Shriram Properties Navigates Regulatory Headwinds, Poised for Strong H2 Rebound

Shriram Properties Limited (SPL), a prominent player in India's mid-market and mid-premium residential real estate segments, has released its financial results for the second quarter and half-year ended September 30, 2025 (Q2 & H1 FY26). The period was characterized by robust operational performance, marked by significant sequential growth in sales, yet tempered by temporary financial headwinds stemming from regulatory transitions in Bangalore.

In Q2 FY26, SPL demonstrated impressive operational resilience, achieving a sales volume of 1.1 million square feet, a substantial 39% increase quarter-on-quarter (QoQ). The sales value mirrored this upward trend, reaching INR 685 crores, up 55% QoQ. Cumulatively, for the first half of FY26, sales volume stood at approximately 2 million square feet, valued at INR 1,126 crores, reflecting a solid 19% year-on-year (YoY) growth. This strong momentum was largely fueled by healthy traction from new project launches, reinforcing the company's brand strength and the positive outlook for its target housing segments. The company has already achieved about 40% of its annual sales target, with the second half of the year traditionally being stronger.

Gross collections also saw a healthy increase, reaching INR 388 crores in Q2 (up 15% QoQ) and INR 725 crores for H1 (up 6% YoY). Despite the challenges, SPL handed over more than 760 units in Q2 and over 1,500 units in H1, showcasing continued execution capabilities.

Financial Performance: A Temporary Setback

While operational metrics shone brightly, the financial performance for Q2 was notably muted. Total revenues for the quarter stood at INR 229 crores, a 48% YoY increase, but absolute earnings remained modest. This moderation was primarily attributed to significant regulatory transitions in Bangalore, including the restructuring of the Bruhat Bengaluru Mahanagara Palike (BBMP) into five municipal corporations and persistent issues with eKhata issuance. These external factors temporarily stalled approvals, completion certificates (OC/CC), and the crucial eKhata process, which are mandatory for unit registration and subsequent income recognition. As a result, revenue recognition for over 650 units across five projects, with an aggregate revenue potential of INR 420+ crores, was deferred from Q2 to H2 FY26.

Despite these deferrals, project profitability remained healthy, with gross margins consistently above 30% in both Q2 and H1 FY26, underscoring the company's strong underlying business fundamentals. The company also incurred certain one-off costs, including higher brand/project launch expenses for its Pune entry (approximately INR 5 crores in Q2) and one-time settlement costs related to the Ashiana land in Kolkata (approximately INR 6 crores), which further impacted Q2 profitability.

Financial Summary (INR Crores)

Strategic Expansion and Robust Outlook

Shriram Properties has been proactive on the business development front in FY26. The company added five new projects to its portfolio, boasting an aggregate development potential of 2.3 million square feet and a Gross Development Value (GDV) of INR 2,350 crores. Three of these projects were concluded in October 2025, highlighting strong momentum. These additions are strategically located, capital-efficient, and positioned in high-velocity micro-markets with strong margin potential.

Further solidifying its presence in the western region, SPL announced the signing of a Joint Development Agreement (JDA) for a ~0.7 million square feet premium residential project in Hinjewadi, Pune, with a GDV potential of ~INR 700 crores. This marks the company's second project in Pune, building on the encouraging response to its maiden project at Undri, which saw over 55% of available inventories sold within six months of launch. The Hinjewadi project, a high-rise mixed-use development, will feature premium apartments and retail/commercial spaces, designed to set new benchmarks in vertical living.

Management expressed strong confidence in a robust H2 FY26, anticipating a significant rebound in handovers and revenue recognition as regulatory issues in Bangalore normalize. All delayed OCs (except one) have been received, and the eKhata process has commenced, ensuring that deferred income from H1 will flow through. The company expects to handle nearly 2,800 units in H2, with a revenue recognition potential of over INR 1,000 crores.

Confident in Future Growth and Mission FY28

Shriram Properties remains steadfast in its long-term strategic objectives, supported by a favorable industry cycle, strong operating fundamentals, and disciplined execution. The company's balance sheet remains robust, with a healthy Net Debt-to-Equity ratio of 0.29x and a reaffirmed CRISIL A- (Positive) credit rating, providing ample liquidity to support ongoing construction and future business development opportunities.

For FY26, the company has provided clear guidance: sales volume of 5.2-5.5 msf (28% YoY growth), sales value of INR 3000-3300 crores (44% YoY growth), collections of INR 1800-2000 crores (35% YoY growth), and handovers of 3300-3600 units (14% YoY growth). The management is confident of achieving these full-year targets. Looking further ahead, SPL's 'Mission 1-2-3-4' for FY28 remains intact, targeting a sales volume of ~INR 5,000 crores, revenue of ~INR 2,500-3,000 crores, and profit of ~INR 250+ crores. This mission is supported by a strong supply pipeline, with ~9.8 million square feet of area pending revenue recognition and plans to add 15-20 million square feet to its development pipeline over the next 12-18 months.

In conclusion, while Q2 FY26 presented temporary challenges due to regulatory transitions, Shriram Properties has demonstrated strong operational momentum and a clear path to recovery. With a robust launch pipeline, strategic market expansions, and a focus on accelerating execution, the company is well-positioned to deliver on its full-year targets and achieve its ambitious FY28 mission, creating sustainable value for its stakeholders.