Horizon Industrial Parks Ltd (HORIZONIND) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to the Horizon Industrial Parks Q2 FY '27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. I now hand the conference over to Ms. Prapti from Horizon Industrial Parks. Thank you and over to you, ma'am.
Prapti (Horizon Industrial Parks): Good evening, everyone, and thank you for joining us today. With me on the call today are our CEO, Urvish Rambhia, and our CFO, Krunal Shah. Before we proceed, I'd like to highlight that the management may make certain statements that may constitute forward-looking statements. Please be advised that our actual results could differ materially from these statements. Horizon Industrial Parks does not guarantee these statements or results, and is not obligated to update them at any point of time. Specifically, any financial guidance and pro forma information that we share on the call are management estimates based on certain assumptions and have not been subject to audit or review examination procedures. You are cautioned not to place undue reliance on such information, and that can be no assurance that we will be able to achieve the same. Over to our CEO, Urvish Rambhia.
Urvish Rambhia (Horizon Industrial Parks): Thank you, Prapti. Good evening, everyone, and thank you for joining us. It is a pleasure to welcome you to our second earnings call since our listing in August 2026. I am very proud to report that Q2 has been our strongest quarter to date, with record revenue and EBITDA. Revenue grew 30% year-on-year to nearly 220 crores, while our contracted revenue run rate has crossed the 1,000 crores. EBITDA increased upwards of 30% to nearly 175 crores, and our pro forma cash tax is nearly 130 crores for the first quarter and 250 crores for the first half. I am also pleased to share that, that even on a reported basis, we are now in black. The outlook for the business has never been more encouraging. We truly believe this is only the beginning. You know, with a fully paid land bank that can double our operating footprint, India's largest in-city logistics network, and a fortress-like balance sheet, we believe Horizon's best years are ahead of us. Let me briefly touch on a broader business environment. Demand for Grade A industrial and logistics spaces remains extremely robust, driven by three the three structural mega trends that we discussed on our first quarter earnings as well. First, the flight to quality, second, the industrialization, and third, the consumption. You know, the sector is formalizing very rapidly. Occupiers increasingly moving from fragmented, unorganized facilities to larger, institutional grade spaces. We are also seeing this first-hand across our platform. Several large customers today consolidating their operations from subscale, non-compliant premises into larger, bigger, better, compliant facilities. Also at the same time, we are seeing a rapid acceleration in industrialization across the sectors in India today, you know, which are actually being supported by the supply chain diversification trend which has been playing out since COVID, and also the China plus one strategy. This is being further enabled by the favorable government policies that we had, you know, a cost-efficient and a skilled talent pool, and a large domestic customer base only continues to add to these tailwinds. Since the beginning of the year, we've also seen a meaningful improvement in the consumption trends, and despite the ongoing geopolitical uncertainties, the domestic demand has remained very, very resilient. This reinforces our confidence in the strength and durability of India's consumption-led growth story. Taking this together,
Urvish Rambhia (Horizon Industrial Parks): three factors are creating a highly supportive environment for institutional players like our company to participate in and benefit from what looks like a multi-decadal growth story in this sector. Today, our business spans nine states, 10 key markets and 46 assets. We own 2,300 acres of land, serve more than 130 customers and are rapidly building India's largest incity network. Horizon serves leading blue-chip corporates that are powering India consumption and manufacturing growth. Within consumption and e-commerce, we are effectively enablers to companies such as Amazons, Colgates, Unilevers, H&Ms to name a few to build the large-scale distribution and fulfillment hubs that serve millions of consumers every day. On the industrial and manufacturing front, we provide plug-and-play infrastructure for companies such as