Ashiana Housing Limited (523716) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Ashiana Housing Limited Q1 FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Binay Sarda from Ernst & Young. Thank you, and over to you.

Thanks, Yashasvi. Welcome, everyone, and thanks for joining this Q1 FY '24 earnings call for Ashiana Housing Limited. The results and the investor presentation have been mailed to you, and it is also available on the stock exchange. In case if you have not received the same, please write to us, and we'll be happy to send it over to you. To take us through the results for this quarter and answer your questions, we have with us today Mr. Varun Gupta, Whole-Time Director; and Mr. Vikash Dugar, CFO. We'll be starting the call with a brief overview of the company's performance of this quarter, and then we'll follow it up with a Q&A session. I would like to remind you that everything said on this call that reflects any outlook for the future, which may 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 reports, which you will find on our website. With that said, I'll now hand over the call to Mr. Vikash Dugar. Over to you, sir.

Good afternoon, everyone. Hope all of you and your families are keeping healthy. I welcome you to discuss the performance of the first quarter of FY '24 for Ashiana Housing Limited. Thank you for joining us today. Area booked recorded in Q1 FY '24 was 6.53 lakh square feet as compared to 3.34 lakh square feet in Q1 FY '23. Value of area booked also went up to INR 436.2 crores in Q1 FY '24, vis-a-vis INR 435.82 crores in quarter 4 of FY '23 and INR 152.1 crores in quarter 1 of last year. Ashiana Amarah's second phase were launched in April and the entire stock was sold out on launch, 224 units with a sale value of around INR 290 crores. Average realization went up to INR 6,684 per square feet in Q1 FY '24 as compared to INR 4,557 per square feet in Q1 FY '23. This was majorly driven by bookings in Ashiana Amarah Gurugram. We handed over 3.32 lakh square feet in Q1 FY '24, out of which 2.35 lakh square feet were delivered in Ashiana Daksh Phase 2, Jaipur, which was fully ended over in Q1. This was against a delivery of 2.72 lakh square feet in Q4 FY '23 and 2.11 lakh square feet in Q1 FY '23. Total revenue increased to INR 129.3 crores in Q1 FY '24, vis-a-vis INR 116.9 crores in Q4 FY '23 due to higher deliveries in AHL, which was 2.94 lakh square feet versus 2.34 lakh square foot. PAT increased to INR 10.87 crores in Q1 FY '24 from INR 10.38 crores in Q4 FY '23. TCI also improved to INR 11.2 crores in Q1 FY '24, vis-a-vis INR 10.51 crore in Q4 FY '23. Pre-tax operating cash flow was recorded at INR 83.15 crores in Q1 FY '24, vis-a-vis INR 22.6 crores in Q4 '23. FY '23 was at INR 84.85 crores. This was aided by higher collections during the quarter. On this note, I would like to conclude my remarks. We'll now be happy to discuss any questions or suggestions that you may have.

[Operator Instructions] We have our first question from the line of Rohit from ithought PMS.

Hello?

Yes, we can hear you.

Hi, Rohit. Go ahead.

So just a couple of questions to begin with. So this year, you -- in the last quarter, you had mentioned that we are sort of aiming for INR 1,500 crores, and it seems that the first quarter was also decent from that perspective. Just wanted to get a sense how do you see this year -- I mean the upcoming quarters, how are you thinking about that from a ramp-up point of view?

So we continue to maintain our INR 1,500 crore presales guidance for the year. The first quarter was very heavy with respect to Ashiana Amarah Phase 2 being launched in this quarter. And we'll do one more phased launch of Amarah this year, probably in Q4 of this year or late Q3 or early Q4. I was thinking more probably be in Q4 this year. So therefore, we will have a few quarters which might be very heavy in sales where you have large phase getting launched of any project and some quarters a little lower. But overall, the INR 1,500 crore run rate seems to be good. We were also happy with the way July progressed for the year overall. So things seem to be on good track right now.

Right. So that's good to hear. And in terms of -- so I'm seeing your presentation, you've given the delivery. So this year also is very heavy on delivery, right? And -- so -- I mean from a P&L point of view, I mean these would be based on what realization? These would be more around INR 3,000 or a bit more, and gross margins on these would be like higher? I'm just -- I mean I'm circling back to that question of ROE being 15%. So at these numbers, can we hit 15% of total ROE? Or given the realizations are low, this may not be the case?

