Speaking to CNBC-TV18, Rajat Kathuria, CEO of Signature Global highlighted that the company has launched ₹9,000 crore worth of projects in first half of the financial year, while remaining launches are on track for second half of the financial year.
In terms of pre-sales, he said the company has achieved 58% of the annual target with demand remaining robust. However, on the collections front the company requires second half of the financial year to be strong in order to achieve the ₹6,000 crore goal.
Below is the verbatim transcript of the interview.
Q: Just wanted to understand a couple of things. One, of the ₹16,000 crore launch pipeline that you have for this year, how much have you done so far and are you on track to achieve this number? Also if you could give us a sense on whether you’re on track to achieve that ₹10,000 crore presales and ₹6,000 crore collections number for this financial year as well. And if you could give us targets for next year?
Kathuria: We are on track on most of these numbers as guidance which we had given at the start of the year.
As far as the launches are concerned, out of the ₹16,000 crores, we’ve done launches of approximately worth ₹9,000 crores during the first half and during the second-half we are fairly comfortable with the balance launches for this year.
As far as sales are concerned, we’ve achieved about 58% of the annual guidance. So we have done about ₹5,800 crores of sales for the first six months and I think this quarter is also going quite reasonable, can’t spell out the numbers, but in general I would say the demands holding and sales continue to be going in the right direction. So we are again comfortable with the ₹10,000 crores of sales guidance which we have given for this year.
As far as collections are concerned, we still have some more work to be done. We’ve done about ₹2,100 crores in the first six months, but we stay confident for the annual guidance at this stage.
Q: Do you want to up these guidance numbers, particularly in the launches and the pre sales numbers, it appears you’re pretty much on track or do you want to promise and then over deliver?
Kathuria: We would ideally stick to the promise on a yearly basis. So there’s no pre-set notion on what we want to do, but it’s good that we are by and large in a comfort zone as far as these guidance numbers are concerned.
Q: You have ongoing projects of around I think 15.8 million square feet which you aim to deliver by financial year 2026 (FY26). Could you give us a geographic breakup? I think most of them should be in NCR region. Will there be some part outside that as well?
Kathuria: No, we have almost everything which is in the NCR region. These projects are spread across various micro markets within Gurugram. So these projects are all based in our focused geography.
Q: With the visibility that you have right now, what can you guide for FY26 because of the 15.8 million square feet, I presume that a large part of that would be back ended in FY26 itself or is there a possibility some of that comes in FY25 as well? Could you give us a sense of what your own targets are when it comes to launches and collections in FY26?
Kathuria: So I’ll give you a bit of background on the portfolio side. So close to 12 million square foot is something which we’ve delivered till date. We are a 10-year-old entity and we’ve delivered about 12 million.
There is an additional 15.8 million which is at advanced stages of development. So over the next, four to six quarters we’ll be delivering a lot of these projects as well.
Besides that, there’s another 35 million with a GDV potential in excess of ₹50,000 crores. And within this forthcoming basket, most of this land is owned by us. To give you an idea, more than 90% of the GDV of these forthcoming projects will belong to the company and there is very little or literally nothing in terms of land payments which is still overdue or due from our side. So there’s good amount of land stage raw material which is sitting with us, which is primarily owned by the company.
So that helps us keep doing a sustained supply of products in the micro markets we operate in.
One other thing I would like to add up is, we’ve also diversified ourselves a little in terms of the product offering. So for instance, prior to this calendar year we were doing only mid income housing, whereas during this calendar year we’ve also gone into bit on the premium side housing which we saw some good response. We’ve even recently launched some plots, whether for residential or for commercial or multipurpose usage, and even they’ve like sold well and it’s almost becoming segment within the company.
So with this kind of expanded product basket, we are fairly optimistic in terms of our next year’s performance as well.
Q: If you could tell us about circle rates. There’s an average increase is what we understand, so has it moved up? If yes, what’s the average price?
Kathuria: If you see Gurgaon property rates or capital values over the last decade, for almost like 7 to 8 years they had stagnated – between 2013-14 till about 2021. Post 2021, we’ve seen about two years when a correction happened, prices went up like 70-80%. And that’s where the gap between the real value and the circle rates really widened, which the government keeps correcting in a periodic manner.
Post 2023, we are now seeing a phase where capital values are more range bound. They’re not kind of seeing any sharp increase which is good for volumes. It’s easier to trade if buyer and seller both are able to converge on a price and close the trade. So volumes are healthy right now due to the strong fundamentals of the local market.
Q: Realisations, what do we expect for you? Because you said the circle rates were a correction of the big prices increase that we saw post 2021, we’ve seen that as a change in your realisations as well. A few years ago it was close to ₹4,000, now it’s turned to between ₹13,000 to ₹14,000 per square feet. Do you believe that this is a range that will sustain or maybe because of the product mix, it will go on to around ₹15,000-16,000 and settle at around ₹17,00 say 2-3 years from now?
Kathuria: Our average realisations have gone up because of premiumisation of product and inclusion of better project locations in our portfolio.
We feel that’s the primary reason why that ₹4,500 per square foot number has almost tripled over the last three to four years. You shouldn’t expect anything like this happening in times to come. So we feel you should potentially see a more inflation linked sort of increment in capital values over times to come.