Schneider, SIG, Lumax, Tatas, Vestas, again these are just a few of those names, as well as several other global manufacturing leaders that use our facilities to manufacture, assemble and distribute their products across India and international markets. We support customers not only in renewables, EVs and automotive components, but also in sunrise sectors such as data centers, semiconductors, aerospace, defense, which together account for half of our portfolio. Moving to our financial performance for this quarter, let me take a deeper dive into it. As I previously mentioned, we've achieved revenue and EBITDA growth of 30% and 34% respectively this quarter and continue to sustain a healthy EBITDA margin in excess of 80%. Operationally, the quarter reflected strong leasing momentum, consistent execution across both the large-format parks and the incity developments and continued occupier demand across industrial and logistics sector. Your company leased 2.5 million square feet in second quarter alone across 14 unique transactions, and we onboarded eight new customers to our family. More than 40% of this leasing came from our existing customers, which again continues to reflect the depth of our relationship and the quality of the assets the company is delivering today. Importantly, more than 80% of our first half leasing came from industrial customers, which again underscores the strength of this particular segment. We had set ourselves a very ambitious leasing target of 6.5 million square feet for this fiscal year 2027, representing a 30% growth to the previous fiscal 2026. And just by the end of first half, we've already achieved two-thirds of that target. During the first half, we leased 4.4 million square feet across 27 transactions, and this also includes 1.2 million square feet of releasing at a very healthy 12% spread. This further reemphasizes the continued rental growth that we are seeing in institutional-grade real estate. Occupancy in the stabilized portfolio remains strong at 94%. Coming to the development, development activity this quarter also remained very robust. We've delivered six new buildings spanning 1.8 million square feet, taking our total development completions to 2.7 million square feet in the first half, having already achieved nearly 50% of our fiscal '27 development target, and very confident that we are on track to deliver the 6 million square feet this fiscal. Should increase the operational area of our company to nearly 35 million square feet by the end of this fiscal. On our incity network, we are also progressing very well. We are on track for our first delivery of a multi-story incity asset in Pune by the fourth quarter. The leasing discussions for that are also looking very, very promising, and we're very confident that we will end up signing our first lease in this asset this quarter. With that, I will hand it over to Kunal, our CFO, to walk us through the quarter's financial and operating performance in more detail.
Krunal Shah (Horizon Industrial Parks): Thank you, Urvesh. Good evening, everyone. We continue to deliver and we continue to deliver another quarter of strong financial performance supported by sustained operating momentum across the portfolio. Revenue for Q2 for quarter two stood at 213 crores, reflecting
Krunal Shah (Horizon Industrial Parks): a 30% year-on-year growth. Similarly, EBITDA for this quarter stood at 173 crores, up 34% year-on-year. EBITDA margins continue to remain strong at 81%. Turning to the balance sheet, following the IPO, we reduced our net debt considerably. We have now brought it down to 2,765 crores as at the end of September, which when compared to was at 4,967 crores as at June 30th, 2026. This reduction in leverage has materially strengthened the balance sheet and has already begun to translate in lower finance costs and an improved credit profile. As we highlighted previously, reported earnings continue to be impacted by non-cash depreciation. Given the relatively newer vintage of our assets, cash depreciation remains remains limited. On a pro forma basis and after reflecting the benefit of lower interest costs from the deleveraging, the the cash PAT for H1 stood at 248 crores. On the refinancing front, I am glad to announce that during this quarter, your company refinanced an existing 635 crore facility resulting in a 71 basis point reduction in borrowing cost. This is consistent with our approach of proactively optimizing capital cost, enhancing capital efficiency, and matching financing structures to the assets' cash flows. Thank you. Over to you, Urvi. Urvish.