So on the front of realizations, for all of these projects, we provide the realizations in a separate sheet. You can go through it and compile that, and that's provided across projects, what is the value of area booked as on date for each phase, this was on Slide 11, okay? So that could help. Overall, realization for these projects would be lower than earlier, but definitely not in the INR 3,000 range overall. But we will also -- I don't have the number handy, but INR 3,500 to INR 4,000 -- so about INR 3,700 on average is what you can expect, but there is quite a bit of variation in different price brackets across this. Gross margins on these projects would be lower than what we generally do. It will not be the 30% expected margins that we have. But that said, on the net margin performance, I think relatively things would improve significantly because our fixed costs will not go up in the proportion that revenues will go up. So to get into the teens for ROE on a reported basis this year on a definite basis.

Okay. Okay. Got it. And the other question is now -- I mean in terms of -- given we don't have any major inventory and even in terms of land bank, obviously, you acquired one in Gurgaon again recently. But just from that perspective, so this year we will be able to do it -- I mean we will launch a few projects and we will probably get to that INR 1,500 crores. But given that the business is such that we need to plan at least a year before -- or at least a year before we think of launching, so how do you think for next year? Or what's your thought process?

So this year, we have overall 5 projects to launch, out of which the first one being Ashiana Amodh in Pune was launched in July, and then we have 2 projects in Chennai, 2 projects in Jaipur each. I think one of the good things that happened in July for us, secularly, sales have moved up even in running projects. When the second quarter data comes in, that would be useful. Whereby, we can sell -- we have over 1 crore square foot in the future pipeline that we have, excluding Kolkata and Milakpur which are basically a little bit of a stuck. So we have 90 lakhs in future projects and about 10 lakh square foot in the Gurugram's new land, so it's about 1 crore square foot. So we have a good pipe overall, according to me, to keep launching right now in phases and keep things rolling as we go along. We don't want to have a very large pipe, I think, so to drive return on equity with net margins, we also have to maintain our sales to asset or our sales to equity ratio and return on assets and return on equity. Sales on -- over equity if you don't average effectively to look at our net assets. And in that perspective, I think if we build a very large pipe, our returns might get compressed. So we don't want to go crazy on pipe. We will keep having replacement stock and when we see larger opportunities to look at growth. We did around 20 lakh square foot of acquisition last year, including Sector 18 Gurgaon and 2 projects in Jaipur, having probably a sales revenue potential of about INR 1,500 crores. We are in actively -- in active discussions for 2 transactions as well right now. So replacement pipe will keep coming. Until we see a very strong margins of orders, very -- great opportunities in land whereby we can really ramp up our volumes and also maintain healthy margins at the cost of land that is there.

Makes sense. And just one more thing from a geography point of view. So if I look at your overall saleable area, this is on Page 14. So obviously, we've done really well in Gurgaon and that also is a future area. I just wanted your view on Pune and Chennai. I mean they have put together about 11%. What are your thought process on these 2 geographies? Is there a thought process to sort of ramp them up significantly in the next 2, 3 years? Just wanted to hear your thoughts.

So yes, there are plans to ramp up both Pune and Chennai. There are plans to ramp up senior living as a larger part of the company. And in that context, in Pune, we have just launched Ashiana Amodh in July, which will make a large difference to the Pune overall proportion of sales and things that we're looking at. We also, Chennai, both Swarang and Vatsalya, which are the 2 senior living projects we hope to launch in this financial year itself. And we see a very strong opportunity for senior living both in Pune and Chennai, and driving -- getting to now senior living contributing north of 20% of sales and revenues, and a little bit more of profits as we go along because we see higher margins. And hopefully improving to 1/3 over the next 2, 3 years. So there is a large push in that respect. And -- okay.

[Operator Instructions] We have a next question from the line of Himanshu Upadhyay from o3 Capital.

Congrats on a good set of numbers, and especially the year with the way it started, I hope the momentum continues. I have a question on buyback, okay? We chose the price of INR 301 and the company will pay a dividend tax of around 23%, which takes for effective price to the company of buying shares at INR 370. And the stock price was around INR 190. Can you explain the logic of it? And also, why not market buyback? Would not that have created more value for the remaining shareholders in the company? I understand it is a small amount, but again, it seems -- it may not create as much value.

