, provides full coverage for balanced cost to be spent for ongoing projects which we offered for sale. So now I will summarize our Q4 [ 2020 ] (sic) [ 2022 ] performance. If cash flow is -- we'll go to cash flow, first of all. We have achieved historically higher total cash inflow of INR 12.91 billion during Q4 2022. Total cash inflow is up by 32% year-on-year and 22% quarter-on-quarter. We have achieved real estate cash inflow of INR 10.60 billion during quarter Q4 but highest ever since inception. Real estate cash inflow is up by 48% and 26% as compared to Q4 '21 and Q3 '22, respectively. We have generated operating cash flow of INR 4 billion during quarter 4 2022 and is up by 71% and 92% as compared to Q1 -- Q4 '21 and Q3 2022, respectively. Our net debt was reduced by INR 3.17 billion in Q4 2022. We are able to reduce net debt by INR 7.57 billion in last 10 quarters. If we talk about FY 2022, our borrowing cost has come down by 64 basis points during FY 2022 and net debt got reduced by INR 5.15 billion during FY 2022. We have achieved total cash inflow of INR 39.82 billion during FY 2022, which is up by 29% as compared to FY '21. Achieved real estate cash inflow of INR 31.73 billion during FY 2022, which is the highest ever since inception, the same is up by 44% as compared to FY '21. We have generated operating cash flow of INR 9.20 billion during FY 2022, which is the highest ever since inception but same is up by 44% as compared to FY 2021. Now I would like to highlight sales numbers. In Q4, we have achieved total sales volume of INR 1.34 million square feet of super built-up area valued as INR 11.10 billion, which is highest ever since inception. Due to consistent demand across the product segment and price increase, we were able to achieve best ever price realization of INR 8,265 per square feet. Average price realization is improved by 4.4% Q-on-Q. Sales volume achieved with Gurgaon region is the highest ever since inception. During the quarter, we have launched Brooklyn Towers. So FY 2022, we have achieved best ever sales volume and sales value of 4.91 million square feet and INR 38.70 billion, respectively. Sobha share on sales valued higher since inception, Bangalore, Gurgaon and GIFT City regions has achieved highest ever sales volume during the FY 2022. Total sales volume and sales value were up by 22%, 23%, respectively, as compared to FY 2021. Sales volume achieved by Gurgaon region up by 83% as compared to FY '21. We have delivered 4.07 million square feet of developable area during FY '22 in real estate and 3.71 million in contractual. So now I will take through you the financial highlights. In Q4, total income for Q4 2022 stands at INR 7.60 billion, real estate revenue for Q4 stands at INR 5.33 billion, up by 19% Q-on-Q and 84% year-on-year. EBITDA for Q4 stands at INR 1.19 billion, higher at -- by 16%. PBT for Q4 '22 stands at INR 0.36 billion higher by 5%. PAT for the Q4 2022 stands at INR 0.26 billion, higher by 3%. Total -- FY '22 -- total income for FY 2022 stands at INR 27.89 billion, up by 29% as compared to FY '21. Real estate revenue for FY 2022 stand at INR 20.10 billion, up by 53% as compared to FY '21. Contractual and manufacturing vertical revenue for FY 2022 stands at INR 7.20 billion. EBITDA for FY 2022 stands at INR 5.22 billion (sic) [ INR 5.20 billion ], margin at 19%. PBT for FY 2022 stands at INR 1.58 billion, margin of 6%. PAT for FY '22 stands at INR 1.16 billion, that is 4%. Out of community sales done in residential areas as of 31st March 2022, very balance revenue of INR 80.81 billion to be recognized as revenue which will come in future years. Now I will hand over to Jagadish sir for this quarter comments.
