Marathon Nextgen targets Rs 3,400 crore commercial launch

Marathon Nextgen Realty Limited plans to launch Monte South’s Rs 3,400 crore commercial project in FY28 and Tower D, with estimated gross development value of Rs 1,800 crore, in FY29. Together, the two unlaunched components represent Rs 5,200 crore of planned value within Monte South’s remaining development pipeline.

When will Marathon Nextgen launch Monte South’s commercial project?

Marathon Nextgen plans to launch the Monte South commercial project in FY28, which management also described as the next financial year. Management gave the Rs 3,400 crore gross development value, or GDV, estimate while outlining larger launches across FY28 and FY29. It did not disclose a specific launch quarter, saleable area or booking target for the commercial development.

The commercial launch follows the existing residential rollout at Monte South, where Towers A, B and C have already been launched. Management said Tower D and the commercial project remained unlaunched, while the ongoing launched portfolio still had about 3 lakh square feet to be sold. Management also said project launches are not decided quarter by quarter because approvals, land acquisition, land conversion and planning affect timing.

What will Marathon Nextgen’s commercial project include?

Marathon Nextgen said the commercial project is planned as a high-rise development with two combined towers, lower floors for retail and car parking, and office space above. Management said one office tower would likely cater to smaller offices and the other to larger offices, describing these as drawing-board parameters rather than final specifications.

Management expects construction and inventory release to be phased after the FY28 launch. It said one tower would normally take about four years to complete, while the second tower could be deferred by about one to 1.5 years depending on market absorption. The Rs 3,400 crore GDV therefore does not indicate that all commercial inventory will be built, sold or recognised in one financial year.

Marathon Nextgen cited activity at Marathon Futurex in Lower Parel as part of the basis for bringing forward the commercial launch. During the quarter, Futurex, including the merged portfolio, sold about 21,700 square feet, compared with 4,000 square feet in the first quarter. Its booking value rose to Rs 107 crore from Rs 19 crore, while collections were Rs 91 crore; management said Futurex is about 3 kilometres from Monte South.

When will Marathon Nextgen launch Tower D?

Marathon Nextgen plans to launch Tower D in FY29 with estimated GDV of Rs 1,800 crore. Management did not disclose Tower D’s configuration, apartment count, saleable area, construction duration or expected annual sales pace during the call. Its disclosed timetable is limited to the planned FY29 launch.

Tower D forms part of Monte South’s remaining 15 lakh-square-foot portfolio. Management said the whole project covers about 25 lakh square feet, of which around 10 lakh square feet had already been sold. The unlaunched commercial project and Tower D together account for about 12 lakh square feet, compared with about 3 lakh square feet of unsold inventory in the already launched A, B and C tower portfolio.

Management estimated that the full 25 lakh-square-foot project could produce about Rs 10,000 crore of GDV using an average value of Rs 40,000 per square foot. It said residential apartments worth Rs 3,000 crore had already been sold, leaving about Rs 7,000 crore of future sales yet to be booked from the remaining 15 lakh square feet. The Rs 5,200 crore assigned to Tower D and the commercial project makes them the largest part of that remaining opportunity.

How does the launch pipeline compare with Monte South sales?

The Rs 5,200 crore planned FY28-FY29 launch pipeline is larger than Monte South’s current quarterly sales level. Management said Monte South recorded about Rs 146 crore of sales in the second quarter, a performance it described as similar to the first quarter despite the rainy season. It also said sales had reached nearly Rs 300 crore so far in the year.

Management extrapolated, rather than issued guidance, that the reported pace could result in about Rs 600 crore of Monte South sales for the full year. It said around 800 of roughly 1,800 apartments planned at Monte South had been sold. Management attributed improving sales conversion partly to the critical mass of residents and referrals from existing buyers at the 12-acre development.

Pricing has varied by construction readiness across the launched residential towers. Management said completed Tower A commands a higher value than Tower B, which is nearing readiness, and Tower C, which is further from possession. It reported a 10% value or price increase over the past year in each of those segments, but did not disclose current pricing for Tower D or the planned commercial project.

How will full ownership affect Marathon Nextgen’s reporting?

Marathon Nextgen said full ownership of Monte South would change revenue consolidation rather than the project’s completion timeline. Management said that when it held a 40% minority stake, revenue was not consolidated in the normal way and profit appeared as a single line item. It said 100% of project revenue would be consolidated from the next quarter after the acquisition is completed.

The proposed move to full ownership remains subject to requisite approvals, and management also said its proposed amalgamation requires approval. The moderator said that, based on the prior year’s Rs 1,000 crore sales figure, full consolidation could add at least Rs 600 crore of revenue over a full year. That comment concerned the reporting of existing project activity, not additional sales or a faster construction schedule.

Management said Monte South’s remaining portfolio represented about 60% of the original 25 lakh square feet and about 70% of project value. It estimated an earnings before interest, taxes, depreciation and amortisation margin of more than 30% on the overall project, translating its rough calculation into about Rs 2,100 crore of surplus over the next few years. These were management estimates for the project, not annual company guidance.

Conclusion

Monte South’s pipeline sets out a multiyear monetisation sequence for Marathon Nextgen, beginning with the Rs 3,400 crore commercial project in FY28 and followed by the Rs 1,800 crore Tower D in FY29. The two launches cover about 12 lakh square feet of unlaunched inventory, while the currently launched portfolio has about 3 lakh square feet left to sell.

The next developments to watch are the FY28 commercial launch, the market absorption that will determine the timing of its second office tower, and the FY29 Tower D launch. Management has also linked full revenue consolidation to completion of the Monte South acquisition, while requisite approvals for that transaction and the proposed amalgamation remain unresolved.