Shriram Properties stock gains 3.5% after strong performance in Q3FY22

19 Jan 2022 , 11:48 AM

Shriram Properties Limited (SPL) reported strong quarterly performance with sustained strong pre-sales volume and remarkable growth in collections and construction activities during the quarter ended December 31, 2021 (Q3FY22).

The company achieved aggregate collections of Rs900cr during 9MFY22, up 57% yoy. Total collections for the quarter was around Rs337cr in Q3, up 21% yoy. High collection numbers reflect the Company’s focus on on-ground execution progress, despite covid-led interruptions.

At around 11.50 am, Shriram Properties Ltd was trading at Rs107 per share up by Rs3.55 or 3.43% from its previous closing of Rs103.45 per share on the BSE.

The Company achieved sales volumes2 of 1.03 msf in Q3FY22, supported by successful launches. Aggregate sales volumes for the first nine months thus stood at 2.58 msf, up 56% yoy in 9MFY22. This is remarkable considering the macro challenges faced on the back of Covid-led intermittent lockdowns during Apr-Jun’21, and more recently, the fears of a possible third wave of the pandemic that could adversely impact consumer sentiments.

Projects under the Development Management (DM) model accounted for 38% of sales volumes, while the share of plotted development in overall sales stood at ~25% during 9MFY22.

The Company had 4 new launches, apart from additional phases launched in 3 ongoing projects, with aggregate saleable area of over 1.98 msf, across its core markets of Bengaluru, Chennai and Kolkata. Increased supply from new launches, both new projects and additional phases in ongoing projects, helped in maintaining quarterly sales run-rate above 1.0 msf levels, even during Q3FY22.

Aggregate sales value crossed the Rs1,000cr mark during 9MFY22, reflecting a growth of 60% yoy. Quarterly sales value at Rs415cr in Q3, compared to around Rs340cr in Q2FY22 and Rs410cr in Q3FY21. On a comparable basis, average realisation for plotted development and residential apartments stood at Rs1,920/sqft and Rs4,521/sqft respectively in 9MFY22.

As at the end of Q3FY22, the Company had near-zero inventory in completed projects and nearly 85% of inventories in ongoing projects have been sold already. The Company is focused on new launches to sustain growth momentum, while unlocking remaining inventories in ongoing projects.

SPL’s construction activities regained momentum and construction spend grew strongly during Q3FY22 and 9MFY22, despite second wave of Covid led intermittent lockdowns during Apr-Jun’21. Aggregate construction spends nearly doubled to Rs137cr in Q3 and stood at around Rs423cr in 9MFY22, up 158% yoy.

The business development activities progressed well during the quarter. The Company signed definitive documents for 4 new projects with aggregate development potential of ~ 2.3 msf since filing of the red herring prospectus in Nov’21. The Company is at advance stage of negotiation in certain other projects and expects to reach closure and make a formal announcement in due course.

The Company remains positive on the immediate term and long-term prospects, given strong sector fundamentals, supported by low interest rates, stable prices, improving purchasing power and fiscal incentives from the Government for home buyers.

Mid-market and affordable housing will remain a key performer and the Company remains focused on this segment. Supported by robust project pipeline and strong operating platform, the Company is well equipped to benefit from ongoing consolidation in the industry. Planned significant new launches during Q4FY22 and the next fiscal will enable the Company to sustain growth momentum and deliver significant value for its stakeholders.