Thank you, Yogesh, for the detailed commentary on the financial results of both the quarter and the financial year. The financial year FY 2021 and -- FY '21, '22 was a year of executing the learnings from our FY '21 experience with COVID-impacted business and operating environment. And even though there were similar impacts in Q1 and partially in Q4, we could recover quickly and perform better, aided by what we believe is a sustainable demand environment. As you would have seen, we have improved our performance across all parameters on a continuous basis during this financial year. We registered some of our best quarter figures in Q4 on the back of improved operations and steady sales with positive customer sentiment that resonated throughout the year. Our consistent performance during the year goes on to show -- showcase customers' confidence in our products and services, diversified across cities and businesses. We will continue to focus on our disciplined growth strategy in all verticals of our business and prioritize operational excellence cash flow as we embark on the next growth cycle in the sector. We believe that our self-reliant business model with an integrated design to delivering ecosystem, prudent capital allocation, strong brand equity built on years of customer trust, will be the foundation for remaining competitive and sustaining free growth momentum. While we believe the demand environment seems positive, the unprecedented inflationary environment has also caused significant cost increases for everyone and affecting us as well. This might impact margins for us going in the future, particularly in projects where we have already sold majority of the inventory. We have continued to increase our prices, which we started in the Q3 of last financial year, and we will -- it looks like we will need to continue to do that in order to cover up some of these cost increases. The next financial year also seems to be filled with both opportunities and challenges, which we are geared up to tackle. With this, I would like to open the floor for questions.
[Operator Instructions] The first question is from the line of Pritesh Sheth from Motilal Oswal.
Congrats on very steady set of results and improved cash flow performance. Our first question is on, obviously, the launches. We have been seeing a very robust pipeline that you have been highlighting since last year or so. How is the visibility now in terms of launching projects from the pipeline that you have disclosed this year? And at least in short term, how many projects we see are getting on stream for next couple of quarters?
Thank you, Pritesh. With regard to the new launches, we have a solid pipeline across some of the geographies, which are doing really well, one, including Bangalore. In fact, we have -- after the quarter, we have already launched 2 projects in Bangalore, measuring about 1.5 million square feet. And we will do -- so we will continue to do new launches in this -- in the subsequent quarters. The pipeline for the overall launch that you have seen in the presentations and which we have been discussing earlier in the call, they seem to be very robust, and we are actively working towards making sure that those pipeline -- the inventory comes in into the market as quickly as possible. I hope that answers your questions.
Pritesh, do you have any further questions?
So whatever challenges we are facing so far in terms of getting approvals, have that been all sorted out? Or are we still seeing some [indiscernible] in getting the approvals?
As far as some of the specific cities are concerned, I mean few quarters ago, we had some challenges in Bangalore. Those have been resolved. And currently, we do not see any city-specific or project-specific approval-related issues.
Okay. And secondly, on -- due to rising interest rate scenario, partly, how is the mix of our customers in terms of applying for mortgage versus not applying for mortgage? And how is the initial response post this positive hike in interest rates from the customers? Are they a little bit hesitant in terms of making those property decisions? Or we haven't yet seen any impact on the segment?
Good question, Pritesh. As you have seen that RBI has already increased to 0.4% and it looks like there can be increases in the interest rates going forward. Although that's the -- and which would definitely impact the home loan interest rates too. As of now, if you look at any of the leading indicators towards the demand classification for us, we have not seen any big impact in terms on the demand environment despite this -- despite these increases in the interest rate, However, if there are movements which are more than 1% to 1.5%, we might -- we will have to actually watch and see if they would be. Considering the current strong job environment -- job market and corresponding confidence in the customers, it looks like that might not factor -- that might not come in as a factor for any time in the near future. But we will have to watch see once if the rates move up more than what one anticipates.
And any comment on mix, if you have a number readily available, how many -- how much of your customer mix is towards mortgages and opposite to that?
Yes. So the overall mix is -- typically, we have seen for the ticket sizes of INR 1.5 crores and below, the mix is far higher in terms of the bank loans with over 80%. And for the ticket sizes over INR 2 crores to INR 2 crores plus, the mix is slightly lower. Having said that, the overall numbers always are in the range of about 80%. But the time at which people take the loan, it varies based on the ticket size. For the higher ticket sizes, people tend to take the home loan slightly later than the slightly lower ticket sizes.
The next question is from the line of Puneet Gulati from HSBC Securities.
Yes. Thank you so much and congratulations for very nice set of cash flows here. My first question is on the EBITDA margin. So the margin came in a bit more at 16%. Is this something that we'll have to see going forward as well, given the impact of inflation? Or do you see that price increase will normalize the impact?
