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

Ladies and gentlemen, good day, and welcome to Ajmera Realty and Infra India Limited Q4 and FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisor. Thank you, and over to you, sir.

Thank you, Steve. Good morning, everyone, and a very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of Ajmera Realty & Infra India Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the fourth quarter of financial year 2024. Please note that the operational updates of the quarter have already been shared in the second week of April 2024. The investor presentation and the press release based on the financial results adopted by the Board have also been uploaded on the stock exchange as well as the website and can be downloaded from the company's website as well. Please 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. The purpose of today's earnings call is probably to educate and being awareness of the company's fundamental business and financial quarter under review. Now let me introduce you to the management participating with us in today's earnings call and hand it over to them for opening remarks. We first have with us Mr. Dhaval Ajmera, Director; and Mr. Nitin Bavisi, Chief Financial Officer. Without any further delay, I request Mr. Dhaval Ajmera to start the thing with his opening remarks. Thank you, and over to you, sir.

Thank you, Anuj. A very good morning to each and every one of you. I hope you are doing well, and thank you for joining today -- joining us today for our earnings call. I will begin the discussion by sharing the overall macroeconomics and sector updates. We all know that in 2023, India has sustained its standing as the fastest-growing economy with a stable interest outlook at the end of 2023. On this, the Indian residential market continue to be on a very strong recovery path since the pandemic and with the positive buying sentiment and the support of economic environment. I think the real estate market all across India has been in a very good space and a buoyant position where sales have been positively happening all across, sales volume in primary markets have grown at an extremely healthy rate since 2020, and it has culminated into a 10-year high in the calendar year 2023. The last quarter, Mumbai has witnessed the higher sales volume and year-on-year growth all across the Indian metros. The need for larger living spaces and upgraded lifestyle which was parked during pandemic continues to fuel the demand across India. With strong demand all across and the future -- with the strong demand, which is there, the future seems to be very positive, right, for established real estate players like us. On the back of these encouraging macroeconomic conditions, I'm elated to inform that we have delivered a robust performance during the FY '24 crossing our major milestone of about INR 1,000-plus crores in sales revenue, increased advantage, total revenue of INR 700-plus crores and a PAT of INR 100-plus crores. FY '24 has been an exciting year for us, wherein all our projects performed well, obviously, clocking the first 4 digit sales figure. Our flagship Ajmera Manhattan project which is in Wadala has seen about a 76% sales already happening in that project, whereas I'm very proud to say we are currently just above the podium parking levels on the [ EBAC ] level, and we still have about INR 35 crores to INR 36 crores to complete. We also launched Greenfinity in the next quarter -- next phase during this quarter and have sold about 19% of its inventory, 1-9, and the project is currently at the exploration space. Our project at Ghatkopar, which is a premium residence project Ajmera Eden as we have sold more than 50% of its inventory during the first year of its launch and we're advancing steadily towards the in terms of construction. Ajmera Prive our project in Juhu, has also seen a great sales as compared to the micro market over here, where we have sold about 38% of this inventory and we are just at completion -- we've just completed the superstructure. So usually, the sales begin for project like this now after the superstructure is completed, where we've already sold about 38% in this project. Moving on to our Bangalore projects. It's made on Ajmera Lugano and Florenza which is about -- which is in North Bangalore, which is about 85% sold and is under fast track execution. All the above projects we aim to deliver before the committed or the timeline. Looking ahead, we are very confident that we are achieving on our path to achieve our strategic vision of 5x. This year is also looking very, very exciting for us, the coming year, we are about to launch about 8 projects with a total GDV of about INR 4,500 plus crores with a total development of about 1.9 million square feet. I'm very happy to say that on the back of a profound phase of Ajmera Manhattan, we are also adding our existing new launching, a new phase of Wadala which will have a GDV of about INR 1,500 crores. We also have further guided that we are also looking at our project expansion and portfolio expansion wherein we are under advanced talks to a lot of projects, and hopefully, that should materialize during this financial year, the coming financial year. And we are looking to add about INR 3,000 crores to INR 3,500 crores of projects in our pipeline from what we are existing -- already having. Moreover, our target to ensure with all these committed projects and the launches, we want to keep our debt at a manageable level. And currently, we are also looking at reducing our debt-to-equity ratio and our target is to bring this to 0.8x by the end of this fiscal year. In all of these projects, launches and the expansions, we are looking at a guidance of about 33% to 35% growth in our presales figure from what we did this year, where we are aiming between INR 1,350 crores, in this financial year '25. This year is looking as exciting as what the last year was. And we, as a company, are really leaning forward to see that we achieve our vision of 5x in a quicker and a faster way. At this note, I would now like to hand over the conference to our CFO, Mr. Nitin Bavisi, who will take you through the performance highlights. Thank you.

