@abhisr points out several items to be examined - which are quite valuable
Revenue Recognition
In real estate—particularly housing projects—revenues are typically received in advance, often in instalments from booking tills possession. However, accounting recognition occurs only after the final sale. In contrast, commercial real estate projects usually generate revenue post-completion in the form of rentals (Nirlon or listed REITs being good examples), unless the project follows a pure EPC model. These projects, however, require significant upfront investment in land and construction (unless the land is pre-owned or the arrangement involves rental sharing). For this reason, companies in this segment can provide clear revenue guidance for the upcoming year.
Thus, the key question when assessing a company’s real estate business is whether the revenue stream is one-time, cyclical (linked to project completion), or recurring (as in commercial properties, which can later be monetized through REITs).
Raymond Realty prepares its accounts under Ind AS, which are converged with IFRS (specifically Ind AS 115 – Revenue from Contracts with Customers, equivalent to IFRS 15)
From the Information Memorandum
pg 135
“Revenue from real estate property development is recognised over time from the financial year in which the agreement to sell is executed. The period over which revenue is recognised is based on the entity’s right to payment for performance completed. In determining whether an entity has right to payment, the entity shall consider whether it would have an enforceable right to demand or retain payment for performance completed to date if the contract were terminated …”
Revenue begins once a registered agreement to sell is signed with the buyer.
Recognition proceeds over time in proportion to construction progress / satisfaction of performance obligations, provided Raymond Realty has an enforceable right to payment under RERA-compliant sale agreements.
In the Information Memorandam Note 1.14
The progress towards satisfaction of performance obligation is measured using input method, based on proportion of actual cost incurred to date to the total estimated cost.
Raymond Realty uses a percentage of completion method to recognise revenue proportional to the costs incurred. So if they sold a flat for ₹200 to be delivered in 5 years, total project cost of ₹100, and in year 1 they incur ₹20 as costs, then they recognise 20% (₹20/₹100) of the total revenue in year 1, i.e, 20% of ₹200 → ₹40
This is the standard practice for Real Estate developers in India and globally
To answer the first question, the revenue is not cyclical, one-time, or linked to completion, but rather based on the progress they make in completing the project. Cash is also collected from customers in a structured way over the course of the project, not just as a one-time payment on delivery, as is the practice with most real estate developers.
Land bank
Their gross development value is split in the following way -
Own land
- 25,000cr from the 100 acres in Thane
- 9000cr from 40 Acres area under development → 4m sqft RERA carpet area, 3.61m sqft sold, 5746cr revenue recognised, with 0.39m sqft remaining to be sold.
- 16,000cr from 60 acres to be developed 7.4m sqft of RERA approved sqft
Currently, they plan to expand with JDAs, rather than buy land and management has reiterated that "All the new projects that we have signed, the JDA projects are all in the range of 20% to 25% IRRs.” in Q1 FY26 earnings call
Current JDA Pipeline: ~INR 14,000 crore GDV; Raymond Realty share ~INR 11,500 crore; to be delivered over 5-6 years.
To check their track record - we can look at Address by GS in Bandra, which was their first JDA
Address by GS in Bandra - Tower A
Total Project Cost for Tower A was estimated to be around INR 90cr (only construction cost - since its a JDA, they did not bear the cost of land)
blob:https://maharerait.maharashtra.gov.in/2824a40c-c39d-4268-ade1-f518e7877142
Tower A has 88 apartments approved, approximately 103,000 sqft RERA approved, they have sold 45207 sqft. Based on the project sales, they have sold at INR 37240 per sqft, Roughly 168cr of booking values.
They have sold 49% of their inventory within 1.5 years of launch. Assuming they are able to sell the rest of the inventory, the Total Tower A project yields them 384cr total inflows. as per their published figures, their share is 80% of revenues, so that gives them ~approximately 315cr of inflows against a total project cost of 90cr.
This exercise is just to get an understanding of how they are currently executing on their JDAs
I think that answers both the considerations provided by abhisr
Would love to hear your thoughts