Ajmera Realty & Infra India Limited (513349) Earnings Call Transcript & Summary

Ladies and gentlemen, good evening, and welcome to Ajmera Realty & Infra India Limited Q1 FY '24 Earnings Conference Call. We have with us today, Mr. Dhaval Ajmera, the Director of the company; Mr. Nitin Bavisi, the Chief Financial Officer; and Ms. Sonia Agarwal, the Senior Manager for Investor Relations. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Sonia Agarwal. Thank you. And over to you, ma'am.

Thank you. Good evening, everyone, and a very warm welcome to all. On behalf of the company, I would like to thank you all for participating in Ajmera Realty & Infra India Limited earnings call for the first quarter of FY '24. The call will commence with the opening remarks by our Director, Mr. Dhaval Ajmera and will be followed by the business performance discussion by our CFO, Mr. Nitin Bavisi. We have already shared the operational updates of the quarter in the 1st week of July 2023. The investor presentation and the press release based on the financial results adopted by the Board have been uploaded on the stock exchange website and can be downloaded from our company website as well. Please do note that some of the statements in today's discussion may be forward-looking in nature, reflecting the company's outlook and may involve certain risks and uncertainties that the company may face. I would now like to hand over the call to our Director, Mr. Dhaval Ajmera. Thank you. And over to you, sir.

