NCR entry executed, Bangalore graduated to growth phase, and Palava data center committed to 1 GW BTS build.

And in your mind, between the data center opportunity and the residential in Palava, which one is giving better return on investment?

Again, I think it's not that these are not opportunities in the alternative. I think the fact that we have this very high quality and significant land located in such a strategic location with a huge amount of infrastructure build-out and no constraint for us in terms of having to use land in one or the other is a truly unique position that we have. And I think we can capitalize and scale up on both those levers. I think the residential scale-up is well underway. The locations are the part of the overall land that are earmarked for residential are very different from that, for what we've done for data center and allied users, for out of our approximately 4,000 plus acres, only about 400 acres is earmarked for data center. And we see that the data center opportunity is additive beyond our residential growth. Our residential growth plans continue to remain at pace.

And when I look at your average realization trend. It seems to be trending down over the last few quarters. Is it a deliberate strategy to move more towards a mid-income product instead of one being luxury premium...?

As we've always maintained, we like to maintain a diversified and granular sales mix. We broadly have about 50% of our sales coming from the mid-income segment, which obviously, as you mentioned, is sort of lower in price point. We have about 12% to 15% coming from the luxury segment and the balance coming from the premium segment. So that's how our business mix is and that's what we like it to be because we don't really want to take a view that only luxury will perform or only mid-income will perform. What we are seeing this year is that mid-income has started picking up on the back of the support from the government, whether it comes in terms of interest rate cuts or income tax cuts or so on. And therefore, perhaps the average blend may shift this year slightly compared to last year. But overall, as we've shared on a like-to-like product, our price growth is at about 3%.

You talked about your NCR strategy. Would you like to outline whether you're going towards Gurugram or Noida or both?

At this stage, our initial focus is most likely to be in Gurugram, but it does not mean that we do not look at any other part of the NCR, but it's quite likely that we will perhaps start off on the Gurugram side of the NCR.

First question is on the weekly sales number that you have put out, roughly INR30 million, if I'm not wrong, per week. How do you see this number trending in second half of this year or later part of the second half whether we generally see improving trend? Or it likely remains similar. Do we expect the bulk of the heavy lifting apart from the non-launch sales will happen from launches that we have lined up in second half?

Pritesh, thank you for your question. Just to correct the numbers, its INR3 billion of non-launch sales. This number is something which we put out because we think it gives a good sense of the run rate and how things are progressing through the year. If you were to take this number and do a multiplication basically last year's full sales, would more or less now come this year from non-launch sales. This number was obviously lower at the start of the year. It's trending upwards, and we expect it to further trend upwards in the course of the balance part of this fiscal, which really is just a sense of the strength of our brand and the fact that on an ongoing basis every week without doing a big activation or launch. We have consumers walking in, interested in buying and making the decision to buy, which is really why because they are buying on the basis of product and they're buying on the basis of reputation rather than on the basis of an offer. In terms of the second half of the year, out of our estimated sales of approximately INR12,000 crores or INR120 billion, which is expected in the second half of the year. We expect that somewhere between 70 to INR75 billion will come from the non-launch sales and the balance INR40 billion to INR45 billion from launch sales.

And one last on the Palava residential side, now that this infrastructure is -- the key tunnel is getting completed in next quarter or so, what to look forward to from our side in terms of the product offering over next couple of quarters that one needs to follow whether that's happening or not.

Yes. So, Pritesh, I think in our view, because this tunnel was supposed to be opened maybe 6 to 9 months ago, we have already brought into the market the products that we think will benefit from this connectivity. So, we had the launch of Lodha Opulis at the end of last fiscal. We've launched a new villa project recently. We've had now 5 sales in our Golf View development, which are close to $1 million each of apartments. So all of this product is already out there, which we think is a good position to be because the product is already under construction, sales are already happening. What we expect to see is there'll be some further launches, including at Opulis over the next 12 months. But we also, in our opinion, see much greater traction, much greater contribution to the overall sales mix as a percentage and in absolute terms from these premium category products. So overall, what I would expect to see in the next fiscal is significant ramp-up in both overall sales because the mid-income will also perform better, but we would think that the premium will have an outsized benefit, so higher sales coming through from Palava and also an improvement in margins because obviously, these premium segment sales are at a higher margin.

