Bengaluru-based Puravankara (earlier known as Puravankara Projects) is moving towards putting its legacy issues behind. The company has been successful in bringing down its ready stock of residential units by 67% in the last two years, its sales volume from under-construction projects have increased by 51% in the year ended March 2022 and net debt has reduced by about Rs 900 crore in the last three years.
Abhishek Kapoor, CEO of Puravankara, told FE that the company’s focus is back on new launches and monetising existing investments where the land is paid for. “We are now looking at projects where I monetise the investments, get my equity out and re-deploy that further. We are back in that cycle and it means that our return on capital employed will continue to improve as I will start getting a lot of my equity unlocked from these investments as projects start getting monetised,” he said.
Till the end of financial year 2020-2021, a large part of the company’s sales were coming from ready-to-move (RTM) inventory. Like other developers, Puravankara has also benefited from the heightened sales momentum in the last two years of Covid-19, and was able to reduce its RTM stock significantly. The company had 2.16 million sq ft of RTM stock till the end of December 2018, which is down to 400,000 sq ft now — a sharp reduction of 81%.
This also helped the company reduce debt by nearly Rs 900 crore in the last three years from Rs 2,750 crore in 3QFY19 to Rs 1,860 crore at the of 3QFY22 –76% of the reduction was post-Covid-19. “Puravankara was sitting at a lot of RTM inventory because we complete projects early, and we ended up liquidating and selling large part of it, which was a clear focus for us and that has helped in reducing our debt as well,” Kapoor said.
Kapoor joined Puravankara in September 2019 as chief operating officer and was elevated to the position of CEO of the company in April last year. After he joined, Puravankara has seen improvement in the company’s performance and change in strategy.
Puravankara recorded total sales volume of 3.52 million sq ft in FY22 with a total sales value of Rs 2,406 crore — clocking its highest ever sales value since inception. The developer was ranked 16 in calendar year 2016 in Bengaluru, and has been able to improve its ranking to top 10 in 2019 and in top seven in 2020 and 2021. The company’s market share has also improved from 1% in Bengaluru in 2016 to 1.6% in 2021.
Company’s credit ratings have also been upgraded in the last few months. ICRA upgraded the company’s ratings to A- and A2+, and revised the outlook to stable.
While the company has presence in nine Indian cities, Kapoor said that now the focus will be on Bengaluru, Chennai, Hyderabad, Mumbai and Pune. The company also plans to increase its focus on the West with Mumbai and Pune markets, where it has two projects each at present and plans to launch 3-4 more this year. In all, Puravankara plans to launch 14 projects in the current financial year with over 11 million sq ft of saleable area across Bengaluru, Pune, Mumbai and Chennai.
“Our focus is on under-construction projects and if you look at our numbers, our under-construction business has gone up by 51% on a y-o-y basis, which is the real growth story and that will continue,” Kapoor said.
Going forward, in the wake of the reviving housing market in India, Puravankara has carved a separate division to cater to plotted development. Of the launch pipeline, 2.30 million sq ft will be in plotted development, said a note from a domestic brokerage. The company is also in the process of launching an alternative investment fund of `750 crore for funding land purchases, which it expects to launch in the next two months.
“It is a 500+250 crore green shoe, with a first close of Rs 200 crore. The fund will have participation from smaller high net worth investors and few anchors — larger HNIs and offices. The returns offered will be in the range of early to mid-teens,” Kapoor said. He added that the fund will fulfil the need of the company to have a diversified pool of capital which will enable it to scale up operations.
“Most funds are structured where the capital comes back towards the end of the project. In this particular case, AIF starts getting returns much earlier. The capital will be deployed in land purchase and Puravanakara will do the development. The revenues in a certain percentage will go towards the returns and the investors will start to see capital come to them much earlier,” he said.