Thank you, Sonia. Hello, and good evening, everyone. I hope everyone is having a good time and like us, I'm sure every one of us really enjoying the way the companies have been performing and India has been growing. We just hope that this continues and we all are able to contribute to something or the other for a growing economy in India. Just to give you a small backdrop about with all whatever is happening across globally, India still stands out to for the growth -- for its growth and potential. And the outlook -- the economic outlook always looks very promising with growth rates of 5.9% in 2023 and estimated at 6.3% in 2024. With this, we are very confident that real estate is also one of the major contributors to our growth, and we can definitely see with whatever is happening all across in our results and also to many real estate companies all across India. I would also want to mention that with the 4.4% GDP growth rate, the nation is actually weathering to global economic headwinds. While the market remains [ resilient ] as Central Bank tightened monetary policies to target inflation levels, but still with all these options, we still see a good traction coming in real estate. And I was just -- recently, there has been news that the half 1 year, that is the first half of the year from January to June 2023, the luxury market has been on a really upscale and 50% of -- has been on a growth of 50% year-on-year as compared to Jan to June 2022. So this only shows customer confidence with the high demand, especially in urban centers, fueled by rising income levels, nuclear families and changing in preferences and asking for better homes, bigger homes is actually moving the demand up. So this has been very encouraging. I would like to now continue with our company's performance, which has been remarkably very strong as evidenced with this impressive performance in quarter 1 of FY '24. As we all know that we have done a sales value of approximately INR 225 crores, where we achieved a remarkable 60% increase over the last quarter. Sales volume have also increased and shown a growth performance of about 96% to 135,000 square feet. This positive outcome is a testimony to our successful execution and revamped sales strategy, which we applied for our projects in Lugaano and Florenza in Bangalore. And we also got a great sales velocity and launch for our project as Ajmera Eden in Ghatkopar. These were the 2, I would say, are major drivers for our -- this growth success for this quarter. Now coming to some exciting projects update. I just want to start off with our flagship one, Ajmera Manhattan, where we have sold and booked value of about INR 656 crores, which is 45% of the inventory already sold. And the project has also got significant interest from buyers. We have been having steady sales happening in this project. And construction has also been equally moving at a good pace, where we've already reached in Tower B to the ground level and Tower A is almost on the verge of completion at the basement level. The Ajmera Greenfinity and Ajmera Sikova, our 2 other projects, the boutique office and the small affordable project in Mumbai is also set to get completed and delivery in the quarter 2 of FY '24, where we have about 84% and 89% of the respective projects inventory already sold out. So that projects have also been significantly completed, and we are very sure by the time which is in the next -- over the next few months when we complete our project, we should be 100% sold out. Ajmera Prive in Juhu, our luxury project has also done a great progress in terms of construction. And we have above -- we've already reached above ground, and we are proceeding and finished almost completing third slab now. Impressively, the project has also seen 24% of its inventory being sold by the end of the quarter in addition to the Ajmera Eden project, which we launched in mid-June and we've already sold 14% of its inventory. The Bangalore market has also proven to be a key contributor for our growth this year -- this quarter, making remarkable strides during the quarter. Our mid-luxury project, Ajmera Nucleus is 96% sold and is expected to be completed by this fiscal year. Ajmera Lugaano and Ajmera Florenza, which contributed to 31% of our total sales value this quarter, has also seen a great result with our revamped sales strategy and they were actually contributed also towards 24% of our collection has come from these projects during this quarter. The company is diligently focused on its expansion, its project pipeline across Mumbai market in the coming months, as we have announced earlier. During the year, we have a visibility of total of 3 more launches to come in, which includes development of our recently acquired project in Vikhroli and other Mumbai regions. And the total estimated value of all these 3 projects put together is about INR 1,800 crores with approximately 900,000 square feet of carpet area to be sold. Apart from this, we have our -- apart from our ongoing and upcoming projects, we also have a land bank of approximately 11.6 million square feet, which is in carpet terms, approximately about 1.2 crore square feet in different parts of Mumbai. And we are seeing a great potential coming out of this Wadala, which has our ongoing one, and Wadala has a total potential of 3.65 million square feet of this development, out of which 1.8 million is residential and balance is commercial. Obviously, these projects will come up in phase-wise manners as and how we start -- the demand picks in and we start selling significantly, we'll start launching these projects. And moving ahead for the year FY '24, we have set ourselves a target of achieving around INR 1,000 crores, and I'm pleased to share that INR 225 crores has already been achieved in this quarter. The phase development of our land bank and the market demand and consistently evaluating asset-light JV/JDA models to target opportunities for lucrative acquisitions and our commitment to timely delivery is driven by ensuring executional efficiencies. And I must say that we are really immensely satisfied with what we have done, and we would like to emphasize that the operational efficiency is further visible with faster execution, new launches as promised, launch velocity, mindful acquisitions and focused sales strategy has all been the key contributors towards our growth strategy for our company in this financial year and the coming. And I'm very sure this is also going to continue -- this momentum is going to continue for the coming quarters as well. I extend my heartfelt appreciation to entire team of Ajmera, its shareholders, the value customers and therefore, their continued support and trust, which they laid on us and they gave us an inspiration to work faster, better and continue with our better efficiencies always. Together, we are poised for a few -- prosperous future reaffirming that Ajmera Realty's position as a leading player in the real estate industry. Thank you all for joining us on this call. I would now look forward to hand over to our CFO, Mr. Nitin Bavisi, to take you through the numbers and the operational performances for the quarter and the year. Thank you.

