NEW DELHI: Concorde Group is looking to grow its revenue by 30 per cent year-on-year and wants to achieve Rs 550-600 crore revenue by 2026. The company claims to have achieved revenue of Rs 270-280 crore in FY24 and is looking to touch about Rs 380-400 crore in FY25.
In an exclusive conversation with Ankit Sharma, B.S. Nesara, chairman, Anil R.G, managing director and Grishma Reddy, director of Concorde Group discussed about company’s plan for residential and commercial portfolio, their expansion plans and business model.
How was Concorde’s performance in FY24?
Nesara: So the last financial year was pretty good. We were able to meet our targets. The supply is coming from very limited players and price appreciation has happened quite well. Some investors have started coming back to the market because they’re seeing good appreciation.
We crossed sales booking of Rs 440 crore in FY24 and recognised revenue was about Rs 270-280 crore. Our profit before tax was about 10 per cent.
We launched seven lakh sq ft project- Concorde Antares, in the last quarter of financial year 2023-24.
What’s the plan for this financial year (FY25)?
Nesara: This year we have four projects in the pipeline, close to two million sq ft put together. So in FY25, we want to cross sales booking of Rs 800 crore, recognised revenue to be around Rs 380-400 crore and profit before tax to be around 10-11 per cent. We don’t want to increase too fast, too soon. We want to go step by step. Eventually we want to construction three million sq ft per year.
First project is a mixed development project of 5.5 lakh sq ft along the airport road – Concorde Mayfair. This was a stressed project of Dhammanagi Developers which we bought through NCLT. The company had previously planned to launch it in Q4 FY24 but it got delayed due to the approval process.
Second project-Concorde Neo is along the Thanisandra Main Road about 5.5 lakh sq ft and will be launched in Q3 FY25
Third project is a high-end residential project of about three lakh sq ft having 38 floors. It will be launched in Q4 FY25 with apartment price starting from Rs 2 crore.
Anil: We are launching a plotted development project in Hubballi. This will be launched in two phases with phase-I having 16 acres to be launched in Q3 FY25 and second phase having about 20 acres to be launched in the mext financial year.
How many projects you plan to complete in this financial year?
We completed Concorde Luxepolis, which is about 1.5 lakh sq ft having 50 units. We plan to complete Concorde Auriga, which is a six lakh sq ft project having 501 units. We also plan to complete Concorde Hillcrest having five lakh sq ft and Concorde Equity having five lakh sq ft.
We will complete Econex, our commercial project having 1.5 lakh sq ft. So, in total we will be completing about 19 lakh sq ft in this financial year.
Anil: We will also start handing over Concorde Abode having 161 villas.
Do you see demand for villa projects in coming years? Do you plan to launch more such projects?
Anil: We are exploring 2-3 land parcels to develop villa projects. We see strong demand for such projects.
What is the ratio of apartment, villa and plotted projects in your portfolio?
Nesara: In the ongoing projects, it about 60 per cent apartments, 20 per cent villas and 20 per cent plots. In the upcoming projects, 8o per cent is apartment and 20 per cent is plotted development. As of now we are exploring options for villas project.
What is your profit margin?
Nesara: For an apartment project, profit margin is around 10 per cent. In villas, its about 15-18 per cent and plotted development is around 20 per cent.
Anil: Also in apartment projects, our overhead absorption is high around five per cent while in plotted development its less.
What is your debt level?
In FY24, it was about Rs 135 crore. It might go up to about Rs 200 crore in FY25.
How does your commercial portfolio looks like?
Grishma: We are primarily a residential-focused developer, so, our commercial projects are about 10-15 per cent of our overall portfolio. We are focusing on projects which are under three lakh sq ft and offer boutique commercial offerings.
As mentioned earlier, we are completing one commercial project in this financial year- Concorde Econex. We have sold about 25,000 sq ft of the project, while the rest we are leasing out. In this project, we are looking at Rs 65-70 per sq ft of rent.
The mixed-use project of about five lakh sq ft that we are launching in this financial year has about two lakh sq ft commercial development.
Nesara: We want to build our capabilities carefully because commercial real estate is a very risky asset class. And it is a very capital intensive portfolio and even after completion it takes some time to lease it out completely.
Do you prefer joint development agreements (JDAs) or outright purchase? Are you also looking at development management (DM) model?
Nesara: Of the eight projects which are launching in the next two financial year, only one is outright purchase, rest are JDAs. About 75 per cent of our portfolio should be JDAs and 25 per cent should be outright purchase.
We did one DM model recently, but we are very selective on it.
What is your take on the price appreciation that has happened in the real estate industry?
Nesara: What happened in the last two, three years the cumulative inflation on the cost. So inflation, you see it every year, 6.5-7.5% but when you accumulate it over a period of last three years, it’s been almost 30 to 35% on cost escalation, and because of that, the prices have increased by almost 50% in the last three years. What was selling at around Rs 7,000 per sq ft is at Rs 10,000 per sq ft now. Till now it was okay. People were able to afford a bigger units. But because of this, whole segment got changed, affordable segment which was Rs 50-60 lakh is now Rs 75 lakh, mid-segment is now above Rs 1 crore and premium segment has moved to above Rs 2-3 crore.
So we foresee that affordability is going to take a hit in the coming 2-3 years. We are mostly in mid and premium segments but now we are thinking of reducing the size. We have to plan when we are designing the projects and market dynamics are changing very fast. We now need to be little careful so that we don’t get stuck with the only high-end inventory, hence we are broadening our range little bit.