Himanshu, a, it is a small amount, like you said. So -- and b, I think we looked at it as more of a onetime distribution of cash flows back to shareholders and looked at it as an alternative to dividends as to how do we give cash back to shareholders rather than looking at it as a -- another form of allocating capital and buying shares at a cheaper price, and therefore, it's a way to invest the capital of the company because it was more. And when we looked at it, it was a tax-free cash flow back to shareholders. There was, obviously, buyback tax at the company. But overall, a more efficient way to reward shareholders back through -- as a onetime distribution of cash flow. So that's the lens we applied as compared to the lens that you are applying.

And this INR 301 price, was there a cash flow basis method of valuation or the third-party valuation you chose or...

No, it was just a premium to ensure all the shareholders participate in the buyback completely and everybody gets rewarded.

Okay. And one thing, the IFC deal we have signed, will it be only for the incremental areas that we will purchase? Or we can partner for that large HSIIDC project also? And secondly...

We can partner for the large HSIIDC project also. And other than that, other fresh projects that we have too.

And any change in the terms which we had with IFC earlier?

No, it's on the same terms.

And this HSIIDC, have you paid the complete payments which were to be done? Or it is...

Only 25% payment is made, Himanshu. The remaining payments are due after a year.

So we'll expect the project launch only in '25 and/or '26?

I would -- we hope to launch the project in '25 end.

[Operator Instructions] We have our next question from the line of Pravin Agarwal, an individual investor.

I have a couple of questions. One, on the overall trend -- demand trend which you're seeing across markets. And second is a related question that in terms of price appreciation, the data you are -- in terms of percentage terms, what you are seeing in the end product which is either apartments which you are selling versus the land rates. Essentially, is one going faster -- growing faster than the other or they're kind of in tandem? Essentially, what I'm trying to assess is whether going forward, will our margins increase or it will be kind of stable or where we are?

So as of now, in my view, land rates have gone faster than price appreciation in the last 18 months. Land prices have appreciated at a rate faster than end apartment prices, okay? That said, now in a lot of profits, I have started seeing land prices plateau, in some pockets not yet, okay? And apartment prices continue to appreciate. So in some places -- in these pockets, I hope that the land prices will become stable and the apartment prices will catch up in the appreciation, so margins remain relatively stable that we are used to. That said, all the transactions that we have done 2021 onwards, I think we were able to do generally at good terms and our margins on those projects are better than what we have had margins historically.

Okay. That helps. Just one last question. Any update on the Kolkata land which was stuck or the other one which was under the court order?

Both Milakpur and Kolkata are long state stuck. We have not been able to see any light of day for them.

We have our next question from the line of Asif Ali from independent advisors.

Hello?

Sir, we cannot hear you clearly. Please use your handset mode.

Yes. Am I audible now?

Yes.

So I have 2 questions regarding the proposal to co-invest with IFC, International Finance Corporation. So the first one is what are your identified projects? Hello?

We haven't identified a pipe yet for the IFC platform. It's too early right now. Once we've got the platform, now we are going to start identifying projects to put on the platform.

Okay. Okay. The second one is what do you mean by the return linked to project-specific data? Can you put some light on this?

Can you say that again?

What do you mean by the return linked to project-specific return for the identified projects?

I'm not able to understand what you were really asking Asif.

Actually...

Mr. Asif, please use your handset and speak closer to the microphone, please.

Okay. Okay. Am I audible now?

Yes. Please ask your question. Yes.

Barely. Barely, Asif. You're not audible.

Asif, try now once, please.

Yes, I'm audible now?

Yes. Go on.

Okay. So second question is regarding the return linked to project-specific return. So I just wanted to understand what do you mean by this.

Mean by what?

[indiscernible] to project-specific return.

Okay. So it's not a fixed return obligation investments. They have a return in the project. So effectively, they make the return what the project makes. A little lower because from -- we do get a higher rate of return on our capital that the company puts in. But effectively, their overall return is tied to the return in the project itself.

That was what, Asif, you were asking for?

Yes, yes. Yes.

[Operator Instructions] We have a question from the line of Rohit from ithought PMS.

Yes, I just had a couple of follow-ups. So I mean you were talking about -- I think 2 calls back, you were trying -- evaluating some new geographies, be it Bangalore or Bombay, [indiscernible] living in the outskirts. So just wanted to get your sense how things moved forward? Or what's your thought process there?

We are very excited by the launch that has happened for Ashiana Amodh in Pune for a senior living launch in a fresh market. We are satisfied with the volume that has been received and the price that we have been able to command in that area. We are looking actively closer to Bombay. We are in one very advanced deal discussions we are funding. But outside of that, we are still scouting and looking.