Thank you, everybody, and very warm welcome and a very good morning to you all. Before we move on to the Q&A session, allow me to summarize the compelling operational and financial performance we have delivered for the quarter and as well the entire financial year FY '24. Starting with operational performance for the quarter. Our sales grew almost double precisely 104% on Y-o-Y basis to INR 287 crores, and our sales area witness 64% Y-o-Y growth, reaching 1,13,000-plus square feet on carpet basis. Our collection grew almost double precisely 91% Y-o-Y to reached to INR 197 crores. On the financial highlights, the revenue grew by phenomenal 99% to INR 234 crores. EBITDA stood at INR 69 crores, which is also 98% Y-o-Y growth, and PAT stood at INR 29 crores, which is also a 90% Y-o-Y growth. Coming to our performance for the entire financial year FY '24, our sales value crossed the mark of -- in the history revenue recognition, and we have achieved the presales on the back of presales of INR 1,017 crores and the resale area of like 4,73,000 square feet. The collection stood at INR 570 crores and revenue stood at INR 708 crores, representing 61% Y-o-Y increase, EBITDA stood at INR 209 crores, which is 56% Y-o-Y increase, which is having the EBITDA margin of 30%. and PAT stood at INR 103 crores, witnessing 44% Y-o-Y growth, resulting the PAT margin of 15%. I'm pleased to inform that despite aggressive business development activities, our debt remained stable at INR 780 crores, improving the debt equity ratio below 1x benchmark and precisely at 0.9x equity. The weighted average cost of the debt remains stable and below 12%. With our OC received and ongoing project portfolio, we have a revenue visibility of INR 1,860 crores from our ongoing projects, and we are expecting INR 4,570 crores of the launch pipeline, and that is going to deepen further the revenue visibility to totaling to INR 6,400 crores. The estimated net cash flow from OC received and ongoing portfolio is estimated to be INR 755 crores. With this concise summary of our business and financial performance, I invite the question and answers and further interactions from you all. Thank you, everybody.

[Operator Instructions] The first question is from the line of [ Pranav Manohar ] from RoboCapital.

Yes, congratulations on good set of numbers. So I have a couple of questions. First being, if you could provide any guidance on reported revenue and EBITDA margins for '25 and '26, FY '25, '26? And also, it was regarding Manhattan project. So when will it launch and some details about it?

So in regards to the guidance on revenue, we have given the entire visibility of our revenue potential, INR 116 crores from the OC received project and about INR 1,750 crores from the other ongoing project. So the entire portfolio, the existing portfolio is expected to generate revenue of about INR 1,800 plus crores, plus the launch pipeline, which is 1.9 million square feet having the GDV of INR 4,500 crores plus which has the -- further going to add on to this INR 1,800. So summing up both the things, it is INR 6,400 crores plus. And if I were to give you the indication about the time line on an average basis of about 4 years of the life cycle of these projects, I'm talking on the average basis, so maybe about INR 1,400 crores, INR 1,500-plus crores of the revenue on a year-on-year basis over this project. And this is the only finite projects portfolio, which we are talking on to this revenue visibility, there could be a possibility that when we are doing the business development activities further few add-on projects will be further helped to accelerate this number.

As far as the Manhattan new project is concerned, it is going to be on the lines or really more on what we've already launched because we had a great run of the sales in this project. The approvals and the planning is already the -- sorry, the planning of the team has already been started. We should be very soon submitting the same for the -- to the authorities for approval. Our estimated that towards the last quarter of FY '25, we should be able to launch this.

Okay. Great. And if you could provide on the EBITDA margins as well?

So as regards to margin, the composition of the project definitely drive the year-on-year margin. But however, the EBITDA margin should be in the range of 30% or 30% plus kind of a thing as we are maintaining the stable margin out of the portfolio.

