Ashiana Housing Limited (523716) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 FY '20 earnings conference call of Ashiana Housing Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Gaurav Sud from Kanav Capital. Thank you and over to you, sir.

Thanks, Margaret. Welcome, everyone, and thanks for joining this Q3 FY '20 Earnings Call for Ashiana Housing Limited. The results and investor update have been mailed to you, and it is also available on the stock exchange. In case anyone does not have a copy of the press release, please do write to us, we will be happy to send it over to you. To take us through the results of this quarter and answer your questions, we have today with us Mr. Varun Gupta, full time Director of the company. We will be starting the call with a brief overview of the company's performance, and then we will follow it with a Q&A session. I would like to remind you all that everything said on this call that reflects any outlook for the future, which can be construed as a forward-looking statement must be viewed in conjunction with uncertainties and risks that they face. These uncertainties and risks are included, but not limited to what we have mentioned in the prospectus filed with SEBI and subsequent annual report which you have -- you will find on our website. With that said, I will now turn over the call to Mr. Varun Gupta. Over to you, Varun.

Good afternoon, everyone. Thank you for joining us to discuss performance of third quarter of FY '20 of Ashiana Housing. I extend a warm welcome to all of you. Area booked in quarter 3 of FY '20 was 9.78 lakhs square feet as compared to 2.55 lakhs square feet in Q3 of FY '19 due to launch of Ashiana Daksh Phase 1 and 2 in Jaipur, Vrinda Gardens Phase 4 in Jaipur, Ashiana Aditya Phase 1 in Jamshedpur, and Ashiana Nirmay Phase 3 in Bhiwadi. The sales were at 2.37 lakhs square foot in the previous quarter. We handed over 1.5 lakhs square foot in quarter 3, out of which 1.45 lakhs square foot was delivered in Ashiana Housing and 0.05 lakhs square foot was delivered in the partnerships. This was against delivery of 3,31,000 square foot in quarter 3 of FY '19. Revenue recognized from completed projects was INR 59.73 crores for quarter 3 FY '20 versus INR 58.59 crores in Q2 of FY '20. Revenue recognized from completed projects was at INR 48.65 crores in Q3 of FY '19. Total comprehensive income was a negative INR 6.39 crores this quarter versus negative INR 9.05 crores in quarter 2 of FY '20. Pretax operating cash flows for the company was a positive INR 21.35 crores versus a positive INR 3.32 crores in the previous quarter, largely due to collections received from newly launched projects in the quarter. Equivalent area constructed was at 2.39 lakhs square foot versus 2.04 lakhs square foot in the previous quarter, and which was 1.62 lakhs square foot in Q3 of FY '19. Our construction has been generally in line with our commitments. On this note, I would like to conclude my remarks. We will now be happy to discuss any questions or suggestions that you may have.

[Operator Instructions] The first question is from the line of [ Rohith Potti ] from [ Marshmallow Capital ].

And congratulations on a really excellent set of results. So my first question is obviously on the excellent performance by the new launches. So I was curious to know why did these 2 projects do so well when we have other projects which at least in -- I mean Jamshedpur Sehar was launched quite recently. And Jaipur -- we have other projects as well. But none of them have seen the responses that these ones have. So what is particularly different about these projects?

[ Rohith, ] thank you. I also am not fully aware as to what's the differences here. In Ashiana Sehar in Jamshedpur, I think, we bungled up the launch a little bit at our end in terms of just doing the preparation and the marketing effort and understanding the consumer as well. So some of the learnings were taken from there. The other reason, I think, these projects do well as compared to existing projects is that we've been able to reconfigure one of the projects in terms of unit sizes, the facilities, the pricing, the location. And all of that just has made a difference. Like in Jaipur it is probably the best-located projects that we have done till date in terms of proximity and access to the city and stuff like that. So there is, I think, a little bit of differences also on that front, which a new project allows us to do is sort of recalibrate the design, the pricing and the location, right? And fix that in the beginning itself.

