Horizon Industrial PRKS Q1 FY27 earnings call

What moved the numbers, as management explained it

• Revenue +23% YoY to INR200 cr driven by 1.9 msf of new leasing added during the quarter against a 29.5 msf operational base.
• EBITDA margin held at 80% reflecting industrial mix and contractual escalations; EBITDA up 36% YoY to INR161 cr.
• Reported net loss of INR12 cr entirely driven by non-cash book depreciation (~INR75 cr) and interest expense on legacy debt, not operations. (accounting)
• Proforma cash PAT INR116 cr after adding back non-cash depreciation and proforma-ing the full interest savings from the INR3,900 cr debt paydown. (one-off)

Guidance on this call

By business

Balance sheet, capex and funding

• Proforma net debt INR2,500 cr (12.5% of enterprise value) as of 30 June 2026 after INR3,900 cr paydown funded by IPO proceeds.
• August IPO raised INR4,250 cr fresh primary capital; Blackstone did not sell a single share.
• Current cost of debt ~8.2%; expected to decline 40-50 bps post-deleveraging as credit ratings improve.
• Capex guidance INR1,500-2,000 cr over next 3 years, funded roughly 1/3 by internal accruals and 2/3 by incremental debt.
• Land bank 2,300 acres fully paid, supporting 25 msf of further development with approvals and financing largely in place.
• Rooftop solar portfolio 38 MW (20 MW operational, 17-18 MW being operationalized); worker accommodation beds 6,000-7,000 under construction.

The industry, as management sees it

Management views India's industrial and logistics real estate sector as massively under-supplied — Grade-A stock at <500M sq ft versus Chicago alone >1B sq ft, and Grade-B/C stock in tens of billions of sq ft. With over 90% of stock today sitting in fragmented, non-compliant assets, the institutionalisation megatrend (driven by GST-led formalisation, e-commerce growth, PLI/Make-in-India and global supply-chain diversification) offers a multi-decade runway. Industry can comfortably absorb 'tens of Horizons' worth of additional institutional supply; competition is welcome rather than threatening.

Risks management named

• Sub-judice Delhi High Court case challenging tender for 13 in-city warehouses (legal proceedings ongoing)
• 13% of portfolio (~4M sq ft) coming up for lease expiry over next 21 months, re-leasing risk if market softens
• Cost of debt at 8.2% remains elevated until credit rating upgrade post-deleveraging

Not answered directly

• Delhi High Court case on in-city warehouses tender (sub judice)
• Blackstone sponsor holding period and exit intent
• Future M&A quantification / annual acquisition targets
• Replacement valuation of land bank and construction cost

Asked for a number, answered without one

• Annual addition on new acquisition opportunities: Tough to say that today.

Every question, with its answer

1. 1. 3-5 year volume and revenue trajectory

   Mohit Agrawal, IIFL Capital

   Question. On a 3-5 year view, is the ~8M sq ft pipeline (6M sq ft large-format + 2M sq ft in-city) on a 30M sq ft base consistent with ~25% volume CAGR? How would this 6M sq ft split between industrial, logistics and e-commerce? And how should we think about the 2M sq ft in-city split across sectors?

   Answer, Urvish Rambhia, Chief Executive Officer. Mohit, the four growth engines are: (i) contractual 5% escalations on 29.5M sq ft plus re-leasing spreads — we saw 12% re-leasing spreads in Q1 and have seen 12-15% historically on a 7.1-year WALL; (ii) continued development of large parks, with 25M sq ft of land already paid for — doubling large-park footprint over 4-5 years at 5-6M sq ft/year; (iii) in-city, ~2M sq ft/year over 24-36 months at 2.5-3x big-box rentals; (iv) value-added services — rooftop solar, 6,000-7,000 worker beds being poured (12-18 months delivery), India's first on-site residential hotel (18-24 months) — driving another 5-10% of revenues in 4-5 years. Phased in-city deliveries will start showing over next 12-18 months.

   Follow-up. Quick clarification on in-city economics — while rentals are higher because of land cost, how would the yields differ between a large park and in-city?

   Answer. Better than a large park. Our in-city assets are largely through the Central Warehousing Corporation partnership on a revenue-share basis — even after sharing, we will track 13-14% yield on costs on in-city vs 11-12% on big-format industrial/warehousing parks.

