Ashiana Housing Limited (523716) Earnings Call Transcript & Summary

I would just like to add, Rohit, on the front of phase launches, I think there are more evenly spread across the year. We have launched 2 phases in the first quarter, already 1 in Ashiana Tarang and 1 in Ashiana Dwarka. In the second quarter, Ashiana Nirmay's launch happens and in Ashiana Dwarka, we relaunched the phase because the phase got stuck during half the launch happened pre-lockdown, and the lockdown got stuck, so we launched it again in the second lockdown. So there are 3 launches have happened already in the H1 of this year. And hopefully, we should get 2 more phased launches in H2. And then the rest are depending on -- the rest are dependent on new projects getting approvals, as Vikash ji had enumerated.

So this -- got it, sir. This Amarah is how big in terms of square foot? And this is the Sector 93 Gurgaon planning, right?

It is -- this is 21 lakh square foot of salable area, give or take, Rohit.

Got it. Okay. And the second question was in your -- on your completed or ongoing projects where there is some inventory, there are 2, 3, which sort of are, for the lack of a better word, very slow moving ones, Amantran and then there is Vrinda Gardens. So if you can just talk a bit about that and also wanted to understand Shubham Phase 4, how is that going.

Let me just pull that information in front of me as well. So I can locate at...

So slow in terms of sales, you mean to say, Rohit?

Actually, I would -- I mean I would correct, I would not say slow moving. I mean, I would say inventory is more, I mean, as compared to salable area. I just wanted to understand the [ salience ] in these 2 projects in these 2 projects, and also Shubham. I didn't mean slow moving as such, I just meant that as a percentage of the salable area versus an area booked is what I wanted to...

Sure. So given the stage of construction in Ashiana Amantran, which is about a year ago we started work and we have guessed another, let's say, 2 years to go for construction here, we're looking at Q3 of FY '24 for delivery. We sold about 60% of the stock, and I'm happy with that. That pace is that -- where we have a basic thumb rule at completion of the project, we should not have any stock really left to sell. That's a good project. I think Ashiana Amantran is checking those boxes. And as of now, the information that we have tells me that we will not have any stock left as and when those phases are complete. Similarly, in Ashiana Shubham Phase 4, I'm satisfied with the sales velocity that we have reached over there at about 33-odd percent there and the pace that it continues to move at. My sense is, again, we'll have very limited stock left there or no stock left there at the time of completion. And those are 2 projects, which are not bothersome in any manner, or not -- that's also correct thing to say. Let me say, if we take up a project, and as per our expectations, the pace of sale in Amantran and Shubham both are satisfactory and we will make decent returns from that perspective. In Vrinda Gardens, that project has always been a little of the slowest moving projects in Jaipur. And therefore, we've always had some units at the time of completion of whichever phase we completed, and then we had to sell that off. And for -- due to some other reasons, we also needed to complete the remaining phases by a certain time line. To meet that, we expedited those -- that construction. But that said, as of today, the way the month of July has gone and the way last financial year also went, that is financial year 2021, I'm overall happy with how Vrinda Gardens is faring. And the kind of stress that I was expecting that project to have, I don't think it will have. It will obviously have stock ready at the time of completion but not something that will bother us in any manner or stress our balance sheet. And so we are quite okay with how that thing -- how Vrinda is also going at this moment in time.

Just one more question. You mentioned like your view is that the sector per se is on an uptrend for at least next 4 to 5 years. So just from our perspective, I mean, last year FY '20 was a decent year peak in a sense of about 2 million, 2.2 million square feet. So I mean, how do you see us? And you think -- I mean, over the next 3, 4 years, can we sort of break, let's say, can you get into 4, 4.5, 5 million square feet -- are we prepared as an organization? Because I mean, if you require buying land or doing deals as an organization, can we sort of gear up for that? What are your views? What -- I mean if you could just give some broad direction.

Yes. Sure, Rohit. After financial year '20, our plans was to take up a lot more land. COVID happened and then we became a little bit more cautious as to what to do after the first lockdown. As of this time, we are actively looking at multiple transactions. We have 4 live term sheets at this moment of time. And we hope to conclude some of those. We did 2 transactions already in May -- in June, which were a large, one in Pune in Senior Living in sector 93 in square footage. So the great part of financial year '20 sales was that it threw us a lot of cash last year. And we are liquid at this point of time. And we are, therefore, have a view that we should do a lot of transactions. And the first -- I think the first piece is to get to 3 to 4 million square foot to get there in square footage. But more than that, also, I think from a sector uptick, we need to become profitable, which we will become in financial year '23 very well substantially. And after that, we need to hit return on equity in teams. I think that's the first view of the company as to how do we get there and put ourselves in gears in that, and launching projects would be key for that. Fortunately, we have now a lot of inventory already, which I think about 50, 60 lakh square foot of inventory, which can be launched if we get approvals across 4 projects, Senior Living in Ashiana Town Gamma, Ashiana Malhar, the land in Varale in Pune and Ashiana Amarah in Gurgaon, which will -- which can provide the first thrust in terms of launches. They are not going to be enough. So therefore, we are in active -- lots of active discussions for land at this point.

And sorry, if I can ask one more follow-up.

Yes, last one, please, Rohit.

Sure. So in terms of -- as you sort of move ahead, I just wanted to understand from a gross profit per square feet point of view. you've done 1,000-odd and as we sort of get into Pune and as more of our sales per square footage would be from areas like Gurgaon, Pune, which are slightly higher in terms of realization. How do you see gross profit in terms of -- I mean, both your realization and your gross profit, how do you see that evolving in the next 3, 4 years, if you can just also give some color there?