Thank you, Puneet. The -- you're right, you have observed it right that the EBITDA margins have come in a little lower than earlier quarters. It's -- as you know, in real estate, the EBITDA margins are considered -- the revenue is recognized on the handover of the units. In the project, in this particular quarter, the -- some of the projects that where we have recognized revenue, they were of slightly lower margins being joint development projects. But otherwise, the margins on the real estate have been reasonably steady. Coming to the contractual and the manufacturing side, the cost increases have impacted in the quarter itself, because some of the cost increases could not be passed on to the customers. And hence, there has been an impact on the EBITDA margins there. And also the -- some of the land income that we have recognized in this quarter, that's not of very high margin. So hence, overall EBITDA margin has been low. Going forward, it is dependent on the mix of the projects, again, that we are going to recognize. For the next financial year, largely the projects where we are going to hand over, most of the costs have been baked in. And hence, the cost increases, the impact of it might not be as high. But at the same time, it might impact in the projects where we are -- where we have sold in the last financial year and the costs have to be incurred subsequently in the next couple of years.
Okay. So FY '23, you're saying the impact is [indiscernible], for '24 and '25 would see some bit of impact?
Yes. I mean that's how we have estimated it. We'll have to see in terms of even in FY '23 the -- also the overall margins and overall revenue that we can recognize because most of our projects currently, because last 2 years, we did not spend -- could not spend enough, even though we would like to on the project. Now that the operating environment has become clear, we will spend a lot more. There has been a lag in terms of delivery, and that we will capture this, this financial year. And hence, the revenue recognition might take -- will improve on quarter-on-quarter going forward.
Understood. That's very helpful. My next question is on the debt side. So there's quite a good decrease in debt. How should we think of further reduction in debt? You're already 0.93. What is your target for our end FY '23, please?
Puneet, like I mentioned -- like we have been discussing for the earlier calls as well, the debt reduction is one of the priorities for the company. And however, we think that we have achieved quite a bit of our targets in the last financial year. Going forward, also, it's going to be a mix of -- from whatever free cash flow that will be available for us. We would tend to prioritize first, in debt reduction and two, investing in new opportunities as well. So from a capital allocation point of view, so first, in terms of debt reduction, probably we will look at further reduction. And from new investment point of view, we have a bunch of opportunities lined up, and we have allocated some of the capital for that. And so it's going to the next -- the second point is here, the new cash flow that will come in, in the next subsequent quarters. Like I mentioned, the construction activity would significantly increase in this financial year, FY '23. And hence, a lot of the cash inflow would be allocated to making sure the projects are completed. So given that, the cash flow availability for the -- overall, net cash flow, that would be available would also probably come under -- might not be the same as what we have seen in this quarter.
Any number you can give? Any target for '23?
'23, I would -- we are still working on these numbers. We don't have a target at this stage.
The next question is from the line of Sameer Baisiwala from Morgan Stanley.
Sir, what's the new sales target for fiscal '23?
Sameer, the -- we think that the demand environment now after a significant increase in the last 2 financial years and particularly in the last 6 quarters, reached level where I think it's going to be steady. So I would tend to think that the sales would remain largely flat or little increase. I don't think it's going to be significantly different from what we have this financial year.
Okay. okay. That's fine. And the second question is, any thoughts on what could be the collections and the construction outflow for fiscal '23? I know you made some qualitative comments, but anything more you want to add over there?
On construction outflow, Sameer, it's more of a definitive number because we have a plan to deliver the -- all the projects that are ongoing. So I think there will be an increase of about 60% to -- 60% or so in the overall construction outflow. And in the collection of inflow also, I think there would be an increase but I think it will be in the range of at least 20%.
Okay. Sir, your voice is not very clear, but -- so construction spend will go up by 60% and the inflows collections would be -- would go up by 20%, is that what you said?
That's right. Sorry for not being clear, Sameer, but yes, you are right.
Okay. And the other question is on the contractual business. If I look at pre-COVID and fiscal '20, I think we did about INR 1,500 crores and now it's obviously come down to half of that. So how is the pipeline building up? And do you think customers are coming back now that pandemic is more or less behind us?
Right. So as you know, Sameer, in the contractual and manufacturing revenue, we have both the manufacturing units, which contribute about roughly INR 400 crores to INR 500 crores. That would sustain or that would go back to pre-COVID levels. But from a contracts point of view, we are seeing that there is some of the projects that we have taken, have -- like I mentioned earlier, we have taken some kind of margin hit. So we are carefully considering the business development activity there. And we are reevaluating wherever we have been active in bidding. So that's something that we are a little bit cautious about. So we will complete the current existing order book that we have. But going forward, we are reevaluating how we can bid and what are the opportunities that we see colorful.
Okay, sir. And one final question from my side. What's been the sort of price increase that you have taken? Is it like broadly on an average for the portfolio, is it like mid-single digit on a 6-month basis? And how do you see it going forward over the next 6-month period?
