| Established regional and brand presence of ‘BPTP’ in the real-estate market with experience promoter’s
BPTP was incorporated in 2003 with the main objective of developing real estate in verticals of Residential, Commercial projects ranging from Integrated Township, Group Housing, Retail, Office Space and Cyber Parks by Mr. Kabul Chawla, who has more than 2 decades of experience in the real estate industry. Mr. Kabul Chawla is a first generation entrepreneur and started his own business of development of real estate in the year 1994. Since inception, the company has acquired more than 2,500 acres of land bank primarily in Faridabad, Gurgaon and Noida. Nearly entire land bank of the company falls in approved Zones (Residential, Commercial, IT, SEZ) which strengthens the company to keep supply of realty inventory extant as per demand in the market. Since inception, on a consolidated basis, BPTP has developed/under development more than 50 million square feet of saleable area (Group Housing apartments, Low Rise Developments for both floors and plotteds, plotted development, Villas, plots, Commercial Spaces etc.) in NCR, primarily in Gurugram Market (Dwarka Expressway, SPR, Golf Course Extension), Faridabad and Noida. The Company has achieved sales value of more than Rs.12,000 Cr over the years and has delivered more than 18,000 units; of which more than 8,500 units have been delivered over last 5 years which is one of the highest in NCR region. BPTP has a diversified portfolio of contemporary commercial, residential, and retail developments, wherein each project is defined by its unique architecture, design, aesthetics and infrastructure. BPTP has not only offers viable realty with its mega township Parklands in Faridabad but has also forayed in luxury housing with various projects across the NCR. Acuité believes that promoters’ extensive industry experience and leveraging of its brand equity will lead to lower implementation and demand risk associated with on-going and upcoming projects over the medium term.
Demonstrated track record; improvement in sales and collections in FY2023
BPTP has successfully completed 23 projects (excluding plotted) (20 - low rise and group housing projects and 3 - commercial projects) in the past covering a cumulative area of ~149.44 lakh square feet with a project cost of approx. Rs.2565 Cr by constructing 9,475 units until March 31, 2023. Only 3 percent (295) of units are yet to be booked out of 9,475 units of the completed projects. These mainly pertains to the towers/phases which were launched at the last leg of the projects. Entire construction cost has been incurred except a minimal amount which will be incurred before a unit is delivered to customer for finishing purpose. From the total launched projects, the sold and unsold receivables is more than Rs.4000 Cr. for which the balance cost is around 10 percent. Also, ~8 percent of the total sales value is to be received from unsold inventory. However, the project cost has already been recovered. The successful completion and receipt of customer advances with moderate reliance on debt in past projects shows management’s conviction in continuously executing larger scale projects. Additionally, it has 7 on-going residential and commercial projects with saleable area of ~81.82 lakh sq ft across Faridabad and Gurugram which comprises of low rise and group housing projects in Noida.
BPTP has been witnessing higher demand of the plotted land which is evident from the facts of sales and collections over the last 2 years ending FY2023. The total collections stood at ~Rs.1206 Cr. in FY2023 as against Rs.901.72 Cr. in FY2022 out of total sales value of Rs.1498 Cr in FY2023 and Rs.1156 Cr. in FY2022 respectively.
Acuité believes that BPTP’s demonstrated execution capabilities and entrenched brand equity in the NCR market will continue to help in recording improved sales and collections.
Strong enterprise value backed by huge unencumbered land bank; diversified streams of cash inflows
BPTP has diverse streams of cash inflows with presence in residential, commercial, plotted land developments and outright land sale. These are further fragmented into retail, office spaces, shops, group housing, low rises, townships and others. With presence in variegated real estate segments, BPTP can hinge on multiple sources of cash inflows. Besides, BPTP at present reigns on a strong enterprise value of more than Rs.12,000 Cr; backed majorly by its huge unencumbered land bank acquired at competitive price a decade ago. Acuité believes that strong enterprise value will assist the company in generating smoother cash inflows and diversified revenue streams will aid the company to overcome segmental concentration risks over the medium term.
Moderate project risk associated with on-going projects (except commercial projects); adequate sources of cash inflow over the medium term
BPTP is presently developing 7 residential/commercial projects across Faridabad and Gurugram along with plotted developments. These projects in Faridabad and Gurugram have been funded through a fair mix of debt, equity and customer advances. Regardless, the reliance on debt has been moderate (=<50-60 percent of the aggregate project cost). Entire debt had been drawn down and equity had been infused long back as the projects are in the last leg of completion. Healthy bookings via-a-vis construction indicates moderate implementation and demand risk with low funding risk for the residential projects. Furthermore, BPTP’s term loans remain prepaid by a year almost through its healthy customer advances which get adjusted through prescribed sweep ratio. Management has indicated Acuité that the reliance on long term debt is expected to lower in the near to medium term as it has been generating ample of cashflows to take up upcoming construction.
Acuité believes that the project status of the above-stated projects exhibits an assured source of cash inflow for the medium term. Additionally, with decent portion of construction and bookings in place, the company has moderate project risk associated with on-going plotted development projects.
|
| High geographical concentration risk in revenue profile and customer related risk associated with on-going projects
BPTP’s on-going projects are in NCR majorly in Faridabad, Gurugram and Noida; it has no plans to diversify in the medium term. Acuité believes that BPTP would remain geographically concentrated until the start-up and successful completion of any project and receipt of healthy customer advances through the sale of entire units in any other region in future. Furthermore, BPTP would continue to remain exposed to intense competition from larger players in NCR like Residential/Group Housing (DLF), Emmar Properties, Omaxe Limited, M3M India, ATS Infrastructure Limited (ATS) amongst others. Moreover, BPTP holds high customer related risks w.r.t. its on-going projects due to delay in receipt of occupancy certificates for the projects which were launched long back and w.r.t. delay in construction activities in few projects. This risk emanated from the past events to give an exit to the PE investors.
Reduction in other liabilities (except for debt) to remain key monitorable
BPTP’s trade payables and other current liabilities and provisions were at Rs.1965.35 Cr. and Rs.1497.57 Cr. as on March 31, 2022 against Rs.2,415.34 Cr and 1,549.17 Cr (includes majorly customer advances) as on March 31, 2021. The trade payables majorly consisted of external development charges, vendor payables and payables to group companies. The reduction in such liabilities would remain key monitorable over the medium term.
Inherent cyclicality in Real Estate Sector
The real estate industry in India is highly fragmented with most of the real estate developers, having a city-specific or region-specific presence. The risks associated with the real estate industry are cyclical in nature of business with drop in property prices and interest rate risk, among others, which could affect the operations.
|
