Puravankara: Gearing up for growth

Puravankara Limited is one of India's leading listed real estate companies headquartered in Bengaluru. The company embarked on its remarkable journey 47 years back in 1975 with a clear vision and mission to meet the aspiration of teeming millions by offering quality homes.

In sync with other A-grade developers, Puravankara reported the highest ever sales performance in FY22 supported by strong sector tailwinds driving housing demand despite the transient impact of COVID-led disruption.

The rising demand in the housing sector amid favorable macros like enhanced affordability, low-interest rate, and intent of home ownership. The shift of consumer preference towards branded players will continue driving supply-side consolidation.

The growth of 100-150 bps in interest rates will not have a severe impact on demand as the affordability is at an all-time high and the wage growth prospects look positive as well which will continue driving housing demand.

On a blended basis the cost, increased by 6-7% in FY22 on account of inflationary pressure. Puravankara was able to pass on the cost increase via calibrated price increases across projects.

The company has opted for the differentiated brand strategy to capture pockets of growth in all the key segments like affordable (Provident brand), Premium/Luxury & commercial (Puravankara), and plotted development (Puravankara Land).

In order to participate, in the underlying sector demand, Puravankara has a robust launch pipeline of 12 million sqft (TSA) (16.3 million sqft of TDA) over the next 12-15 months. This is about 3.3x of the FY22 launches. about75% of the launches are expected in Bengaluru.

Apart from 16.3 million sqft, Puravankara has an additional about 41 million sqft of the monetizable land bank which provides strong visibility of growth. We believe these land parcels will come in handy to drive future launches with minimal capital allocation resulting in improved financial performance going ahead.

Puravankara will continue to focus on the residential segment, however, management remains upbeat on India's commercial office space as well and intends to expand its footprint in the segment. While residential is a lumpy business, commercial provides steady annuity income. In the long term, the company expects a 20:80 mix of commercial and residential.

Plotted development / Independent housing has been a segment that was largely fragmented and catered by unorganized small players. However, with the shift in consumer preference for branded developers, many grade A developers (incl. Puravankara) have entered this segment. Puravankara has crafted a dedicated brand - 'Puravankara Land' - to cater to the segment and expects to contribute 15-20% of its sales mix in the medium to long term.