Puravankara eyes commercial properties with attractive valuation

Bengaluru: Real estate major Puravankara is looking at acquiring real estate assets in the commercial realty space in its bid to raise the revenues contribution from this segment in coming years.

As the ongoing pandemic has made commercial real estate assets attractive, the Bengaluru-headquartered firm is planning to cash in from this consolidation phase. "We are going to launch commercial properties along with residential assets.

We have done a strategic sale of one commercial asset, which has strengthened us. We are out there in the market. Looking for acquiring commercial assets. We are looking at all kinds of assets. In this consolidating environment, assets are available (due to the pandemic).

Both from the funding and customer side, there is a traction in the commercial real estate. So, we are in an acquisition mode and launch mode at this point of time," Abhishek Kapoor, Chief Executive Officer of Puravankara told Bizz Buzz in an interaction.

"We are going to launch projects this year also. In the next two-three years, you will see increased contribution of commercial real estate segment in our revenues," he added. The realty firm is in the constant process of raising funds in order to make those acquisitions apart from funding its ongoing projects.

"We have a plan and we are in the constant mode of process of raising funds. So, we have a plan to deploy capital in acquiring commercial real estate, just like in our other segments," Kapoor said.

Talking on the structural shift happening in the commercial real estate segment, the CEO said office would stay relevant despite the current work from home (WFH) operating environment.

"It has been more than one year for Work from Home (WFH) operating model. Now, productivity has not been maintained. We are social animals and office is one place, where people come in, and collaborate.

Though there would be a hybrid work environment, work from office would stay from efficiency and productivity point of views," he said. According to the company, the demand for commercial real estate has been slowly coming back. "I think, it should be back to normal by March," Kapoor said.

Meanwhile, Puravankara has improved its cashflow position by deleveraging its balance sheet. It has reduced its debt by Rs 451 crore in the first quarter of current financial year, with its net debt standing at Rs 1,848 crore.

Its net debt to equity ratio has also improved to 0.90 in Q1 of FY22 from 1.20 reported in the preceding quarter. With an operating surplus of Rs 817 crore, the company is very well capitalised to take the maximum opportunity that is coming up in the market.

Also, credit rating agency ICRA has improved the real estate company's credit rating from BBB plus to A minus with stable outlook. These developments make the company confident of meeting its funding requirements for acquiring assets.