Ashiana Housing Limited (523716) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Ashiana Housing Limited Q2 FY '21 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Diwakar Pingle from Christensen IR. Thank you, and over to you, sir.

Thanks, Rio. Good evening, everyone, who's joined the Q2 FY '21 Earnings Call for Ashiana Housing Limited. The results and investor presentation has been mailed to you, and it is also available on the stock exchange or in our website. In case anyone doesn't have a copy of the same, please do write to us and we'll be happy to send it over to you. To take us through the results of this quarter and answer your questions, we have with us the top management of Ashiana, represented by Mr. Varun Gupta, Whole-Time Director of the company; and Mr. Vikash Dugar, who is the CFO. We will start the call with a brief overview of the company's performance, and then we'll follow it up with a Q&A session. As usual, the standard state public laws apply. With that said, I'll quickly turn over the call to Vikash Dugar. Vikash?

Thank you, Diwakar. Good afternoon, everyone. Thank you for joining us to discuss performance of the second quarter of FY '21 of Ashiana Housing. I extend a warm welcome to all of you. Area booked recorded in Q2 FY '21 was 2.29 lakhs square foot as compared to 0.81 lakhs square foot in Q1 FY '21. The booking in the quarter had a significant contribution from launch of Phase 5 of Vrinda Gardens in Jaipur and launch of 1 block open for sale in Phase 3 of Ashiana Nirmay, Bhiwadi. Also the bookings which were due for cancellations in Ashiana Amantran, Jaipur have been considered in this quarter post the updation in the system. Area booked as well as area constructed has recovered in this quarter as compared to previous quarter. We handed over 1.10 lakhs square foot in quarter 2 of FY '21, out of which, only 3,000 square foot was delivered in partnership. The area delivered in AHL in Q2 FY '21 was higher at 1.06 lakhs square foot in comparison to area delivered in Q1 FY '21 at 0.82 lakhs square foot. The revenue recognized from completed projects in Q2 FY '21 was INR 36.22 crores versus INR 25.19 crores in Q1 FY '21. Revenue recognized from completed projects was INR 58.59 crores in Q2 FY '20. Total comprehensive income, that is TCI, in this quarter was negative at INR 1.74 crore vis-à-vis negative INR 2.3 crore in Q1 FY '21. Margins are under pressure due to lower revenue resulting from lower deliveries. Pretax operating cash flows were positive at INR 30.04 crores, increasing significantly from positive INR 10.56 crores in the previous quarter, largely due to improved collections. Equivalent area constructed was at 3.01 lakhs square foot versus 1.21 lakhs square foot in the previous quarter and was 2.04 lakhs square foot in Q2 FY '20. The construction activities is expected to improve going forward, and we expect to achieve our targets for the year which is in line with our construction 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 [ Avadhut Joshi ] from [ New Berry Capital ].

I would go into the numbers. Am I audible?

Yes, you are. Please go ahead.

So we have good sales trend in Bhiwadi as well as in Jaipur, so it's like good to see the numbers. I would just like to know how was the current prices were trending there? Because I think we have not seen the number focus there of growth, decreasing the number. So I just want to know what was the pricing trend in these areas, in particular, Bhiwadi?

Pricing continues to remain stable across [ Bhiwadi ].

Okay. So that's very good, very clear. And second thing in Lavasa also, we have seen good certain. Was it because of Maharashtra has given continued or was it the reason, one of the reasons?

Hard to say, I think Lavasa, so I don't think that is driven by the stability again because where there was -- it's not a similar situation as other places. We put together sort of a scheme which made a difference and I would like to comment on Lavasa after one more quarter. Let's see how sustainably we are able to recover sales in Lavasa.

Okay. I think Q2 will be better for us because of the Diwali in second half.

I hope so.

The next question is from the line of Srivathsan Ramachandran from Spark Capital.

Just wanted to get your sense on some slides that we have on the investor presentation on the future projects. I'm referring to Slides 24, 25 and 26. How should we read this? These are mutually exclusive project detail that you've given. Or is there some overlap between the -- just wanted to get a sense on the future.

They are mutually exclusive projects that we have listed out. Typically, Slide 24 are projects where there are typically future phases of existing projects, except for Ashiana Town Gamma which is written there, which is again, short of a future phases like Ashiana Town, [ Aangan ], Nirmay and [indiscernible] from the base home part of one chunk of land that was segregated during the approval process because of growth. So -- but outside of that, so the future projects inventory is typically future phases of existing projects. The land inventory are places where we have land either through joint development or ownership where nothing has been launched. We haven't launched any particular phase typically because approvals have yet not been received. And so these are new projects which are coming up. And completed projects in a way or having inventory are actually finished goods which is like . So they're all mutually exclusive inventory.

Thanks for the detailed disclosure. On Slide #24, it is a land available for future development. Is it safe to assume that most of the land-related costs would be incurred already? Or is it something that would be not yet incurred? How should we look at that?