So does that mean that, I mean we can take learnings from these extremely good launches into the new phase -- newer phases rather, the newer phases which can come up in other projects of that location?

So some learning, yes, we can take. Some learnings is not possible to be taken into new launches. We are understanding what learnings to take and also make better success of new phase launches of existing projects when we go ahead and do that, either during this quarter or the next year itself. I think that's important and also we'll take some learnings into launching new projects further in the company. So some of that, some pipe is with us and some pipe we'll have to create, but some learning will be taken there as well.

Okay. Great. And some -- on the other part, so I have noticed that, generally, I believe when your area booked is higher than the equivalent area constructed, that is when you sort of get the confidence to, I believe, increase the prices? So I noticed that over the last few quarters, this has been generally true. So do you think the price increase is still far away or in specific projects, like the ones which have been so successful recently, you think you will take a price increase in the next phase launch whenever it happens?

Yes. Some price increases will be taken in the next phase launch when we happen to do that. So -- as I have been saying earlier as well, I think, overall, in my view, the market is going to absorb price increases going further and as we launch more phases. But the kind of increase that we saw probably in the different boom times, that kind of price increases are still far away.

Okay. Fair enough. That's understandable. The third question I have is, so I believe, at least, in my opinion, there is a difference in the run rate -- I mean there is a difference in how the new projects have taken off versus the old projects, where I believe the momentum has come down. So I'm talking about projects like Town and Anmol, et cetera. So any thoughts or comments there?

It was -- just there isn't -- we don't know exactly what's going on completely. Some of it has also got to do with the attention of a team being on new launches and the focus there, and that has hurt a little bit. So there is some challenges on that front. We'll have to fix those as we go forward. We are looking for a solution there, but we haven't been able to find a solution till now. The only place -- sorry, just the only place where we see some momentum is on the senior living front. I think we'll continue to see good momentum there.

Okay. Understood. So broadly, other than, I guess, senior living and a few projects in Jaipur, the other existing old projects is something which you are concerned about, I would guess, right?

Yes, we are.

Understood. Okay. And just a follow-up on the Kolkata launch. Is it still on track for the first quarter next year?

It is on track. Hopefully, we'll know closer to the end of this quarter where it is, but things -- there are silver linings there and things are moving.

Fair enough. And the last question is on Amantran. How is the expression of interest going for this project? I believe it's on -- to be launched on March 12, I believe, right?

Yes. So the expression of interest there is moving as per expectations and speed, things are good.

[Operator Instructions] The next question is from the line of [ Vivek Joshi ] from [ Bandarpoonch Capital ].

In these launches that you've just done in Daksh and Jamshedpur. Could you let me know when are the possession dates for them? Like, I'm assuming that's when the revenue will be recognized, right? I mean...

Correct. So possession dates for those projects -- so we give possession dates as per what we give in the RERA things. So the possession dates for Ashiana Daksh as per RERA is in FY '24. And Ashiana Aditya in Jamshedpur is in FY '23. I would expect both these projects as per internal estimates to get delivered in FY '23.

'23?

Yes. Daksh, there might be slight possibilities of even getting into FY '22. But I would say, early part of FY '23 is when we'll start.

Which month? Any -- if you have it...

Too hard to say right now.

Okay. No, but in the RERA, what's been given, like?

In RERA, it's been given Q2 of FY '24 for Ashiana Daksh Phase 1, Q3 of FY '24 for Ashiana Daksh Phase 2, and Q3 of FY '23 for Ashiana Aditya Phase 1.

When you say '23, it's like '23, '24 or like, how do you...

No. It's FY '23.

Okay, '23. And one more question is this volume in the -- the launches going forward, is it -- are you expecting the same pace? Or this is like a spike? Or some idea where this booking is going to go, like. So that's what I want to know.