2. 2. Contracted revenue run rate to reported EBITDA conversion

   Mohit Agrawal, IIFL Capital

   Question. On the INR967 cr contracted revenue run rate (slide 7) — built at 80% margin that is ~INR770-780 cr of EBITDA. How does this flow through to reported EBITDA, and by when will the contracted book translate into delivered financials?

   Answer, Urvish Rambhia, Chief Executive Officer. Of 29.3M sq ft, 26.9M sq ft is operational — you'll see near-full 12-month realisation over the next 12 months. The 2.4M sq ft balance is pre-leased where we are currently pouring concrete — completion in 6-9 months plus ~3 months stabilisation, so 9-12 months to revenue flow. Over the next 9 months we are also delivering 5M sq ft of buildings; FY27 leasing target is 6.5M sq ft, so ~4-4.5M sq ft of incremental leases to be signed, taking operational assets to 34-35M sq ft at year-end with occupancies in high-90% zip codes. ~80-85% of the INR967 cr is on existing assets.

3. 3. Leverage, capex pacing and cost of debt

   Pritesh Sheth, Axis Capital

   Question. On leverage, proforma net debt has come down post-listing — how should one think about annualised capex and leverage from here? And now that you are listed, can we expect rationalisation in cost of debt?

   Answer, Urvish Rambhia, Chief Executive Officer. Proforma net debt at INR2,500 cr as of 30 June; the build-up includes ~INR75 cr of book depreciation on the P&L, so on a proforma basis we generated INR115-116 cr of net cash last quarter. Material internal accruals will emerge over the next 12 months; growth headroom plus internal accruals effectively fund capex. Capex requirement over the next 3 years is INR1,500-2,000 cr, funded ~1/3 internally and ~2/3 via incremental debt.

   Follow-up. And what gives you comfort on the cost-of-debt rationalisation? Any quantification?

   Answer. Current debt cost is ~8.2%. Post-deleveraging we expect credit ratings to improve significantly, bringing cost of debt down by 40-50 bps. — Kunal Shah, CFO

4. 4. In-city Pune pre-leasing and rental expectations

   Pritesh Sheth, Axis Capital

   Question. On the in-city Pune asset targeted for delivery this year — any pre-leasing activity or traction? What rental zip code are you working with?

   Answer, Urvish Rambhia, Chief Executive Officer. We already have three mid-mile (not last-mile) assets fully developed and leased, fetching INR65-70 psf. On the multi-story Pune in-city asset (page 11 of the deck), we are gearing towards delivery by end of FY27. Multiple conversations ongoing; expect to announce to the market over the next couple of quarters. Rentals should track a similar zip code.

   Partly answered.

5. 5. Future M&A and acquisition cadence

   Pritesh Sheth, Axis Capital

   Question. Beyond the existing development pipeline, will focus for the next couple of years be on execution of current pipeline, or can we still opportunistically look at new acquisitions on industrial/warehousing and in-city? Any quantification on annual addition targets?

   Answer, Urvish Rambhia, Chief Executive Officer. We've grown from 10M sq ft to 60M sq ft in 6 years through both sub-scale platform consolidation and greenfield land parcels; that acquisition strategy remains central. Today we have enough raw material to execute over the next 4-5 years — so the strategy is two-pronged: execute on hand while continuing to develop the acquisition pipeline. Quantification is tough to call today.

   Not answered directly.

6. 6. Lease expiry schedule and re-leasing risk

   Samreet, Investec

   Question. How much of the area is currently expected to expire over the next 4 years?

   Answer, Urvish Rambhia, Chief Executive Officer. Q1 had ~300,000 sq ft expiring which we re-leased at a 12% spread. In the next 9 months of this fiscal ~1.4M sq ft comes up; next fiscal ~2.2M sq ft. So next 21 months, ~13% of the portfolio (~4M sq ft) comes up for expiry. Current WALL is ~7 years.

   Follow-up. On new developments being added — what is the expected ramp-up to stable occupancy at a single-asset level, and how much area is pre-leased for new developments?

   Answer. Build cycles are 9-12 months. We manage 20-30% of the development cycle through pre-leases (currently 2.4M sq ft of pre-leases). Balance 70-75% — half gets leased during construction, the other half we keep as stock-in-trade. As of 30 June we have ~1.6M sq ft of stock-in-trade on 29.5M sq ft operational.

7. 7. New development ramp-up and pre-lease mix

   Samreet, Investec

   Question. Follow-up on new developments — see above.