Okay. Sorry, could you repeat -- so this is in Pune, you were saying, the one that you were scouting for? I missed that part, sorry.

Yes. We are scouting around closer to Bombay, closer to Panvel. We are in advanced negotiations and advanced discussions for one parcel already.

Understood. Okay. Okay. And in your Pune -- the [indiscernible] Malhar, have you seen any kind of...

Sorry, but you are not clear. Can you use your handset, please?

Am I -- is it any better now, ma'am?

Yes.

Yes. yes.

So in your Hinjewadi project in Pune, Malhar, have you seen any price appreciation? And the sell-through -- how has been the sell-through so far?

So the sell-through rate is okay. We have launched 2 lakhs 62 thousand square foot. I think August of last year was probably the launch. And we have sold 1 lakh and 81,000 square foot as of 30th June. That is decent enough sell-through rate for us. Price appreciation is not of the nature that we would have desired, but it is appreciated. So we would have appreciated by about INR 300 a square foot -- INR 200, INR 300 a square foot. I think there is room for more, but that will take some time for us to be able to establish the kind of product that we do and how we are differentiated from the market, which will take a little bit -- I think, will take time until deliveries. And over a period of time, that will kick in.

Okay. Okay. This INR 300 incremental is on what base, Varun?

Yes. I'm not sure exactly, I will be giving again rounded numbers. I think we were selling at about INR 5,100 and we are at about INR 5,400 today. So INR 5,200, we were selling that and we are somewhere between INR 5,400 to INR 5,500 a square foot right now on a salable area basis. So that's where we're at.

Right. Right. Understood. So I mean that project, I think we face competition from a couple of other developers there. So I mean how -- is that the reason why -- are you happy with the sell-through? You said you are happy. Is that -- or you could have done better?

So no. So in Malhar, am I satisfied? Because it's the first project for us and, therefore, it takes time for us to establish our brand, yes, I am because the sell-through rate is good to keep the bottle chugging along. But from the margins we are making in Malhar, we are not satisfied at all. But for that, we'll have to establish our brand further to be able to realize better prices. I think that's still a work in progress. As compared to Ashiana Amodh in Pune, where we're satisfied with the volumes and we are very happy with price activity.

Got it. Understood. Understood. And this Amodh would be where exactly, in terms of revenue, if you can just share?

Ashiana Amodh is located on Talegaon. So it serves both Bombay and Pune from senior living.

We have our next question from the line of [ Deepak Bhojwani from Swan Investments ].

Just wanted to check it out. Firstly, in terms of the pretax operating cash flow, this quarter, we had done INR 84 crores. I mean from the run rate point of view, how should we take it from the next 2, 3-year perspective, how it should shape it up?

Okay. So from this year's perspective, I think we are expecting pretax operating cash flows anywhere between INR 250 crores to INR 300 crores. This quarter was a little bit heavier than usual because I think there was a little bit of coverage of last year. Last year was a little slow. I think we had sold, but the collections came in, particularly in Ashiana Amarah, this year. And we also had overall a lower amount of construction in this quarter as compared to the proportionate amount of work that we'll do next year. Like this year, we did -- this quarter, we did 4 lakh 35,000 square foot as compared to 5 lakh 8,000 square foot in the last quarter. And the construction pace will also pick up. So overall, the INR 83 crores, INR 84 crores is a little higher aberration. But maintaining around INR 250 crores to INR 300 crores, between that range, run rate is something that we are aiming for this year. And hopefully, going forward, that should improve as sales value improves.

Okay. And is it possible to share the numbers in terms of collection and construction outflow, sir?

We'll have to get back to you on the same. I think collection was around INR 250-odd crores this quarter.

Yes, yes. It was around INR 250-odd crores, yes. Correct.

So I don't have exact construction outflow numbers. But there will be other outflows like JDA partner payouts will also be a pre this number. So there will be other outflows, not just construction outflows at that. And this year, we expect to collect anywhere between INR 1,000 crores to INR 1,100 crores and make net operating cash -- pretax operating cash of between INR 250 crores to INR 300 crores.

Okay. And in terms of the Gurgaon market, sir, what should be our overall strategy in terms of the acquisition of the project and long-term strategic shares in terms of the overall sales profile?

Can you repeat the question for me again, please?

Yes. With regards to the Gurgaon market, macro market as a whole, what should be our overall strategy in terms of taking the market share, and also, in terms of overall contribution from the sales perspective from the next 3- or 5-year perspective?