From a -- if you compare from FY '22 to FY '21, there has been an increase of roughly about 6% and going forward also, I think -- I mean, in most of the projects we have taken some price increases. And going forward as well, we can expect in FY '23 also to have a similar number.
The next question is from the line of Abhinav Sinha from Jefferies.
Hi, and congratulations on the strong cash flows that we are seeing. So Jagadish, I just wanted to go back to the sales target. Did you mentioned you're expecting flat sales Y-o-Y this year? And I mean, considering the low base of COVID wave 2 and a bit of wave 3, is that right?
So Abhinav, the sales, as you would have seen, we had done about 4.9 million square feet in FY '22 and FY '21 was about 4 million. I think this is a sustainable number, even if there is an increase -- I mean what I was mentioning was that this 5 million square feet is a number which is sustainable for us. And given our current inventory and the pipeline that we have, this is definitely something which is doable. Anything more would be a bonus for us. But from a target point of view, we would roughly try to achieve about -- in the early double digits.
Okay. So value wise early digit is feasible, considering pricing is also slightly higher, yes? That is right?
Volume-wise, it will be roughly similar, a little bit up, but both volume and price increase, if you take it, can be in low double digits.
Okay. And on the contractual side, so the pipeline now seems to be much lower than what it was in the previous quarter. And does run rate of FY '22, even is that repeatable? Or if there's like a wholesale, we think on whether the group wants to do this anymore, and you will maybe redeploy the goal post accordingly? What do you think?
So there are 2 parts for it. Firstly, FY '23, FY '23, there would be definitely an increase in the overall contractual and manufacturing business. Since we have an order book, which we need to execute. And for beyond that, what we are currently doing is what I mentioned earlier regarding the reevaluating some of the opportunities that we have been seeking also. So based on how they certify, we will have to be -- we will either continue on the current path or we reevaluate the contractual business.
Okay. So maybe we will have a better idea for sustainability in a few quarters, does that help?
Yes, in a couple of quarters, we'll have a much better sense of how we would work out in the subsequent financial years.
Right. And one last question, just on the Gurgaon project. So a, can you tell us how much inventories that now there for villas, which is left? And b, any timelines on when the new project with Karna ones can be launched?
Well, the -- on the existing inventory, we have about more than 1 million -- 1.5 million square feet for us in Gurgaon. and corresponding to the new launch to Karna, we are still awaiting some of the clarity from a licensing point of view. Once we obtain it, then we'll be able to share the definitive timelines with you, Abhinav.
Like but Hyderabad should be likely this year?
Yes. Hyderabad, we are -- we had been working on the -- doing a launch. We had more -- we are here in the last leg of approval. So hopefully, we should be able to do quite soon.
The next question is from the line of Mohit Agrawal from IIFL.
Yes. Heartening to see a good debt reduction this quarter. Sir, my first question is on your business development strategy. So how should we look at adding new projects into new geographies? Or are you just going to focus on utilizing your land bank? So any color on that, can you provide?
Sure, Mohit. Real State in the new business development, it's going to be mix of how we are planning to go ahead. One, as you know, we have a reasonably good land bank the -- our first priority is to invest in the incremental investment that's required for this land bank to monetize it in the form of the project or in terms of a best utilization of the assets at that point of time. So in that regard, some of the projects we have already conceived and we would like to -- they are going to come up at the projects in the subsequent -- this end of this financial year or early next year. That's a continuous process wherein the -- we continue to invest on our existing land bank to make sure that they come up as projects. With respect to the new pipeline that we create in terms of deals, we are honored in terms of evaluating multiple opportunities across cities. Our focus cities will continue to be our current operating locations, which is Bangalore, Pune, NCR and some within Chennai as well. In addition to this, if there any fantastic opportunity is in new locations, we would see it, but our first priority is going to be on operating locations, where we have already have a team set up and brand recognition and we understand the operating environment pretty well.
Okay. And sir, any outflow that you've planned both for your existing land bank to make it more monetizable for this year? So what kind of outflows are you looking there? And also any target that you have for investing in JV, JVA projects that you just mentioned that you will be looking at some opportunities in the existing locations?
I will not be able to share exact numbers for that, but it's an ongoing process where we evaluate opportunities and invest. So hence -- but definitely this year, we will look at investing in new opportunities in the cities that we operate there. Right.
