NEW DELHI: Bengaluru-based Concorde Group has lined up four launches having development potential of over two million sq ft in the next 12 months. In this financial year it expects to register revenue of about Rs 300 crore, which it plans to increase to Rs 800 crore by 2026.
Nesara B.S., chairman of the company in conversation with Ankit Sharma, ETRealty, talked about company’s performance in the last one year, future plans and company’s focus on joint development agreements.
Edited excerpts:
How has the market performed in the last nine months?
Post covid, there was a major churn in the demand as everybody wanted to upgrade to a bigger house. The prices also went up by 30 to 40 per cent in the last two and a half years. We were selling at some Rs 5,000 per sq ft now it’s at Rs 8,000-8,500, that’s almost 30 per cent jump. Now I think in this financial year, things are kind of normalizing because of overall global slowdown and even the IT industry in India is looking at a hiring freeze. If we talk about Bengaluru, unlike other markets it is very end user driven, still it has grown. Earlier, we were selling around 45,000 to 50,000 units, now I think we are selling 55,000 to 60,000 units.
Also, what has happened is that pre-covid, profit margins in residential real estate were very tight because the prices didn’t go up as much as we had expected. There was a lot of uncertainty in the market, lot of consolidation was happening and there was a lot of non-delivery of projects. But post-covid, there was a consolidation and now very few developers are left in the market, which means supply is restricted, which is giving us pricing power along with brand premium.
How is the profit margin now?
Now it has increased. The reason being we are able to get better pricing. Though the raw material prices have gone up, pricing also has gone up slightly. Earlier margins had come down to single digit (about 7-8 per cent). Now we are able to maintain early double digits (10-15 per cent). In luxury segment, margins are slightly better (about 15-20 per cent).
How was Concorde’s performance in the last financial year? And what are your plans for FY24?
Our target this financial year is to touch around Rs 440 crore (pre-sales). In H1 FY24, we did about Rs 200 crore and we should be able to touch our targets because we have two launches lined up for the second half of this financial year. Overall, we have four launches lined up having development potential of over two million sq ft in the next 12 months.
In the financial year 2022-23, we did sales of Rs 300 crore, our recognized revenue was approximately Rs 272 crore and our profit was around 9-10 per cent. This financial year we expect our recognized revenue to be around Rs 330 crore, our sales should be around Rs 400-440 crore and profit should be around 10-12 per cent.
In October-December 2023 quarter, we plan to launch seven lakh sq ft project having revenue potential of Rs 390-400 crore. Out of this approximately Rs 275 crore will be our share since it is a joint development project with the landlord.
In January-March 2024 quarter, we plan to launch 5.5 lakh sq ft mixed-use project having revenue potential of Rs 400 crore. This is also a joint development agreement. This was a stressed project of Dhammanagi Developers which we bought through NCLT.
In April-June 2024 quarter, we plan to launch another residential project along the Thanisandra Main Road. It’s development potential is about 5.5 lakh sq ft. This was also a stressed project between Arun Shelters and Puravankara in which we bought majority stake in October 2023 through NCLT for Rs 65 crore. In this project our revenue recognition is around 85-87%.
We are also developing 36 towers luxury building on two ares land along the Old Madras Road. It has a development potential of three lakh sq ft. This is expected to be launched by the second quarter of the next financial year.
Revenue potential of this planned two million sq ft is about Rs 1,400 crore, out of which our share should be around 65 per cent (Rs 840-900 crore).
Apart from this, we are in talks to finalise projects having development potential of about 1.5-2 million sq ft which we expect to launch in the next six quarters.Nesara B.S., chairman, Concorde Group
We are also in advance stage of discussion to acquire another about 5.5 lakh sq ft project along the Kogilu Road, which is under NCLT. This will also be under joint development agreement.
What is your average price realization?
Average price realization has increased by about 20 per cent for us from the last financial year, mainly because most of the newer projects are in a different micro-market where the pricing is much higher. Last financial year, our average price realization was about Rs 6,000 per sq ft while in this financial year we are expecting it to be around Rs 7,000-Rs 7,500 per sq ft.
What kind of growth you expect in the long term?
As I said, this financial year we are targeting about Rs 400-440 crore (pre-sales) and recognized revenue of Rs 300 crore which means we are bringing in one million sq ft per year. Our target is to reach revenue recognition of Rs 800 crore by 2026 which will be about two million sq ft per year.
How many projects you plan to complete this financial year?
Completion we expect in this financial year is around 1-1.5 million sq ft.
How much land parcel do you hold?
We follow the asset light business model. My father started the business in 1998, during which time we use to acquire land parcel. Till date we have acquired 1,000-1,500 acres. But by the time second generation came in whole dynamics changed, either it was difficult to acquire land parcel or it was very costly, hence we moved to asset light model. Now, most of it is joint development agreement and we hold only about 100 acres land. Even though the profit margin are comparatively lesser, there are lot of opportunities for us in JDA model.
How much investment are you planning in this and next financial year? How do you plan to fund this expansion?
In the next 2-3 years, we plan to invest about Rs 1,000-1,200 crore. We will fund most of this through internal accruals, customer advances and remaining through construction finance.
What is your debt level?
In the last 4-5 years, we have brought down our debt level. Pre-covid our debt was around Rs 265 crore, while we were doing about Rs 150-200 crore sales. Now we have completely reversed it, our sales is around Rs 400 crore and debt is only about Rs 100 crore (in FY23). Our debt-equity ratio was about 0.4-0.5 in FY23.
How is the commercial real estate market performing?
Currently we are in a residential growth cycle. Before covid, commercial real estate was selling at premium now it has come down. Even the commercial cost is a little higher than residential. Because of all the uncertainty, commercial uptake is also slow. Vacancy rate is high well. We even re-planned one of the project to increase the residential area over commercial space.
We have 1.2 million sq ft of commercial projects as of now.