Okay. So we haven't specified the type of transaction here. Next time we will try to specify that. The 4 lands, I'll just walk you through it. Milakpur Land and Ashiana Umang Extension are fully paid for. They are outright owned by Ashiana, and there is no future payments. Ashiana Malhar and Ashiana Maitri/Nitya in Pune and Kolkata are joint development. I'll tell you that Ashiana Malhar in Pune in this quarter got fully funded in terms of deposits and duties and everything and whatever remaining payments that have to go to the land owners will go through as a revenue share structure. Similarly in Ashiana Maitri/Nitya in Kolkata, we have funded part of the land cost already, which is committed now. The rest of it is structured as a revenue share/some -- but with some guaranteed revenues over a period of time, where the time line for that start has not started yet. So there is no affecting liabilities as of this moment towards any of these parcels.

Okay. Okay. At least for the presentation, which is your first project in Kolkata, I just wanted to get a sense how do you see the opportunity there because we've seen multiple projects. Are there meaningful profitability differences between cities where you run some of the projects vis-à-vis multiple projects? And what is the road map there? Would you want to kind of expand more in Pune in terms of good projects? I mean we do not have a target of how many but maybe 2, 3, 4 like what you see for Bhiwadi.

So longer-term focus, Mr. Ramachandran, is on -- so the NCR region, so Bhiwadi and Gurgaon that we have done one project in the Gurgaon area. We're looking for another, continue to do more in Jaipur. This will be our first project in Pune, which one is sure, Ashiana Malhar outside of Lavasa. And we've been waiting for a bit to get a project kicked off in Pune. And this now, this quarter, we paid off a significant part of the deposit because those were linked to loan conversion in statutory hurdle issues. So those have been, to a large extent, resolved and remaining approvals of building plan and environmental care still remain, but the smaller hurdles to go through. So Pune would be the other and Chennai would be the other places where our focus. So far Jaipur, Jamshedpur and Kolkata do not remain focus areas. Kolkata, we are having difficulties in even getting the project off the ground right now. So I would not comment on that. Jaipur and Jamshedpur are going to remain smaller markets with 1 or 2 projects going on, nothing really more.

My last question, we've seen some state government amusement as the previous questioner alluded in Maharashtra [ to trigger ] something Karnataka quite small to take over. I'm sure you're speaking to multiple regulators across states. What do you see? Do you see a few more states joining the bandwagon in cutting stamp duty or so-called rate, the case where you want to get reference yearly operator multiples?

I hope we do. I don't think there is anything coming in right now.

The next question is from the line of Rohith Potti from Marshmallow Capital.

A very good set of numbers. So my first question is, do you think this is a pent-up demand and -- or do you see the momentum continuing into this quarter as well?

Yes. I would see the momentum continuing in this quarter. I would say -- sorry, are you thinking to be yes? So the second quarter momentum should continue. Hopefully, it will improve going forward. So things seem to be all right, right now.

Okay. That's great to know. And the second question I have is, how does the land pipeline, landing pipeline look? Because I think it's been quite some time since the last land deal, which I believe was in Jaipur if I'm not wrong.

Yes. So as of March, lots of active conversations. We had 3 term sheets, there are 4 term sheets, not 3, 4 term sheets as on the date of lockdown thinking of taking those through. And then post lockdown, we also became a little conservative on how things are there. Now with the COVID sales momentum continuing forward right now and our expectation that they continue to like this. We are now looking to take some of those land transactions here through -- on those term sheets that we have executed. So provided diligence and financial closures happen so we have a few transactions in the pipe, and we actively look for more. One thing that happened in this quarter as well as I alluded earlier, Ashiana Malhar in Pune, which was signed up earlier but we were not able to take through because of some statutory hurdles. And that has gotten cleared and additional documentation concluded finally from the registered and the projects done with that project looking forward. So we are looking of course on that line actively right now. And more confident of taking things now.

That's very nice to hear. And so just a follow-up, does it mean that you expect to hopefully sign a few deals this financial year? Or do you think it can spill over the next?

I'm looking right now, we should be able to do about 3 transactions this financial year is what my hope is. It might spill over to April-May, but we are looking to close out 3 transactions in this financial year.

Okay. Great. And on Pune, I mean, it's very nice to know that the progress has been good . Are you looking at launch this financial year? Or is it the...

No. Launch will be in the next financial year. Again, the approval process will take that kind of time before. But we were having a lot of uncertainty now that is we have a lot more certainty in that now and things should come through in the next financial year.

Okay. Okay. So that was helpful. And so we have 3 broad segments that we operate in the mid income, the kid centric and the senior. So any particular segment that has -- that you are more confident about today than, let's say, pre-COVID or something? Because, for example, I was hearing your brother, I believe, Ankur spoke interview or discussion on senior living. And he seems clearly excited about the space, and he indicated that we get around 1/3 of our inquiries. I mean the inquiries in senior has gone up really high, and we're looking to add a lot more projects in that going forward. So a little more color on that would be helpful.

