Pre-sales Were At Approx ₹7,300 Cr Last Year, Will Be Around ₹10,000 Cr This Year: Signature Global

Summary

Rajat Kadra from Signature Global discusses the company's strong pre-sales performance, projecting ₹12,500-₹13,000 crores, surpassing the ₹10,000 crores target. While collections may fall short of ₹6,000 crores, they will still show growth from the previous year. The company has shifted focus from affordable housing to mid-income and premium products due to rising land prices. Signature Global is on track to exceed ₹13,500 crores in launches and expects healthy margins. Brokerages predict the company could reach net cash status by FY27, with operating margins potentially hitting 40%, aligning with or exceeding expectations.

Takeaways

• 😀 Signature Global is experiencing strong pre-sales momentum, with expectations to surpass ₹12,000–13,000 crore in pre-sales this year, exceeding the initial ₹10,000 crore target.
• 😀 The company is likely to fall short of its ₹6,000 crore collections target but will still show a significant increase from the previous year.
• 😀 Signature Global's pre-sales and collections are linked to construction-linked plans, meaning they tend to rise in tandem, although collections may be delayed by a few months.
• 😀 The company pivoted from affordable housing to mid-income housing due to rising land prices, which made affordable housing less viable post-pandemic.
• 😀 Despite the pivot, Signature Global continues to see strong demand in the affordable housing sector, but high land prices limit profitability in that space.
• 😀 Rajat Kadura confirmed that Signature Global’s margins remain healthy, with a projected operating margin of 35% for this year, aiming to increase to 40% in the future.
• 😀 The company’s land acquisitions, made at favorable prices before the price surge, have helped maintain strong margins, making their current guidance realistic.
• 😀 Signature Global's launch pipeline remains robust, particularly in key micro markets like the Southern Peripheral Road, Dwarka Expressway, and Sona Corridor.
• 😀 The company has already crossed ₹13,500 crore in launch value for this year, with the expectation to reach between ₹13,500 crore and ₹16,000 crore by the end of the financial year.
• 😀 Signature Global has a strong future outlook, with plans to maintain steady growth in pre-sales and operating surplus in FY26 and FY27.
• 😀 Despite some challenges with collections, Signature Global's strategy and operational adjustments continue to position the company for long-term growth in the real estate market.

Q & A

What are Signature Global's expectations for pre-sales and collections this year?

Signature Global expects pre-sales to exceed 10,000 CR, potentially reaching 12,500-13,000 CR. However, collections are likely to fall short of the 6,000 CR target, possibly reaching around 5,000 CR, although collections are expected to improve in the coming months.

Why did Signature Global shift from affordable housing to mid-income housing?

The shift was driven by rising land prices post-pandemic, which made affordable housing less viable in city limits. While demand for affordable housing remains strong, the company is now focusing on mid-income products as the land prices no longer support affordable housing development.

What is the company's approach to maintaining healthy margins despite market challenges?

Signature Global has maintained healthy margins, currently expecting 35% EBITDA margin for the year. This is due to favorable land acquisition prices made before the rise in land costs, and the company's strategic focus on projects in prime micro-markets.

What is Signature Global's outlook on achieving net cash status?

Signature Global is aiming to be net cash by FY27, with an operating surplus nearing 40%. The company is optimistic that its strong operating performance will continue, with operating surplus increasing post-tax to 48% in recent months.

How has the price rise in the real estate market affected Signature Global’s strategy?

The company is relieved that the price rise in real estate has moderated. If prices had continued to increase steeply, it could have made offering affordable products more difficult. The moderated price rise allows Signature Global to provide more reasonably priced options to customers.

What is Signature Global's target launch pipeline for the upcoming fiscal year?

For the upcoming fiscal year, Signature Global is targeting launches in key markets such as Dwarka Expressway and Sona Corridor. The company is aiming for total launches between 13,500 CR and 16,000 CR, with some large projects scheduled for the first quarter.

What are the key micro-markets Signature Global is focusing on for its new projects?

Signature Global is focused on key micro-markets including the southern peripheral road, Dwarka Expressway, and the Sona Corridor. These areas are expected to see several new launches in the coming year.

How is Signature Global addressing the challenge of increasing land prices?

The company has already acquired land at favorable prices before the price surge and is leveraging this inventory for new projects. This strategy allows them to offer competitive prices for mid-income homes without being impacted by the high land prices seen recently.

What role do brokerages play in Signature Global’s current market position?

Brokerages are now increasingly bullish on Signature Global, with a target price of 1,436 rupees per share. This positive outlook is largely driven by the company’s strong pre-sales momentum and healthy financial performance.

How does Signature Global view the demand for affordable housing in the market?

Signature Global acknowledges that the demand for affordable housing is immense and beyond imagination. However, due to high land costs in key markets, they find it increasingly difficult to provide affordable housing within city limits, leading to the shift towards mid-income housing.