Thank you, sir. And thank you, ladies and gentlemen for joining this call. I would like to present some of the key performance highlights, and that -- then open the floor for questions and suggestions from your side. In the first quarter FY '24, we witnessed a robust growth with sales value, INR 225 crores, representing a 60% increase compared to the previous quarter. Volume-wise, we achieved sales of 135,000 square feet on carpet area basis, which is also a remarkable 96%, almost doubling, as I said, over the previous quarter. And our collection stood at INR 111 crore, which is also a very stable performance. During the quarter 1 '24, we successfully implemented the revamped sales strategy for our Bangalore project and successful sales launch of Ajmera Eden, which collectively contributed almost half -- more than half rather precisely 53% of the total sales value, which were the key factors driving the overall operational numbers. It is important to note that while positive and continued market sentiment contributed to this growth, year-on-year comparisons are not directly comparable due to the massive launch of Manhattan project, the last year and which we had the robust numbers coming from that particular launch as such. Turning to the financial numbers. The first quarter '24 -- FY '24 exhibited outstanding performance. Our revenue stood at INR 118 crores, recording about 113% increase over quarter 1 that of FY '23, which is year-on-year basis comparison. The EBITDA stood at INR 39 crore, representing almost 112% jump over quarter 1 FY '23. Additionally, the PBT stood at INR 29 crore, which is also a remarkable 88% increase over quarter 1 FY '23. And so is the case with the PAT, which is the very impressive growth, which is at 22% in absolute terms, representing 82% increase that of FY '23 -- quarter 1 FY '23, I mean to say. The strong EBITDA, PBT and PAT margin stood at 33%, 25% and 18%, respectively, demonstrating the effectiveness of our strategies and contribution of our revenue eligible projects to the bottom line. We are confident in our ability to maintain this positive momentum and deliver strong financial numbers in the forward quarters. We remain committed to deleveraging and improving our debt profile as well. Our efforts have been rewarding, as evident in the debt equity ratio, which stood at 0.97:1, which is significant improvement compared to 1.1:1 in quarter 1 that of FY '23. Notably, this marks a significant milestone as it is the first time our debt equity ratio has come down below 1x that of the equity. We are pleased to share that financial performance and overall credit profile improvement yielded as well into the reduction in our average cost of debt, which is around 11.9% as compared to 13.7% as on March '23. We are delighted to report a strong revenue visibility of approximately INR 3,960 crores encompassing of our existing projects as well as upcoming projects -- upcoming launches. In the next 6-month to 12-month projects at an advanced stage and those which are already received the occupation certificate are expected to contribute almost INR 233 crores to our revenue. And our mid-stage projects, which are the set of the projects which are at start or at the different life cycle of the project cycle, which is going to estimate or contribute to about INR 1,900 crores to our revenue over the next 36 months. The estimated net cash flow from the existing project portfolio are expected to be INR 980 crores, reinforcing our strong financial performance and ensuring the successful execution of our growth strategy. This robust revenue visibility provides confidence in our ability to deliver sustained growth and value to our all stakeholders. The floor is now open for questions and further interactions. Thank you for your continued support.

[Operator Instructions] The first question is from the line of Jeevan from Sahasrar Capital.

Congratulations, Dhaval. There are a few questions. In the press release, you are saying that we will be able to achieve 5x target by 2025. So are you implying of INR 2,000 crores sales value in 2025?

So if you look at the way we have grown over the last 1 or 2 years, and if you look at our numbers, and that is where we are slowly and steadily moving ahead. And over this year, this year, we are launching 3 more projects, which has a sales value of about INR 1,800 crores to INR 1,900 crores. And beyond this, our land bank, as I said, right now, which is about 1.2 crore square feet. Obviously, those -- from there also some projects will start coming in. And definitely, if we put in -- add in all this, we are definitely on the growth path, and we are very confident that we will achieve those 5x numbers by the time we have set.

So the shortly, are you saying INR 2,000 crore sales value in 2025?

Well, I -- 2025 is a number which I would wish and want to target, but we are aiming towards a 5x growth in the next 5 years, starting '22 onwards. So within '26, '27, definitely, we should be there.

Because in the press release, we have given 2025 specifically?

So let me explain that piece with the numbers that we have been in the range of about INR 350 crores to INR 400 crores as we have given the -- in the investor presentation, the 3-year trending as well kind of a thing. So from that base, we are meaning that 5x numbers, which is in the range of INR 1,200 crores to INR 1,500 crores on an average basis, considering the unsold inventory, which is about INR 1,400 crores plus new launches and the phase-wise development from the land bank as Dhaval explained. So basis all the aggregate and the few new acquisitions, which is going to add the momentum to this number is definitely which will inch up towards this 5x growth plan.

Okay. The second question is, we said in the press release that we are about to enter new micro market in second half of the current financial year. So are you -- so which micro market we are basically targeting? Is it Kanjurmarg?

Sorry, go ahead.

So is it Kanjurmarg that we're talking?

No, that Kanjurmarg is not that one. We are talking about new acquisitions in different micro markets of Mumbai. What we are talking about significantly new acquisitions and these new acquisitions, we are just on the verge where I do not want to -- we cannot -- as the NDA purpose, we do not want to release or probably give, venture out details, but it's going to be in the suburbs of Mumbai in Western and Central Mumbai both.