My question is again on Palava monetization, especially for the residential bit. So I get it, some of these infrastructure development projects will obviously drive the demand. But on a long-term strategy basis, some of the developments that we're doing in terms of, say, data centers, industrial parks and warehousing. I'm not sure whether employment in these segments would be driving the demand for Palava, especially the fact that we are making it more premium as well as luxury kind of development, data center anyway, it's less human-intensive as such? So just wanted to understand your long-term strategy in terms of like, of course, relying on the infrastructure development, at the same time, like creating captive demand in Palava in terms of more office development, creating a more social infrastructure, such as retail, hotels and all of that?

So Kunal, thank you for that question. We see Palava as a location which benefits significantly from its proximity to Mumbai's critical job hubs. In spite of the lack of connectivity so far, the Mahape job hub has played a key role in addition to the Kalyan, Dombivli area in terms of the demand and the scale-up in Palava so far, where we are now close to 250,000 individuals living, just under 50,000 families, which is an amazingly large scale up over the course of the last few years. The connectivity to Airoli and Mulund will further make -- the way we look at it is what are the jobs within a 30-minute driving distance from Palava. What this connectivity is doing is that it is making almost all of Mumbai's key job hubs within that very attractive distance from Palava. We have Encube pharma having set up their large-scale R&D setup in Palava, and that is already operational. We've completed one speculative office building of about 400,000 square feet, which we are now starting to lease. So we really have put in the building blocks of all these elements already in place.

Second question was on the business development side. If you look at last year, we acquired projects worth INR237 billion of GDV and our land spend stood at about INR63 billion. In the first half, we have acquired about INR250 billion worth of GDV and the land spend is about INR26 billion, INR27 billion there. So just wanted to understand kind of projects that we have acquired, are there more JDAs here? Or we would see some spill over of land spend happening in second half and subsequent quarters?

Yes. I think that's an important and valid question. Our land spend comprises of the spend, which is done at the time of the acquisition of the land and then also, of course, takes into account any future obligations towards the aligned and approvals related to that land, which come in over a period of time. So obviously, over time, there will be further incremental expense towards this header as the projects move to their phases of development. In case of JDA, it's a more forward based cash outflow and in case of owned land, it's more front-loaded. In terms of the mix of land that we've acquired in the first half, yes, there has been a higher proportion, if you may, of JDAs. But that's just -- it's not a shift in any strategy. It just happens to be the nature of the developments of the transactions which have concluded in the first half of the year.

So 2 questions. Firstly, on the Palava data center land transaction side. So, you mentioned that we're looking at the land pricing move up to about INR300 million per acre. So, this will be like the follow-on phases for the current 2 anchors or are you expecting the new anchors to pay this amount?

We expect fresh transactions to be closer to the INR0.3 billion or INR300 million per acre number. So what's already agreed or what's already finalized will obviously be at the levels that they have already been finalized.

And my second question actually is on the sales velocity and it appears that we are a little more launch dependent now or maybe it's perhaps just how this year is pacing out to be. But do you think we go back to being much more even and less launch dependent like we were, say, in the previous 2 years?

Abhinav, last year, our contribution to sales from newly launched projects was in the mid-30s. And this year also our contribution to sales from the newly launched projects will be around that number. So I don't think that there has been any change in the fact that all just somewhere around 2/3 of our sales come from our projects which are already ongoing as of the start of the fiscal year. It's just that we've had a very specific circumstance this year where the environmental clearance was blocked for the preceding 12 months up to the end of Q2. And therefore, you've had more of a bunching. So we are talking about the fact that more sales will happen in H2 because more of the launches have gone into H2. But overall, the best metric to be looked at is that what percentage of the sales for the fiscal are coming from projects which were already ongoing at the start of the fiscal and what are coming from those which have been launched during the fiscal, and I think our numbers will be sort of in the early to mid-30s for both last fiscal as well as this fiscal.

Just your thought on the real estate cycle. The real estate demand has been quite resilient. And I think better than what many investors were thinking. So where do you think where we are in the cycle right now? And then what are you thinking about on the footfalls and conversions side? And now that we're also reaching like INR3 billion weekly non-launch sales, and that's higher than the INR2.5 billion to INR2.7 billion numbers that we saw like roughly 3 to 6 months back. So do you think that this cycle right now is a lot more resilient than the previous cycles?