Okay. Sir, just last one on this. But is the investment in the own land bank, is it going to be a significant outflow this year?
No, that's -- the existing land bank, there are 2 sets of it, again, some land banks, which are -- which we can monetize much quicker. Those, I think the incremental investment is going to be -- has to be done more in terms of permissions and conversions. So that's not going to be significant. And the second one on the land bank, which will take time for us to actually certify and monetize, those also -- there is going to be an investment, but that is going to be incremental and long-term in nature, in the sense it's not going to come everything at one shot, but it's going to come periodically. So both put together, it's not going to be a very large investment, but they will be incremental in nature.
Sure. And sir, my second question is on your P&L. We are seeing your P&L -- your interest cost in the P&L for FY '22 was about INR 750 crores. Now your cash outflow is about INR 300 crores, and there is a notional interest that you show of about INR 450 crores for '22. If you could give some color on that, is this recurring in nature? And is this something that if you could throw some light on whether our listed peers also do the same kind of accounting, if anything on that, if you could share?
So Mohit, this is India's requirement. So we have to compulsory show that notional interest in both sides, as income as well as expenditure.
Okay. So this will be recurring, sir?
That is going to be recurring.
So Mohit, what Yogesh is mentioning is that this amount consists of -- majority of it is notional financial costs and not the actual finance costs. If you got -- if you have to look at actual finance costs, I understand it, our investor team will reach out to you again and probably explain that.
The next question is from the line of Kunal Lakhan from CLSA.
My first question is on your Slide 15 in your presentation on your cash flows. Now when I look at your balance construction cost of INR 87 billion against unsold stock value of what, INR 100-odd billion, there doesn't seem to be much room to increase the cost to offset the -- to increase the prices to offset the increase in the cost save. I know, you said 15% hike in the cost of 6% increase in the prices will not really offset the impact of increase in the cost. So how should we look at this going ahead? Like -- and firstly, do we have the room in our portfolio to increase to take -- to undertake such price hikes in the market?
So Kunal, thank you for the question. The -- you're right. I mean, there is the outstanding what we have receivables on that is mentioned as about INR 5,387 crores. So corresponding to that, we have a balanced construction cost of about INR 4,800 crores. So you -- from there, this is all receivables and any increase in that cost that outflow will have an impact on the margins, you're right.
So actually, my question was on the overall portfolio, the total column that you have, which is like your total outflow to complete the entire ongoing portfolio is about INR 87 billion versus INR 100 billion of unsold stock value that you can get from even the area which have not launched so far. So what I'm trying to understand...
So Kunal, this is Yogesh. So INR 100.64 billion unsold stock value, whereas INR 53.87 billion we have to receive from our outstanding receivables. So once we fix [indiscernible] you have to look into minus [ INR 87 billion ]. This includes over INR 100.64 billion of unsold stock which we have not sold as on date. Whereas construction cost includes units which we have sold also, not constructed.
Correct. Correct. And there is no scope of any price improvements or price increases on those units, right? So entire price increase will only happen on your unsold stock?
Unsold stock, correct.
Correct. But you have a total cost of INR 87 billion estimated on your entire ongoing projects, balance costs, right? So I'm saying that they are almost like your balance cost is 90% of your value of unsold inventory that you can fetch right? So there isn't much room there in terms of like passing on the entire cost inflation. So it just seems like it will be very difficult to actually base of 15% hike in construction, practically, you have to increase the price by 15% on your entire portfolio to stay EBITDA neutral or margin neutral. So just trying to assess like whether we have the ability to increase prices by that scale if the cost increase by that amount?
Well, Kunal, the -- if you look at the projected sales value of unsold stock, right? That INR 8,720 crores includes the -- it is for the completion of the unsold stock as well. Where we have about INR 6,000-odd crores. I think that's where we have a room for it. So there is -- we believe that there is enough room for us to offset that.
Okay, sure. My second question was again on your guidance side. Like so value you said in terms of value low double digits. But in terms of volume, you said like flat or marginal growth, right? Now again, like considering like last year, there was some deadlock in terms of launching new projects, which is not there as of today, like you said. So -- and we have 13 million square feet of new launches planned. So just trying to understand that, like how do I reconcile this? Because the new launch, the approval pressures are not there. So new launches should come through. But at the same time, we are guiding for a flat volume on FY '23. So are there -- other way to ask this? And are you seeing some pressure? Or are we seeing the market softening overall?
