Shriram Properties Limited demonstrated resilience in its Q2 FY'26 performance, achieving significant sales growth despite regulatory challenges in Bangalore. The company reported a 39% quarter-on-quarter increase in sales volume, reaching 1.14 million square feet valued at INR 685 crores.

Key Highlights

• Sales Performance: Q2 sales volume grew by 39% QoQ to 1.14 million square feet, with a 55% increase in sales value to INR 685.00 crores.
• H1 FY'26 Performance: Cumulative sales for H1 stood at ~2 million square feet, worth INR 1,126.00 crores, reflecting a 19% year-on-year increase.
• Business Development: Added 5 new projects in FY'26 with an aggregate development potential of 2.3 million square feet and a Gross Development Value (GDV) of INR 2,350.00 crores.
• Regulatory Challenges: Revenue recognition was impacted by the division of Bangalore's municipal corporation (BBMP) into 5 entities, causing approval delays.
• Financial Performance: Q2 revenue stood at INR 229.00 crores, a 48% YoY increase, with a gross profit of INR 61.00 crores, up 34% YoY.

Regulatory Impact and Recovery

The division of BBMP into five municipal corporations effective September 2, 2025, temporarily affected the real estate sector in Bangalore, impacting approvals, completion certificates, and eKhata issuances. This transition affected Shriram Properties' revenue recognition, particularly in completed projects awaiting final approvals.

Gopalakrishnan J, Executive Director and CEO, stated, "With governance stabilizing and normalcy returning from end-October, the outlook for H2 looks robust. New corporations have started functioning, approvals are moving, and many of our pending OCs have started flowing now."

Future Outlook

The company remains optimistic about its H2 FY'26 performance:

• Strong Pipeline: Over 2,800 units are ready for handover, with a revenue recognition potential exceeding INR 1,000.00 crores.
• Launch Plans: A high-confidence launch lineup of ~2.7 million square feet, with a GDV of nearly INR 2,200.00 crore across Bangalore, Chennai, and Kolkata.
• Market Expansion: Successful entry into the Pune market, with plans to establish 4-5 projects before considering expansion into other markets.

Financial Position

Shriram Properties maintains a strong balance sheet with a net debt of INR 407.00 crores and a net debt to equity ratio of 0.29x. The company's cost of debt has reduced to 11.1%, and it continues to enjoy an A- positive outlook rating from CRISIL.

Management Commentary

Murali M, Chairman and Managing Director, commented, "Despite temporary headwinds on the financial side due to regulatory transitions in Bangalore, our fundamentals remain robust, and we are confident of delivering a strong second half and achieving our full-year goals."

The company reaffirmed its FY'26 guidance and remains committed to its "Mission 1234" targets for FY'28, aiming for significant value creation for shareholders.

As Shriram Properties navigates through regulatory challenges and focuses on expanding its project pipeline, the company appears well-positioned to capitalize on the strong demand in the mid-market and mid-premium residential segments across its key markets.

Shriram Properties Limited , a prominent player in the Indian real estate sector, has announced its quarterly results for Q2FY26, showcasing strong operational performance but subdued financial results due to regulatory challenges.

Operational Highlights

The company achieved impressive sales volumes of 1.1 million square feet, representing a 39% quarter-on-quarter (QoQ) growth. These sales were valued at Rs. 685.00 crores, marking a substantial 55% QoQ growth. For the half-year, cumulative sales reached 2.0 million square feet, valued at Rs. 1,126.00 crores.

Financial Performance

Despite the strong operational performance, Shriram Properties' financial results were impacted by temporary deferment of revenue recognition. This was primarily due to delays in receiving Occupancy Certificates (OCs) and eKhata processes following the Greater Bengaluru Authority's regulatory transition.

Total revenues for Q2FY26 stood at Rs. 229.00 crores, showing a 48% year-on-year (YoY) growth. However, the company reported a net loss of Rs. 8.67 crores for the quarter.

Project Expansion

During FY26, Shriram Properties added 5 new projects with a development potential of 2.3 million square feet and a Gross Development Value (GDV) of Rs. 2,350.00 crores.

Regulatory Matters

The company's auditors included an emphasis of matter in their report regarding an Enforcement Directorate search operation conducted at the company's premises in October 2023. As of now, no formal communication has been received regarding the findings of this operation. Shriram Properties maintains that there is nothing to implicate the organization or its directors in connection with the allegations.

Outlook

Management expects robust performance in the second half of the fiscal year as regulatory issues normalize. Most delayed OCs have now been received, and eKhata processes have begun. The company maintains its FY26 guidance and remains confident about achieving its 3-year strategic objectives.

Despite the quarterly loss, the significant increase in revenue suggests that Shriram Properties is experiencing growth in its operations. As the company navigates through these financial and regulatory challenges, stakeholders will likely closely watch how it addresses the factors contributing to the loss while building on the positive aspects of its operational performance.