Akash, it's a big question. One question, of course, we can have a long conversation over. But in summary, our view which we've been expressing for a few years is that the Indian housing side, India is going through a once in a lifetime transition from low income to mid income. And such transitions, wherever they've happened in large economies in the world, have always we have always witnessed a very long real estate cycle when this transition happens typically in the order of 15 to 20 years. We think India is also going to have a cycle which is that long. We are only in the year 4 or 5 out of that very long cycle. It doesn't mean that we never have a bad year. We can, of course, have a bad year. But from a more structural perspective, this is a much longer cycle because the level of demand that India needs to produce to meet its housing needs. It's going to be a long, long time before the supply side can catch up. I think that the real estate cycle has not even gotten started, it will only get started when GDP per capita crosses $4,000, $4,500. So, we're still a few years before real estate really takes off. This is, I would say - the plane is on the runway. It's not even gotten to its kind of take-off phase, it's just sort of moving along on the runway.

And sir, just one question on the launches. Last time, our launches were more phased out through the year. Now they have bunched up towards the second half. So is this mostly due to the Thane, because the Thane launch got pushed to the second half. Is that the only reason?

No, I don't think there is any specificity of the Thane launch. The reason is what we've articulated earlier, that the environmental clearance process for Mumbai. It was a nationwide order, but it most impacted Mumbai, was basically stalled for almost a year from last August to this August, and that's led to most of our Mumbai launches getting pushed out. And that's the reason why the second half is heavier on launches then has usually been the case where we also prefer a much broader and more spread-out system, and we hope that we'll be back to that from next fiscal.

I wanted to understand the embedded EBITDA margins better. So when you think in terms of new projects, what is the calculation for embedded EBITDA margins on your own project versus compared to JDA project? That's the first part. And then the second part is, eventually over time, if we diversify away from MMR, will these embedded EBITDA margins start to come down?

First let me explain how embedded EBITDA is calculated each quarter. It is the actual sales price of that quarter. So, there is no projection in that number. And then taking into account the actual land cost, which is known, the actual approval costs, which are known the sales and marketing cost, which are pretty steady as a percentage of sales for us. And the only projection in that is the construction cost. And the construction costs, we have a fair amount of contingency built into our construction cost estimates. And therefore, the actual EBITDA in our P&L tends to be higher than the embedded EBITDA. You're right that Mumbai is India's most profitable market, it is also India's deepest, largest market in revenue term, but also, it's the most profitable market. And we do see that margins in Mumbai are about 10% better. So, if margins in Mumbai are x, margins in the rest of the country are probably 0.9x. So, Mumbai margins in Mumbai are about 10% higher than those in Pune or Bangalore. In terms of your question on this current contribution, this current quarter performance of about 32% of embedded EBITDA, our own land had an embedded EBITDA of about 37%, 38% and the JDA, the joint development Project had a contribution of about 27%. That typically is the delta, about a 10-percentage delta between the embedded EBITDA margin of owned versus JDAs.

How do you view the residential prospects of Palava city once full-scale infrastructure, including, say, bullet train and all the upcoming road infra becomes operational? Given significant supply concentration in Palava, do you think that this demand for Palava will be coming from the shift of demand from Thane, Mumbai, Navi Mumbai or will it primarily capture peripheral demand?

Thanks, Biplab, for your question. Our view is that Palava and Upper Thane will attract demand from across the larger Mumbai Metro region as these connectivity points come in as I described in response to an earlier question, consumers are most comfortable traveling about 30 minutes from their place of work to home. And that gives a huge opportunity for Palava as this connectivity brings more and more places within that travel distance. We expect that we will see in the near term a buyer from the Airoli, Mulund belt gravitate towards Palava and from Thane gravitates towards upper Thane as the 2 pieces of connectivity become operational in the next quarter or thereabouts. And so, you should see a big benefit upside of that in the number for the upcoming fiscal '27. And to give context. For example, the scale of the housing market in Mumbai by the end of the decade, will be roughly about INR235,000 crores and we expect sales in Palava and Upper Thane by the end of the decade to be in the range of about INR8,000 crores. So it's about a 3.5% market share of the larger Mumbai market that we expect Palava and Upper Thane to have.