Yes. So senior living is something that we think will drive a larger part of the profitability of the organization going forward. So the shares and profits and projects and things should increase going forward. We are actively looking for transactions. I think it's less to do with COVID more to the fact that it's a less competitive space with differentiation of, therefore, less susceptible to cycles being driven by more competition coming in, and excess supply coming in and those. And with that further realization, I think strategically, we made a view that we want to get in there and slowly assuring we would also been able to get a market going for it. I think a lot of time was spent in creating a market for it because that's right way to put it in educating people, getting people to come in and then getting reference in all that. And so I think, overall, we are enjoying. Could volumes in pricing both in Chennai and in our project in Bhiwadi Ashiana business Bhiwadi [indiscernible] in Chennai. So therefore, we would continue to look for more projects in Ashiana.

In terms of total houses constructed, would I be right in thinking that you are among the top 3 in the country right now in senior living?

In senior living, yes, I would say. So it's not the top definitely, the top 3. So I would say that yes, probably the top developer in terms of the number of houses constructed in senior living.

Perfect. And the actual last question from my end is in Ashiana in Anmol. Your thoughts here? Because I think the momentum is not picking up still. Is the connectivity issue still a big issue there?

It wasn't really a connectivity issue that it is a year further away. But there is a connectivity opportunity that's coming onboard going forward, we're building basically elevated corridor. I think it's about 18 kilometers of [indiscernible]. We cover, but there's an elevated highway. That highway is getting elevated from Gurgaon to -- from center of Gurgaon to our project. And that's going to be a difference. So that is still under construction, but the speed of that is rapid. That said, that will take about 6 to 12 months. But we're working on ways to find momentum in Ashiana Anmol going forward. And I'm hoping that in this financial year, we will start seeing some improvement. We have seen improvement in October and November already, very tight put. And if that momentum that is there, it continues and builds up, I think that Anmol will start doing better in this financial year and quarter.

The next question is from Rohan Advant from Multi-Act.

Yes. My first question was on, we said that the cancellations have been accounted for in this quarter. So what are the gross cancellations there? Because as we see a negative 35,000 square feet in Amantran that, that may be a net number. So if you could just give the gross cancellation for that one? Secondly, if you could talk about your launch pipeline for second half and maybe for FY '22? Like FY '20, we almost did a 2 million square feet so when can we get back to 2 million square feet of sales? Will it be '22? Or will it stay more time beyond that? And just lastly, Pune land, I got what you're saying on Kolkata land. You said that we are finding it difficult to get it started. So I mean what's the outlook on that?

Three things. First was on cancellations in Ashiana Amantran. I don't have exact numbers of gross cancellation there. But I think -- and this is not a 3-month figure but it's 6 months ago between April and September, I think we had a cancellation of that 80-odd thousand square foot to 85,000-odd square foot. And most of these cancellations because we cancelled about 55 that average unit sales we are juggling, additional. These were pertaining to bookings because Ashiana Amantran was launched a week before lockdown came in, and we got about 125 or booking 224-odd bookings, out of which about 55 cancelled. And cancellations had happened in the first quarter itself. A large part of that recognition happened in the second quarter because some of the paper works and documentation for cancellation processes will get done in time but that's what's there. There is also during the quarter, during the 6 months, and we expect Amantran to be now doing well going forward.

Okay. So you said 80,000 square feet, isn't it?

Yes. About 80,000, 85,000. We can -- so let's see if we can give out an exact number across cancellation number out in a couple of days time, post Diwali, if we can set that out within the...

Okay. If you exclude that, we are already at 3 lakhs square feet, right, because this is a sort of a nonrecurring number, right? All the cancellation that was to happen has happened.

Yes. And so also the point was the cancellation effectively happened in April also. It's about even as I remove that April, May, June, that the Ashiana Amantran number, if it had been posted in the both fiscal period, we would have been at the large part of this quarter. You're absolutely correct. So there's a track bookings not from a software perspective. I think we had about 220-odd bookings, net of cancellation in April, July to September quarter or about 215. So an average unit typically for us is about 1,300, 1,330 square foot. So that's where the numbers would be, so yes. I would say that, that's -- we are closer to 3 lakhs square foot. And second, it was -- your question was on...

On the launch pipeline, 2 million square feet, when can we expect?

On the launch pipeline, should we have launches planned of the 4 that we have in terms of projects after the Umang extension, which is now typically become Ashiana Umang Phase 5 because it's part of Ashiana Umang project itself. So basically, it had added a land to the project about 5 years ago. That's going to get launched. We have approvals in place for that, except for RERA. And we should be launching that even in this financial year itself. And Ashiana Malhar we expect to launch next one. The Kolkata project, it's difficult to get color here. It's -- yes, we are having a tough time with the approvals over there. And I can't give color as to because it's a little bit of a maze that we are having difficulty in [ having it tomorrow ]. But I would expect that we should start hitting close to 2 million square foot next year. We are on term sheets stages of projects also that we can launch next year. We have phases of existing projects which we could launch next year. So in my opinion, we want to get back to 2 million square foot again next year as well and more of that momentum. And basically, with -- so if bookings remain good this financial year and cash flow keeps coming in the way it had been coming in right now, then we are overall in a good business because we can move cash from existing projects to fund new projects and get the pipeline and that's it.

The next question is from the line of [ Anuj Sharma from MT Investments ].

My question is on the land bank. Yes. Hello? Am I audible?