   Answer, Urvish Rambhia, Chief Executive Officer. Combined into previous response.

8. 8. Blackstone sponsor intent and holding period

   Hriday Choksey, Indus Equity Advisors

   Question. Given Blackstone is the promoter (a PE fund) — what is the fund's intent? How many years are they expected to hold, and can we expect further dilution from the promoter?

   Answer, Urvish Rambhia, Chief Executive Officer. I represent the company, not shareholders, so cannot give a direct answer. Directionally: between December and August we raised INR4,250 cr total and Blackstone did not sell a single share. Globally, logistics is the highest-conviction theme for them; they own over a billion sq ft of this asset class. Overall hold period is not even 5 years — significantly less than 5 years. Blackstone is best placed to answer their exit thinking.

   Follow-up. On geography — the platform is centred on top 10 cities/markets. Are you looking at expansion beyond these 10 markets, or will next expansion be within the same geographies?

   Answer. A 5-year-old company is already in 10 markets — these are the deepest industrial/consumption micromarkets driving 60-70%+ of throughput in the country. Will continue exploring Tier-1-minus / Tier-2 markets like Nagpur, Goa, Nashik opportunistically, but most focus remains deepening market share in existing Tier-1 markets. >90% of stock today sits in fragmented, non-compliant, poor-quality assets — institutionalisation is the megatrend.

   Not answered directly.

9. 9. Geographic expansion strategy

   Hriday Choksey, Indus Equity Advisors

   Question. On geographic expansion — see follow-up above.

   Answer, Urvish Rambhia, Chief Executive Officer. Combined into previous response.

   Follow-up. On the in-city portfolio — at IPO meet you shared 17 assets / 7M sq ft targeting 25% of revenue at peak. Can you elaborate on this segment and any further expansion plans?

   Answer. 7M sq ft is ~10% of area but rentals are 2.5-3x big-box, so at full completion this should be ~25% of top line. We were at 3-4 assets, now at 17. Institutional in-city stock is negligible today; this is an area the management team is materially spending time on.

10. 10. In-city portfolio expansion plans

    Hriday Choksey, Indus Equity Advisors

    Question. On the in-city portfolio expansion — see follow-up above.

    Answer, Urvish Rambhia, Chief Executive Officer. Combined into previous response.

11. 11. Rental trends and competitive intensity

    Girish Choudhary, Avendus Spark

    Question. On the industry side — how are rental pricing trends moving across key micro-markets? Are rental increases keeping pace with construction cost and land price inflation? Also, with significant institutional capital coming in, how should we think about competitive intensity?

    Answer, Urvish Rambhia, Chief Executive Officer. On rental growth: high single-digit market rent growths in deeper markets — that's why re-leasing spreads are already materialising (15% last year, 12% in Q1) over and above the 5% compounding contractual escalation. On competition: the market today can take 'tens of Horizons'. Grade-A stock in India is <500M sq ft vs Chicago alone >1B sq ft; Grade-B/C stock is in tens of billions of sq ft. More competition is welcome — even more institutional capital could be absorbed.

12. 12. FY26 loss overrun and FY27 outlook

    Naman Bhansali, Chamaria Group

    Question. FY26 net loss came at around 3.5x worse than the forecast — what specifically drove that overrun, and what gives you confidence that FY27 will be better?

    Answer, Urvish Rambhia, Chief Executive Officer. Q1 FY27 net loss is INR12 cr. The way management looks at this is very different to the PAT loss on the face of the P&L. Once you take impact of non-cash book depreciation and factor in potential interest savings from debt paydown (we have materially paid down large part of the INR3,900 cr of debt), the Q1 FY27 pro-forma cash PAT is INR116 cr.

    Follow-up. There is a Delhi High Court case challenging the tender for your 13 in-city warehouses — what is the status of that case?

    Answer. That is sub judice, so I cannot comment much more. We remain very confident on our position and are spearheading the strategy on those assets; expect to deliver large part of those assets over 12-24 months. Pimpri is the first delivery targeted for Q4 FY27 — India has not seen a product of this quality/stature before.

    Not answered directly.

13. 13. Delhi High Court case on in-city tender

    Naman Bhansali, Chamaria Group

    Question. On the Delhi High Court case — see above.

    Answer, Urvish Rambhia, Chief Executive Officer. Combined into previous response.

    Not answered directly.

