| Established presence of Embassy group in the commercial / residential real estate segment
Embassy Group is a Bengaluru-based real estate developer founded in 1993 and is among the largest commercial real estate developers in the country promoted by Mr. Jitendra Virwani, Embassy Group undertakes development and management of commercial office parks, residential projects, hospitality assets, industrial and warehousing spaces, and related services across multiple cities in India and select international markets. EPDPL being promoter arm of Embassy group derives synergies from the groups sizeable presence in real estate has developed along with its subsidiaries and other group/related companies residential and commercial area of ~100+ million Sq. Ft. across Bangalore, Chennai, Pune, Coimbatore, Trivandrum, Serbia and Malaysia. Over its legacy of over 30 years, the embassy group has covered the entire value chain of real estate from land acquisition to development, marketing, leasing, and operation of assets. It also has an extensive land bank of 1000+ acres across India.
Strategic Location, Connectivity, and Project Specifications
EKRVPL is currently developing its project, ‘Sky Terraces’, located near Hebbal lake in Bengaluru, opposite to Embassy Lake Terraces and is near Manyata Tech Park giving an excellent connectivity to IT parks, educational institutions, healthcare facilities, and entertainment hubs. This strategic location offers both daily convenience and long-term value appreciation. Construction to be started in September 2026 post receipt of RERA approvals on the land owned by EKRVPL. The project featured 4 towers each having building configuration of 2B+G+23 upper floors constituting total saleable area of 1.5 MSF consisting of 615 units under 3 & 4 BHK. Acuite believes that the strategic location of the project would help attract customers and augment cash flows in a timely manner.
Moderate funding risk and low reliance on external debt for completion of the project
EKRVPL has witnessed strong demand for its Sky Terraces project, reflected in expressions of interest for nearly 250 units, which are expected to fund a substantial portion of the construction cost. The company plans to raise Rs. 750 crore through NCDs (Rs.500 crore has been issued and utilised to refinance the existing debt), of which only Rs. 100 crore will be allocated toward construction financing. The balance project cost is expected to be fully met through customer advances. The project is expected to achieve an average debt service coverage ratio (DSCR) of ~1.53 times over the loan tenure. Additionally, proceeds from inventory sales are anticipated to fully cover the remaining project costs, thereby mitigating overall funding risk.
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| High project execution risk
Project 'Sky Terraces' is at a very nascent stage and most of the required approvals have already been obtained with RERA approvals still pending. The total cost of the project is ~Rs.1950 Cr., expected to be funded through the promoter’s contribution of Rs. 250 Cr, debt of Rs. 100 Cr and rest through customer advances. The land is owned by EKRVPL while approval related cost has been incurred as on date. Thus, the project is exposed to the high execution risk. However, the risk is mitigated to an extent supported by the embassy group’s track record of over three decades in the real estate sector. Further, Embassy Development Limited (EDL), part of Embassy group is the Development Manager of the project, who has robust track record of completion and selling of projects in luxury and ultra luxury segments for over three decades, which mitigates the offtake risk as well to an extent. Acuite believes that the overall project execution risk and offtake risk remains high given the nascent stage of the project. Thus, any uncertainty due to challenges in the real estate market or delays in collections from the sold and unsold inventory could impact the cash flows as well as project completion and thus remains a key rating monitorable.
Exposure to Industry Cyclicality, Regulatory Risks in the real estate sector
The project remains exposed to the inherent cyclicality of the real estate sector, which is characterized by volatile cash flows and is closely linked to fluctuations in property prices and interest rates. The industry is highly fragmented, with most developers operating within specific cities or regions, leading to intense competition particularly from larger, more established players. Additionally, the company's operations are geographically concentrated in Bangalore. The sector is subject to frequent and unpredictable regulatory changes, including those related to stamp duty and registration taxes, which can impact demand and delay project execution.
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