Kunal, what we are factoring in, which probably we are being a little bit more practical or on the cautious side, is because of the price increases, they and some of the additional supply coming in the market, in the last few quarters and probably going forward, given the strong demand environment. There might be a chance that we would do these numbers which are projected. If there are no such -- I mean is the demand -- if the price absorption is better than what are looking at, then definitely, we can do far better. So this is -- I'd like to be a little bit cautious in terms of how we predict our outlook. It's -- the reason why we were saying is probably flat volume or from point of view, it's not too high, is largely because of the price increases that we would like to do in order to protect our margins. Having said that, new launches, of course, create a certain kind of increased demand. So if there is a pickup there, then that would be additional bonus. So what we would -- what we are seeing is still a strong demand environment, no doubt about it. Hence, first, our focus is to make sure now considering the last 2 financial years have been good in terms of the quality of sales. First priority is to make sure that the cash flow that we intend to spend on the construction is protected and our continuous focus on the cash flow remains the same, so that we continuously generate net cash flow positive on a continuous basis. Second is also to make sure that the margins are also protected. So hence, I would consider high inflation environment, we would like to protect the margins as well. And hence, we are probably being a little bit more cautious on the volume. We will be okay, if we do similar or slightly higher volume and value, but make sure that our margins are protected.
Just let me clarify one thing. So I didn't say that we would be cautious in terms of new launches this year, not because of maybe approval deadlock, but because of cost inflation. Or should we assume that launches this year would be higher than that?
The launches are not a factor of any kind of caution. The launches would happen as we planned. But the offtake from the new launches would be kind of slightly higher prices that we have priced that might call -- might not lead to the demand, which is -- the demand velocity which we have -- we can anticipate in the last financial year. So overall, the volume, we don't see that there would be an issue and value also is not an issue, but from a significant jump in terms of the new sales that we are -- the financial year doesn't look like it's going to be significantly different from last financial year.
The next question is from the line of Parvez Akhtar Qazi from Edelweiss Securities.
Hi, and congratulations for very great set of numbers. Sir, you did mention about geographical diversification and where we would like to improve our geographical footprint going ahead. But I mean, as a medium-term strategy, do we expect any kind of significant change in terms of contribution from Bangalore over the medium term towards, for example today, again, maybe about 70%, 75% of sales from Bangalore? What would be this number, let's say, 3 to 5 years down the line?
Thank you, Parvez. So currently, current mix of the sales, Parvez, is entirely dependent on the inventory and the pipeline that we have. So the current inventory that we have and what's the visibility that we have, if you look at those and what we are planning to do in the next subsequent financial years, is very clearly, we would like to diversify a little bit more. And the mix would -- although Bangalore will continue to dominate the overall mix -- but we would expect and probably target for an increased upward sales, but the contribution of Bangalore coming down by at least 5% to 10%, which is -- which might be a -- right now, it's about 65-odd percent. It might come down to 50% to 55% going forward. But it might not happen in the immediate future, but over the next few years, definitely, we see that happening.
And which are the areas which will probably contribute higher for us to be able to achieve this target?
Well, that is a slightly divesting -- multiple cities can contribute to those. Like I mentioned, our current focus markets would be currently where we are already operating, I think Kerala, Pune, NCR, GIFT City and Chennai, once they start contributing better, then definitely their share would increase and Bangalore's would, from a mix point of view. Overall, but we still think that the volume and the value from Bangalore will continue to be same or go much higher from here.
In the interest of time, this was the last question for today. I would now like to hand the conference over to management for closing comments.
Thank you, everyone, for participating in the call. As you have seen that the -- our focus for the last financial year and which was reflected in the last quarter as well is absolute focus on cash flow management, which has definitely helped us improve our own operational efficiency. That with this learning, we would go forward in FY '23 as well. And we think that our -- these learnings will help us continue to achieve a much better financials and reduce our debt further and give us opportunity to invest in new land opportunities across India. So if you look at our long-term plan, so our plan is to -- like I have mentioned earlier, is to have a disciplined growth strategy, and that's the part in which we would go on. And I think we are -- we have set up the right set of environment and the thinking and strategy aligned across businesses and teams to make sure that this gets executed, given that we are very positive in terms of how we take up the execution of this strategy. And we look forward to deliver extremely positive performance going forward. Thank you. Thank you, again.
Thank you very much. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.