Okay. Third question is in the future potential in the Wadala side. We have given 1.8 million square feet for residential, 1.8 million square feet for commercial.

Yes.

If I remember correctly, it was 3 million square foot for commercial and 3 million square foot for residential early? Why it has been reduced?

So that is what you call the sellable area. So what we are talking is the carpet area. So 1.8x if you do the sellable becomes [ 3 million square foot ].

Got it. Got it. Got it. So same is the case for Kanjurmarg? So we are talking about carpet area.

Because now RERA and everybody only recognizes carpet area, we have changed the terminology and kept it only one. So that it is [ key ] for everyone.

Perfect. And any color on the debt reduction by the end of this year?

So yes, we hold already in the trajectory of below 1x now, and we want to operate under 1x. That's going to be our endeavor at a different varying degrees because of the kind of business development activities also which we are undertaking. However, we have some low-hanging fruits as well to tap on to this cash flow generation. So all this put together, an endeavor definitely going to be 1x -- below 1x to operate throughout the year.

Okay. Any plan on any land parcel monetization to pay off the debt?

So we -- we have -- there are some plants, which -- sorry, 1 land or 2 lands, which we are already under discussion for monetization. And the other things are also going to be on the development front. So to answer your question, yes, one of the lands not on the development front of Wadala or Kanjurmarg anywhere, but somewhere else where we are looking to monetize that land.

Let me clarify, this is investment property, which we are monetizing because the stage of that property, which we have invested and to which we have brought this by resolving challenges into it is a lot of value addition or value accretive has happened. It is not for the purpose of debt reduction. However, definitely, it is going to help us on the debt reduction side as well.

Okay. Perfect. Perfect.

[Operator Instructions] The next question is from the line of Aditya Sen from RoboCapital.

Yes. So as you were targeting around 4.5 lakh square feet to 5 lakh square feet in FY '24, and it's already great to know that we have done 1.3 lakh square feet out of it -- 1.35 lakh square feet. So going forward, can you please guide me as to how much sales will be made in Q2, Q3 and Q3 (sic) [ Q4 ] either in terms of square feet or even in terms of percentage would do, just the ballpark numbers?

So as I -- is there into the presentation, we have unsold inventory, which is almost about INR 1,472 crores, and out of which the first 4, which is the Nucleus, Sikova and Nucleus C Wing, which is the residential, which is at a very advanced stage of the completion. So those ones are the very much, very, I would say, high contributors to this number as well the Manhattan sustained sales phase-wise already been -- we have set up our regular pattern into that. So that is also a very good and a high value contributor, and the very good surprise and the pleasant element coming from the Bangalore market as we have explained in our opening note. So that particular piece is also contributing and expected to contribute further. So all these contributions plus we have launch pipeline, which is about INR 1,800 crores worth of the sales potential. So both these put together is which we are giving the confidence to us that we should be surpassing and entering into the 4-digit league of the INR 1,000 crores as a target, which we have set for ourselves.

Okay. So which quarter will be the heaviest? Because last year, I saw Q3 was one of the weakest quarters. So shall the -- should the sales remain -- should the sales remain in same pattern like last year?

So we are -- as we said that there are going to be 3 launches happening this year. Obviously, these 3 launches will be -- hopefully, we should have a great boost of spikes coming in through the launches. And every launch, if you look at majorly, it's going to be in the last quarter of the year, where we'll have these launches coming in. And over and above that, we have about 6.5 lakh square feet of roughly unsold area, which is left from our current inventory to be sold. Obviously, these are at different, different stages. So if I put this together to answer, I think we are significantly looking at a largest jump over the last quarter. But even the second and the third quarter, we'll have a sustainable number coming almost on the lines of first quarter around that.

All right. All right. And also for the total of ongoing upcoming projects would be around INR 3,200 crores, and we'll also have some collections over that. So do we have 100% share in that or there's a component of JV also in it?