[Operator Instructions] The next question is from the line of Pankaj Tanna from Varun Investments. Mr. Pankaj, your line has been unmuted. [Operator Instructions] The next question is from the line of Bharat Sheth from Quest Investment.

Congratulations on good set of numbers. One bookkeeping, how much your project we launched in '24?

So we are -- as I said, we are looking at 8 projects to be launched in FY '24, we had about 6 to 7 projects where we are going to launch in different parts, primarily most of them are in Mumbai, and the other 1 or 2 in Bangalore.

I'm asking in FY '24, this is you are talking of launch year to be during FY '25. Is that correct understanding?

So Bharat bhai, yes, I get your question, FY '24, you are asking and the 2 projects which we have launched either during the start of the financial year at '24 and -- which is at Pantnagar and Greenfinity in the -- and the next phase of Greenfinity, which is in the last quarter of FY '24. These are the 2 projects which we launched in FY '24.

What was the GDV of these 2 projects?

So the GDV is about INR 500 crores for both the projects together.

Now coming to this, Dhaval bhai, we are expecting to launch INR 4,500 crore...

Sir, your voice is very low, sir. That is why, there was some confusion.

Is it now clear?

Still lower, but please go ahead.

Yes. I just want to understand this, we are going to launch a GDV of INR 4,500 crores in FY '25. But I mean, we are targeting only around INR 1,400 crores kind of presales, including inventory we have. So this number, don't you think it's a little conservative in the kind of market that you are seeing?

Well, yes, you are right. But the thing is the timing of these launches versus the sales we also need to see. So the thing is there are a lot of projects of these 8 where, a lot of them majority are coming towards the last quarter of the FY '25, and then to achieve those kind of numbers, like, let's say, our target is that whenever we launch, we don't launch the entire phase of the project, right? There will be -- usually, it's about 60% of the sales of -- I mean, of the total value of the project is what we launch. And in that, we target to have at least 30% to 35% sales. So on an average basis, when we launch, we are looking at 20%, 25% of the total inventory to be sold in the first 3 to 4 months or 5 months of the launch of the project. Now the timing of these projects is going to be anywhere between November to March. So some will be now, some will be earlier, some will be towards August, some will be November and majority of the larger ones are going to be between Jan to March. So to capture that entire figure of -- in a larger way is going to be difficult, and hence, looking all the combination, we've given a guidance of INR 1,350 crores to INR 1,400 crores.

Yes, I understand that, sir. It's great. And sir, now can you give a little more color on the...

Sorry to interrupt, sir. Mr. Bharat, could you please use your handset while asking?

I'm using my handset only. I don't know exactly -- is this better than now?

Much better.

Okay. So to understand on business development side, how much business development pipeline? And how do we see, again, now again redevelopment side. So some of the concessions, which were given earlier that was encouraging for particularly cluster development. So how do we see with that perspective?

So business development is going in a very, very strong way. In Mumbai per se, redevelopment and cluster redevelopment, slum redevelopment, MHADA redevelopment are the need of the hour and game of the hour. Now society, slum dwellers, even the cluster people, all of them prefer to have larger branded developers coming and doing their development because, a, we are convinced with the kind of project quality, b, they are convinced with the kind of time line. We are also in getting a lot of inquiries and under discussion with many projects and many societies. Obviously, the competition is stiff, people are bidding, but we, at certain times, ensure that we do not overwhelm ourself or over leverage with thin margins, but we try to get the best projects, which gives us a good visibility and a better margin is where we try to focus ourselves. So there is a good supply or good demand coming, people are looking for redevelopments now. And wherever we feel the margins are good, we are safer and even though being a little more conservative as compared to probably others, if we get at our percentages and margins, we probably grab those projects.

[Operator Instructions] The next question is from the line of Faisal Zubair from H.G. Hawa & Company.

Am I audible?

Yes, yes.

Congratulations for the good set of numbers. My question was again connected to the redevelopment project, like how many redevelopment projects is the company considering in FY '25 and '26?

So as of now, we've got about 3 to 4 redevelopment projects, which we have either started executing or we have undersigned the deal or finalize the term sheets and everything. In FY '25 and '26, we are looking at least to -- it's very difficult to say a number, but we are aiming at least to have at least 7, 8 more projects coming in. But this is our aim and this is our target. Obviously, there is a lot of competition which already goes in. And with the set of numbers where we see if the proposals are viable, we're definitely aiming at looking for 7, 8 projects, minimum adding in these 2 years.

