Shriram Properties Ltd (“SPL”), a leading residential developer in South India, announced its financial results for the first quarter ended June 30, 2022 (“Q1FY23”).
The Company has reported 20% YoY growth in sales volumes at 0.66 million, supported by strong sustenance sales across projects and the launch of a new phase in an ongoing project. For the quarter, aggregate sales value stood at Rs.313 crore, against Rs.248 crore in Q1FY22, up 26% YoY. Aggregate collections were higher by 34% YoY at Rs. 324 crores in Q1FY23. Construction spend were higher by 52% YoY at Rs.137 crores, demonstrating continued focus on project execution.
The Company has clocked 4% higher realisation, with actual growth ranging between 1% and 9% across projects, compared to levels seen in Mar’22. The Company witnessed 8% higher average realisation in H2FY22 as well. Price improvement was seen across all product segments. The Company expects the price curve to improve further on the back of strong demand, cost considerations and impact of industry consolidation.
The Company has reported excellent financial performance for the quarter as well. Revenue from operations nearly tripled on YoY basis to Rs. 122 crores on the back of income recognition in two key projects and 62% YoY growth in DM fee during Q1FY23. Total revenues also more than doubled to Rs.145.1 crores in Q1FY23, despite delayed revenue recognition in one key projects in Bengaluru.
EBITDA has more than tripled to Rs.35.5 crores in Q1FY23 vis-à-vis Q1FY22, reflecting higher revenue recognition, increased share of DM fee and lower growth in total expenses. EBITDA margins were higher at 24.5% against 18.9% in Q1FY22.
Overall finance costs were lower by 13% YoY, reflecting reduced debt levels and ongoing refinancing efforts. Share of profits from JVs was remarkably higher, reflecting the start of revenue recognition on completion and handover at one of the JV projects in Chennai.
The Company was able to sustain the turnaround momentum seen in H2FY22. Net profit for the quarter stood at Rs.10.5 crores against full year profit of Rs.18 crores in FY22. This reinforces confidence on earnings potential for the full year.
The Company’s gross debt dropped 6% QoQ to Rs.451.2 crores in Jun’22, while net debt stood at Rs. 364.1 crores in Jun’22. Debt-Equity ratio at 0.32x is among the lowest in the sector. The Company remains focused on reducing debt and interest costs further in the coming quarters. Post IPO, the Company has prepaid debt of ~Rs.200 crores and refinanced ~Rs.265 crores, apart from JV debt refinancing activities.
The Company has near-zero inventory in completed projects and nearly 85% of its ongoing project inventories are already sold. With all its ongoing projects nearly on track, the Company expects to handover ~10 msf during FY23-25. Accordingly, ~70% of revenues recognition over the next 3 years would come from cumulative volumes sold till Mar’22 and ~60% DM fee to come from projects launched already. These should provide strong income recognition potential. Improving operating leverage and rising DM income should continue to help sustain earnings momentum.
Commenting on the Company’s performance, Murali M, Chairman and Managing Director, said: “The continued strong earnings and turnaround momentum is reassuring and demonstrates the strength of our team and the operating platform. Strong current performance reinforces confidence on our strategy and the execution plan. We will remain focused on profitable growth by leveraging the strong project pipeline and market opportunities. We believe, we are on the right path to delivering superior shareholder value in the coming years”.