So as we have given the entire disclosures, Bangalore market, we have 70%, and at upcoming launches, Central Mumbai 2, we have the 85%, which is the ARIIL stake into the projects. Rest all the other projects, SPV level and at a directly into HoldCo level, we have 100% stake.

Okay. All right. All right. Okay. And also on the land parcel, can you please let us know the land value, if it's possible for you?

Well, it's a very vague term to be honest with you because if we look at the numbers which are there, it's something which we honestly do not want to put in as a very...

All right. All right. We understand that. So the -- again, if I can ask this question, like how much share of land do we have in the Kanjurmarg, Central Mumbai, Ghatkopar and Juhu? Can you answer this question, if this is possible for you?

Yes. Yes. So as far as the projects which are coming up, as we've done that a total of about 1.2 crore square feet right now is our land bank. And currently, which we are launching projects, okay, which is one in Central Mumbai 1, one is Central Mumbai 2, and one is Vikhroli, they are all part of the Central Mumbai, say, only, which is about 9 lakh square feet because I'm not giving acreage or something, but I'm just giving you the launch pipeline or the launch project size. So the ones which we are going to launch is about 9 lakh square feet. And over and above that, we would have about 1.2 crore square feet of land banks in different areas being Bombay, primarily Bombay, but also some things in Pune, Bangalore and other places.

The next question is from the line of [ Mihir Desai ] from Pendulum Investments.

So, firstly, on Pune project, I just wanted to check an update on this, sir.

Pune project, it's a slum rehabilitation project, where we've -- 50% of our slums have already been vacated. We are on the verge of clearing up the balance. And very soon, we should be able to launch that project. However, we've not put a time line right now because of the complexity of the matter. But things are moving very positively and hopefully, it should come out in the [ evil ] very soon.

Okay. And secondly on -- sir, if you can give us some guidance on our revenue targets of some sales value, in terms of sales value or revenue targets for '25 and beyond -- FY '25 and beyond?

As we said earlier also with current and existing projects, which is about INR 4,000 crores and plus over and above that, we have land banks about 1.2 crore square feet, which all will come in place. So if I have to put in a number point of view, we are looking at a steady growth coming and definitely moving ahead, if I -- 1.2 crore square feet coming plus the INR 4,000 crores of the already existing land launches and the projects and plus the new project launches this year will contribute INR 4,000 crores over the next 3 years and plus 1.2 crore square feet, which will come in over the period of time. And over and above that is the acquisitions or the JVs or the tie-ups of society redevelopment, which we are constantly endeavoring and continuing to do so, that will also add up to it. We honestly do not want to put in a number right now that what do I estimate '25 to be because we wanting -- we are actually wanting to show you results and that's where we are currently targeting to ensure we launch all the projects what we have committed.

Sure. Sir, lastly, I had to ask one macro question, like as we see the realizations of real estate has been going up post our pandemic. So do you feel that the current realization which we are sitting on will be sustainable and the demand for the residential will be intact?

So if you look at last 2 years, definitely, there has been a great demand. We personally believe and that has been also -- if you look at the data and the statistics, real estate as an investment class has become a great option and people are looking at it very seriously as an investment option all across as compared to maybe gold, mutual funds or stocks or whatever it is, but people definitely look real estate as an investment class now. Number two, with the Indian economy, which is definitely on a very [ resilient ] and a strong growth part, we are looking at a rising income level, and we are also looking at a very great, I would say, spends coming from the middle income families and somebody who's as a working-class people, which definitely is the major micro market or the market for India -- Indian economy and definitely Indian real estate. So to answer your question, we definitely see that this growth is sustainable. And at least next 5 years, 6 years, definitely looks very promising. And as a short-term view, I would say this. And I would also say with the kind of projects where we are, we are spread across in different micro markets. And definitely, when we have a largest stock like something in Wadala or Kanjurmarg, we're not going to launch everything at one go. We definitely go phase-wise depending on the consumption and the micro market areas consumption. So definitely, we don't see too much of an issue and the growth will definitely come on next 6 years -- 5 years, 6 years for sure.

Sure. If I have further questions, I'll join the queue.