Okay. So the -- it is a spike because we had 2 projects to be launched in this quarter. The fourth quarter is seeing the Ashiana Amantran's launch. So the fourth quarter would be better than, let's say, the first 2 quarters of this financial year, but will not be as good as the third quarter. And in terms of let's say yearly numbers, I would say, this year was a little bit of a spike. I would say, a little bit of a trough next year back down because you'll not have any -- as many launches. But the good part is with these launches coming in, our comfort on future cash flows have increased substantially, which will allow us to take some risks in getting projects that we can start acquiring projects. We've been talking, negotiating, discussing a lot of projects, but not signing off or moving aggressively as much because there has been uncertainty on our own cash flows. With a lot more certainty coming in cash flows, we will look to take more projects up. And hopefully, FY '21, '22, from 31st March '22 ending financial year, would also become very well because, now if we sign off some projects now going forward, we'll have a lot more launches coming into that year given the time approval stake. So that's the sort of view I would give in the way bookings will move.

Yes. My third question was regarding to JDA and all other real estate companies. Anecdotally, I have heard that that they are getting a lot of discussions and a lot of people are coming for JDAs and because this RERA and all this consolidation with all these players. So in which geographies are you in discussions? So is it going to be the same geographies to watch?

Yes. So we -- yes, we are in -- so Pune, we have had a land earlier where now approval seem to be moving a little faster than that was. So that framework is on launch. Otherwise, the new acquisitions, we are in conversations for -- in Chennai, for one more senior living project. We are in conversations in Gurgaon. We are in conversations in Jaipur. Yes. So those are sort of the locations we are in. And in NCR also to do one more senior living project, we are in conversations.

Okay. And when do you think we'll be back on a, like a pad basis profitability. How many quarters of -- where are we?

Yes. We are -- so quarterly profitability, in a way, I think both. Okay. And also and so Q4 would be profitable. Otherwise, I don't know. So I don't think FY '21, '22 is where we would look for profits coming into the company. And if not that, then FY '22, '23, definitely. FY '20, '21, I don't think there would be a profit. I think they'll -- FY '20, '21 also will be a reported loss year.

Okay. '20, '21 is reported loss -- '21, '22?

Should be a reported profit. We haven't crunched the numbers yet. We'll crunch the numbers and come back. Internally, we spend more time on cash flow projections and not on profit projections as much. And this quarter, we had INR 21 crores of operating cash flows. And we are looking FY '20, '21 to be substantially better in terms of having operating cash flows. That's where more of the internal thinking is around at this point of time.

Just one last question. How much debt is there on the book, including everything like all working capital?

Yes. So I think, total debt on the books is about INR 121 crores, including debentures issued to IFC for the Ashiana Daksh project. And this is all the long-term borrowings that we have as of today.

And what's the working capital, like, roughly?

What is working capital? I'm aware of working capital. In this also INR 7 crores of long-term debt is sort of a working capital structure where we can keep prepaying the long-term debt and drawing again. So out of that INR 121 crores, about INR 7 crores is working capital. Other than that, if there is any working capital loans, they are all against sort of liquid investments. So they're as good as like drawing down cash.

[Operator Instructions] The next question is from the line of Rohan Advant from Multi-Act Equity.

And congratulations for a good looking quarter. Sir, my first question was on land. We've not seen any meaningful land purchases. So do you feel constrained now in terms of land availability, If we were to get to our aspirational yearly booking targets of 4 million which we've stated in the past? And should we expect any significant land purchases in the coming months, quarters from you now?

Rohan, yes. Now by having land will become an important ingredient, and you should expect transaction announcements from us in the next -- next 12 months. Over the next 12 months, we should be announcing transactions.

Okay. And could you share your launch pipeline for FY '21? I got Kolkata. But apart from that, where do we plan to launch? And other phase extensions, if you could give the names of the projects and the quantum that we plan.