And sir, connected to this question, the 3, 4 redevelopment projects which are under consideration, what are the total square feet that you are preparing?

So overall, it's about 2.5 lakh square feet, which are carpet area, which I'm talking. One is in Versova, one is in Juhu, one is in Yogi Nagar in Borivali. These are the projects where we've already either signed up or under being under construction. So these are the projects where we are currently signed up and done.

The next question is from the line of [James Kumar], an individual investor.

First of all, congratulations on amazing operating performance. I had a specific question on the controlled financial summary that has been presented in the report, where there has been a substantial reduction in your noncurrent assets by way of reductions in maybe loans and advances. So maybe can you just explain that? And how are you seeing these numbers pan out in maybe FY '25?

Great. So more of a granular details. Yes, the loans and advances number has come down by about INR 200 crores. And this is due to the -- as the utility and the objectives of such advances, precisely 3 positions, 1 where the credit classification because of the loans and advances utility achieve. So it has gone to investments, 1 more has gone to the deposits for the project and 1 particular for the inventory as such. So these are the 3 positions which have culminated into reduction of this particular number, and the balance of the money has been come back on the operations as such. And this is typically the business model of ours like for any acquisition or any business development activities we utilize this modus operandi through advances, create our rights and there is the acquisitions or business development activity, and having the various position, then only this particular on a definitive documentation, it will come back to as investments or the inventory or to the business deposits -- project deposits side referred to.

So if I understand this correctly, the position from loans have either moved to some form of business or has culminated into investments that is through revenue for the company in the years to come.

Absolutely right.

I just have 1 question. While you discussed a lot about sales and revenue projections. But how are you seeing on ground conversations, because we're seeing most of real estate companies present very strong sale, who guidance on good sales numbers. But because you're operating in a plethora or very wide spectrum across the product mix, how are you seeing conversations, say, for a high-end project like maybe something in Juhu in Mumbai as against maybe a mid-segment project in Bangalore? So how are you seeing those conversations pan out?

So if you really look at the way sales are happening, just to give you an example of Juhu, as I said. Usually, in the earlier days and when we actually took up the project in a market, micromarket like Juhu as a project is a little high end, usually, these sales are happening towards the completion of the project or once the project is completed. But if you really look at it, we've already sold about 38% to 40% of our inventory in this project. So this shows that people are ready to take the plunge. And similarly, for projects like Bangalore, which is an affordable or a mid-affordable segment. I think there also run rate is pretty good and people are leaping and taking this jump ahead in terms of taking decisions primarily more on the brand of the project or the developer. And secondly, also is the time line what these projects offer. So if it matches the time line and if they are confident with the brand with which that project is being delivered or being executed, I think they are ready to take this decision. And we -- and the framework example you can see is Ajmera Manhattan, where we are just under the -- we just finished the podiums, I would say, of the project. And we still have 35 or 36 floors to go, which is another 2.5, 3 years of development to happen and we sold 76% of its inventory.

[Operator Instructions] The next question is from the line of, Rahul Soni from ICICI Bank Limited.

Am I audible?

Yes.

Yes, sir, just 2 questions on this redevelopment side. So according to, sir, what are the criteria, which you see to consider a building or a project for redevelopment, so as you can make your target margins?

Okay. All right. So usually, when we look at redevelopment projects, we are -- obviously, the location of the society matters a lot to us. Number two, is when we look at these projects, we want to see to it that we -- minimum try and make about 20%, 25% of the margins, because if that's not the case, then we usually don't take up these projects. So that's how we categorize or probably shortlist those projects. Obviously, there are many and more societies, which come in for today for redevelopment. We put in those bids and offers with our comfort and margins. And then if it is available to us at that range, then we move ahead, otherwise, we are okay to leave the project.

And what is the incremental FSI do you see?

So usually, these projects are built on 1 or 1.5x the land area as well as FSI, I have to say. So if, let's say, 1,000 square feet is the land, they would have developed 1,000 or 1,500 square feet. The incremental what we are looking at is anywhere between 3 to 5.