14. 14. Manufacturing customer tenures and rent differentials

    Sushil Choksey, Indus Equity Advisors

    Question. 55% of customers are manufacturing/PLI-driven. What kind of tenures do these assets get signed up for, and how many additional years would they opt for? Second, what is the rent differential between such manufacturing entities (Schneider etc.) versus e-commerce/delivery centres like Amazon?

    Answer, Urvish Rambhia, Chief Executive Officer. Horizon's infrastructure is agnostic today — no dedicated industrial or warehousing parks, just common infrastructure. But manufacturing customers' in-building investments are so substantial that they merit 9-15 year leases with similar lock-ins. On rentals: in-place base rent + CAM today is INR27.20 psf; industrial segment is ~20% above standard bare-bone warehousing (industrial at INR29 vs warehousing at INR24). Average 15-20% better rentals for industrial.

    Follow-up. Do manufacturing customers sign up with extra deposits? Do they commit higher yearly escalations? What additional year-on-year value-added services are they seeking (solar, solid waste, etc.)?

    Answer. Value-added services are largely driven by these industrial customers. Rooftop solar presence has reached ~38 MW, with 20 MW operational and 17-18 MW coming up — largely going to industrial customers. Yields on these are very healthy (no incremental land, no grid capex, captive consumption). Worker accommodations, hospitality, skill centres are also being driven by these deep industrial customers on existing parks.

15. 15. Customer deposits, escalations and value-added services

    Sushil Choksey, Indus Equity Advisors

    Question. On manufacturing deposits and value-added services — see follow-up above.

    Answer, Urvish Rambhia, Chief Executive Officer. Combined into previous response.

    Follow-up. On in-city centres like Pimpri/Mumbai/Vashi — what is the comparable construction cost between a standard industrial facility and city warehousing, and what is the rent difference (100% higher, 150% higher)?

    Answer. On rent: ~2.5x to 3x of standard big-box parks. On construction cost: ~INR500 psf more than standard industrial galas because of architecture/strategy (two ramps, aprons, top-notch construction technology). Directionally, ~INR4,500 psf construction cost; rentals 2.5x-3x more than big-format.

16. 16. In-city construction cost vs standard industrial

    Sushil Choksey, Indus Equity Advisors

    Question. On in-city construction cost differential — see follow-up above.

    Answer, Urvish Rambhia, Chief Executive Officer. Combined into previous response.

    Follow-up. On rental guidance — INR29 industrial, INR90 or INR75? And on the 7M sq ft in-city, what is the average size per occupant — 100,000 sq ft or more 10,000 sq ft parcels?

    Answer. INR70-75 psf is a good guidance today; will update as construction and leasing progress. On parcel sizes: mix of both; because product doesn't exist in-city, expect Horizon to be a consolidator and may see larger 50,000-100,000 sq ft leases, but definitely not 300,000-500,000 sq ft typical big-format leases — more in 10,000 sq ft zip. Will fetch higher rentals than larger parcels.

17. 17. In-city rental guidance and parcel sizing

    Sushil Choksey, Indus Equity Advisors

    Question. On rental guidance and in-city parcel sizes — see follow-up above.

    Answer, Urvish Rambhia, Chief Executive Officer. Combined into previous response.

    Follow-up. On replacement valuation — INR30M sq ft likely spent ~INR7,000 cr on construction on the balance sheet, and 2,300 acres of land acquisition could be ~INR5,000 cr. Have you done a current/replacement valuation of land value and construction cost?

    Answer. Too early to go down that path. But on the incremental capex for the 25M sq ft remaining, yield on capex looks like 13-14% zip. As product mix moves towards industrial and in-city bears fruit, yields on capex will improve further.

    Not answered directly.

18. 18. Replacement valuation of land and construction cost

    Sushil Choksey, Indus Equity Advisors

    Question. On replacement valuation — see follow-up above.

    Answer, Urvish Rambhia, Chief Executive Officer. Combined into previous response.

    Not answered directly.

19. 19. Profitability timeline

    Raunak, Visioner

    Question. When would the company start to report profit?

    Answer, Urvish Rambhia, Chief Executive Officer. Q1 loss on the P&L is at a marginal INR12 cr. Guidance: Q2, Q3 you start seeing the P&L turn black. But management has been looking at these numbers differently — adjust for book depreciation and pro-forma debt paydown impact, and we've been in a very comfortable zone for 4-5 years already.

Topic by topic, in the order it was spoken

In their words