Urvish Rambhia (Horizon Industrial Parks): Thanks, Krunal. As we look ahead, we believe the company is well positioned to enter the next phase of its growth journey. Over the years, we built a platform that combines scale, execution capability, and strategic flexibility. Today, Horizon's fully paid land bank provides a foundation for nearly 30 million square feet of future development. This is supported by a 240-member operating platform with deep capabilities across development, leasing, and asset management. With the required financing and approvals already in place, we are very well positioned to convert this embedded potential into growth and further shareholder value. In our view, these factors provide a very strong foundation for long-term value creation and position the company to benefit from multiple organic growth drivers over the coming years. First, our existing portfolio provides visible embedded growth through the contracted rental escalations of 5% along with that the mark-to-market opportunities as leases mature over time, as you saw what transpired in the first half already this year. Second, our large format parks portfolio continues to offer significant development potential. As this pipeline is executed over the next few years, we expect it to drive meaningful expansion in our operational footprint. Thirdly, our in-city strategy, which is perhaps the most exciting phase of Horizon's growth story today. This remains a very, very important growth lever for us going ahead. We expect this portfolio to deliver approximately 6 million square feet over the next 3 to 4 years while also benefiting from the rental levels that are typically 2 to 3 times of those of the big format parks. And last but not the least, we continue to see very strong potential in expanding the value added services ecosystem that we spoke in a lot of details on the first quarter earnings call as well, which includes, you know, initiatives such as rooftop solars, worker accommodation, the hospitality related offerings, which can further strengthen customer engagement while also creating incremental revenue streams for us. Over time, I believe these businesses can contribute anywhere between 5% to 10% of the revenues, of our future revenues. To sum up, fiscal '27 so far, your company has achieved a revenue growth of 30%, crossed 1,000 crores of contracted revenue run rate, and continues to be on track to achieve the full development and leasing target that we had set for ourselves at the beginning of the year. For the second half, our priorities are very clear. First, outperform on our operational targets and launch our first multi-storey in-city asset with pre-commitments. With that, I will hand it back to the moderator to open the Q&A.
Moderator: Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish
Moderator: Move yourself from the question queue. You may press * and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Thank you. We take the first question from the line of Mohit Agrawal from IIFL. Please go ahead.
Mohit Agrawal (IIFL): Yeah, hi. Good evening, everyone. And thanks for the opportunity. My first question is on your leasing numbers and your leasing targets. So you have already achieved 68% of your fiscal '27 targets. Now, how do we understand this? Like, is typically the first half the stronger part of the year, or like real estate, typically we understand the second half is the stronger part in terms of, let's say, leasing demand? Why I'm asking is basically is there a chance that, you know, you may do better than your guidance, or you may upgrade your guidance maybe just trying to understand that. And the second part to that question is while we understand that the industrial focus is by design, you've mentioned that, just trying to understand if you if you were to do a 50-50 kind of a mix between industrial and let's say warehousing, would would these leasing numbers have been even higher? Just trying to understand the demand demand environment, actually.
Urvish Rambhia (Horizon Industrial Parks): Thank you so much, Mohit. To your first question, are are leasing and our business cyclical? They used to be, to be honest, when we were more warehousing dependent at one point in time. We were more, you know, dependent on your on your, how do you call it, the e-commerce big days or the sale cycles, right? With with the demand today from for for Horizon becoming significantly more diversified today, and I say that because, you know, today effectively saying demand come from nearly every sector of the economy. Like the industrialization demand has significantly picked up, as I mentioned, you know, on our on a full year '26 you know, calls and also for first quarter calls that, you know, nearly 2/3 of the demand is coming today incrementally from the industrial customers, and that trend doesn't seem to doesn't seem to be abating anytime soon, right? Even if you look at our second quarter results or the first half results put together, nearly 80% of our demand has come from industrial customers. You know, we've signed 27 new leases in the first half of which about 10 were with our existing customers, but we've also onboarded 17 new customers, right? And again, these are coming from a plethora of industries. So again, to answer your question, Mohit, yes, third quarter typically sees a little bit of slow down with the festivities. Both Indian and International, Diwali coming up, and you obviously see a shutdown in the global markets from mid-December to early January. So yes, some of that might get impacted with those. But if you tell me that, you know, is is the demand per se cyclical, I would now say, you know, some of those trends are are, you know, abating with, you know, the demand becoming diversified and coming from nearly every geography also. We're seeing customers onboarding from Europe, we're seeing Indian customers, we're seeing, you know, American customers, we're seeing Asian customers. So yeah, you know, all in all, yes, some of these trends will start becoming more and more, you know, diversified.
58 more turns of this transcript: log in to Stocksigma to read the full call.