You see a little bit will depend on how prices and costs behave. At this moment in time, the transactions we have done, the 4 transactions that we spoke about right now launches, there I expect gross profit margins to be good because land prices have already been locked in, and sale prices seem to be going up. At this moment in time, my view is that future sales prices should increase. On some new projects, I think we are looking for value transactions. Question is how will land prices behave in context of the sales value that will drive things. But we've gone through 5 years of the margin stagnation on margin compression, so GP per square foot levels, margin stagnation, net profit margin compression down to negative numbers. I think we are hitting a period of margin expansion over the next 5 years.

We have the next question from Parag Jhawar.

You're on mute, Parag.

Hello?

Now, we Can hear you, Parag.

I have a question or rather a clarification on the pricing environment comment that you made. So I wanted to understand which markets are you seeing improved pricing environment and is it across the board? Or are there stronger markets right now? And secondly, from your side also, are you less aggressive in taking price hike in some of the projects or markets where you have more inventory to sell like Ashiana Town, for example? So if you could comment on these two.

I'll go first. Vikash ji, if you want to add anything if it comes to mind because it's a larger thing. To me, I think price increases are across the board, excluding the comfort homes market -- Kid Centric Homes, comfort home market in Bhiwadi. So Ashiana Town, Tarang, and Surbhi, where we've -- we are not getting capacity to increase prices. Across locations and the senior living projects across, we have been able to increase prices quite consistently is the first thing that comes to mind for me. And so we see a general increase across the board. Vikash ji, if you want to add anything on this or...

Absolutely. And with continued focus on the senior living piece, wherein we see in relative terms, better pricing power, I think as the mix increases in future years, I think that the pricing will be a stronger side of ours. And that is the reason we have been confidently saying that even in the scenario of rising commodity prices, we will be able to negate possibly the adverse impact on margin by increasing the prices also. So we should see a positive side going forward.

And the price increases that you have taken right now, is it just to counter the RM price hike that has happened over the last 6 months? Or is it adding to the gross margin also?

As of now, the price increases that we have done would probably just take care of the margins, the cost input. But I don't see them being interlinked.

I think the basis of the price increase has not been exactly based on the commodity price at which has happened. The 2 are definitely not linked. And the price stagnation, which is there, looking at the opportunity we saw after a long lull period to increase prices is the reason why we actually started increasing prices gradually. So...

[Operator Instructions] So we have the next question from Avadhooot Joshi, it's a follow-up.

What's the quantum of the price increase that we are talking about? And the second question is what's the status of Ashiana Malhar, the Pune project?

Okay. So I think price increases in general across the board have been in the range of about 3%. Between, let's say, 1st April and now, price would be 3%, somewhere 2%, somewhere 4% in that range, I would say, is what we've increased so far. And in Ashiana Malhar, we have received all building plan permissions. The environmental clearance permissions are ongoing. Our application is in part of the process is through. And part of the process is ongoing. We hope that within the next 3 months, we should have the environment clearance received. Post that, we can apply for RERA and launch of project.

We have the next question from Himanshu Upadhyay.

My question was, you said that there are 4 projects where -- not 4 projects, but 4 land deals which we are working on, okay, currently. Are these for outright sales or JD/JV only we are thinking? And we had this IFC some agreement, okay? So what is the progress on that? Are we -- on that platform, are we seeing anything any progress happening or new projects revaluation?

Yes. So the Ashiana Amarah project is substantially funded through that platform, Himanshu. So we had funded Ashiana Daksh, Ashiana Amarah. And we are evaluating one more project on Chennai through the IFC platform. So the IFC platform comes in only in outright purchase. So we are evaluating projects in Chennai, one on an outright basis with -- on an IFC based -- in IFC. We have other projects in Jaipur, in Jamshedpur, where we have sheets signed is fine for -- on a joint venture basis. And we are also talking to a developer for another sort of an acquisition or a joint venture business. So like you jointly acquire with another developer a project that we are looking at. So it's a mix of things that we're looking at.

One small question or I'll comment also or whatever you take it, the Jamshedpur, which has been a very interesting market for us, we have seen a lot of success in that market. Are we getting any traction or a land deals in that market since...

We have one term sheet signed, Himanshu, in Jamshedpur at this moment of time. It's a difficult place to find land transaction because of the status of land in Jharkhand. They say, all of 10% land in Jharkhand is only tradable of all lands. And they become even more complex in urban areas in its [ tradability ]. So it's difficult to find pockets there. So we are searching for land there. One term sheet signed and we are evaluating.

And one last thing. This is on Kolkata land where we have seen issues, and we have said we'll see what happens in the future, okay? But what is your -- is there some way we can move out of this land transaction? Or are we thinking of anything on that? Or we are just saying -- let us keep it on a back burner. As time comes, we'll evaluate it and we'll progress on other projects or other sites. So what is happening on this?

It's -- we are evaluating options to make that progress faster and what can we do, is there some different thinking required. But I would say more -- it's more on the back burner where our larger thoughts are being put into getting new projects, bigger projects off the ground in other markets where we are more comfortable.

[Operator Instructions] I believe there are no further questions. So we'll hand over the call to the management for closing comments.

Vikash ji, would you like to close, please? Thank you.

We would like to thank all of you for being on this webinar and being so patient with all the questions and answers. If we were unable to take any questions, please feel free to write to us directly or reach out to us directly. And with that, we would like to conclude the webinar. A lot of material, we have spoken about it about is posted on our website, and you can also e-mail your queries for any further clarification. Thank you once again for taking the time to join us on this webinar. Thank you.

Thank you, everyone.