Yes. So we will launch the 2 projects in Kolkata, one senior living and one regular housing. Ashiana Maitri in Nithya. And we will launch Ashiana Umang as extension project in Jaipur. Okay. Those are the sort of 3 launches that we are looking at in terms of completely fresh projects. And phase launches, we'll have phase launches, Vrinda Gardens Phase 5 will be launched, Ashiana Daksh Phase 3 should be launched, Ashiana Amantran Phase 2 should be launched, Ashiana Shubham Phase 4 should be launched, Ashiana Aditya Phase 2 should be launched. So there are multiple phases which are going to get launched outside of that.

So sir, in one of your earlier comments, you said that FY '21 should be like a trough year. So on a Y-o-Y basis, you expect our bookings not to grow in '21 versus '20 or would it be flat?

I would expect a certain decline, actually, in FY '20, '21 over the FY '21 square footage numbers. So in FY '20, we are looking to it about 2 million square foot in total -- over 2 million square foot as a company. FY '20, '21, I think, it will be closer to 1.5 million square foot.

Okay. Sir, in Pune, land, I didn't get. Pune is when...

So Pune -- Pune, we have a land in a area called Marunji. Okay? Where -- so we have there, the approvals are finally sort of coming in. And in terms of zones and versions, it was -- our zone had to be converted, then we can file for building plans and environmental clearances. So Pune, I expect to launch in the first quarter of FY '21, '22.

Okay. Sir, and lastly, on the land purchases that you said, would we be willing to acquire more land in Jaipur or are there any other geographies? Last question, sir.

So I announced we are in active conversations in Jaipur, Gurgaon, Chennai as of date and also other parts of NCR for a senior living project.

The next question is from the line of [ Shankar Dutt, ] an individual investor.

Sir, you mentioned that our senior living projects are doing well. So do we expect this to continue going forward?

Yes. [ Shankar, ] I would expect senior living to continue to do better. Overall, we see the inquiries are good, the customers are happy and there is a better -- a more -- a market for senior living is sort of developing, and people are getting educated about it. And the overall interest level seems to be up over there.

Okay. And sir, could you also speak a little bit about the competition intensity in our micro-markets where we are doing the launches. Are there other players who are also doing launches in the same micro-markets?

Yes. So the competitive intensity across micro-markets has reduced. There is very little to say in terms of new launches. Overall, things are more quiet today than it was 3, 4 years ago. And things continue to be quiet over there, which is a good thing.

Okay. And sir, go-to -- for our existing projects, so how do we plan to improve our sales velocity in our existing projects?

They are what they are right now. We are looking to do what can be done. One thing is, we have lots of phase launches coming up in existing projects. So in those phase launches can we take something from here, and do that well. That's one piece. We are exploring for the first time doing sales through channel partners and our project in Gurgaon, Ashiana Anmol and how that goes. So there is some experiments being run across different projects to see what works, what does not work.

Okay. Sir, our relationship with IFC. So with -- have -- what kind of investments we have done together till now?

Only -- up till now, we have only deployed a little bit over INR 18 crores from their end, which was in the Ashiana Daksh, Jaipur project. As I said, we've been overall a little quiet in deploying capital till now because of this -- our own sense of our cash flows, correct? With that now getting a little bit more resolved and we're getting a better sense over there, we are in active conversations for transactions where we can deploy a significant chunk of IFC capital going forward.

Okay. And finally, sir the last question is, what kind of debt level or debt-equity ratio are we comfortable currently?

So let me put it this way. If I exclude IFC's debt, okay, which are more project linked, cash flow linked debentures with very limited or no fixed servicing obligations. On debt, which have fixed cash flow servicing obligations, I think we are comfortable with INR 150 crores-odd of debt right now, that's where we will be comfortable with overall.

The next question is from the line of [ Mishaan Mehta ] from [ Title ] Capital.

Varun, great set of numbers.

Thank you [ Mishaan ].

Couple of questions. These new launches that you are doing, are we still at the same kind of gross margin levels that we've been kind of made to expect like 30%, 35%?