Okay. All right. So I think Gurgaon, from our perspective, will contribute 1/3 of our sales and profits in general going forward, okay, in terms of total revenue terms. In terms of area, it will be a little lower because it's a higher priced, and on a per square foot margin and an absolute profit and a per square foot sales price, it's a higher priced micro market than we usually operate in. But I would say 1/3 of our sales should come in from Gurgaon. From a perspective of market share there, we don't have any market share strategy, Deepak. What we have is we want to play in the less than, let's say, INR 3 crore bracket, preferably in the less than INR 2.5 crore bracket and INR 1 crore and upward price point play there, give high-quality design, high-quality product, high-quality service and establish a brand that allows us to charge a premium price as we go along. And so I think that's the exercise that we're looking to do. If we are successful in that, then from our growth perspective, I think we will be okay. We don't want to take our market share view for that. That's not something that necessarily we want to study and analyze overall. Just make a very competitive product and a great brand and do good to the customers. I think the play is large enough that we will get whatever we need as a developer in that [indiscernible].

Okay. And sir, in terms of the average realization for the project launched this quarter, what was the average realization for the Gurgaon project?

So Gurgaon Phase 2 was around INR 7,700 a square foot. Yes, we -- again, that amount is -- if you look at Slide 11 of the deck that we shared, we have given the 3 lakh 77,000 square foot was sold and INR 290 crores was the value. So INR 7,692 number, it's about INR 7,700 numbers.

Okay. And sir, in terms of the expansion plans with the IFC, is there anything committed or guaranteed event? I know you mentioned about the project-related IRR with a...

There is no committed or guaranteed return on the instrument.

We have our next question from the line of Manan Patel from Airavat Capital.

Congratulations for very successful launches. Sir, the first question is, I wanted to understand your views on the growth in terms of square foot over next 3 to 4 years. So last year, we did around 2.6 million. And we have, as you mentioned, around 1 crore square feet of pipeline. So there could be less than 4 years if we consider the growth also. So what are your views on the growth in square footage? While I understand the prices are appreciating, realizations are going up, so sales are also doing pretty well. So how do we think of your aspirations or growth targets in terms of square feet over next few years?

Manan, I think we made the mistake of last time on focusing on top line volume growth a lot in the last bull run and focusing on that. I think as a company, I think what we are going to do is we're going to focus on return on equity and keep deploying incremental capital well to generate further returns, which will create growth. If your capital base is increasing and your returns are stable, then your earnings are growing at that pace. That's simple math. But the focus of the company is less on top line volumes and the focus of the company is on return on equity. As stated, our view is that how -- a, first, how we get to 15% return on equity. We do both economic and reported basis works. This year, we should definitely, on an economic basis, cross 15% threshold. And on a reported basis, I'm hoping to get into teens this year, and keep growing that. And as and when we do that, our earnings in our top line should continue to grow. But that's the kind of -- sort of focus, I think, we want to have as a company. And we do that, we'll be fine. So we don't have a top line number that we are chasing -- volume number we are looking at from a 3, 4-year perspective. We have actually not mapped that out.

Understood. That's very helpful. And secondly, I would like to understand the position -- the time in the cycle we are in based on the demand and supply or launches happening in your major markets like Gurgaon. So you mentioned that the apartment prices are appreciating, but land prices appreciated faster and now they are stagnating. So where in the cycle do you think are we in terms of further appreciation in the apartment side?

Yes. I've gotten this wrong multiple times, okay? So the kind of bull that -- bull run that has happened, at this pace, it would have been difficult to call. I was publicly commenting 18, 24 months -- from around 18 to 24 months ago that we are in a multiyear bull run cycle because of supply compression that had happened. Fortunately, absolute inventories across major markets, except barring 1 or 2, are not increasing yet, whereby sales continue to outpace launches. Until that happens and continues to happen, I think apartment prices will continue to appreciate. By what pace, for how long, those are difficult things to call with the exact thing. But again, right now, the sense is that it will continue on a multi-bull year run. And I am bearish on launches that launches will catch up a lot because the capital availability for the sector still continues to be restricted. And access to capital is only with a few developers. Until that continues, I think overall supply in the market will continue to be constrained. So -- but that's the data I would look to look at, is absolute unsold inventory that's in the markets, are they increasing or are they decreasing? Right now, they are fairly stable, I would say, or decreasing slowly.

Understood. And in terms of affordability, how long do you think the appreciation can last till the affordability gets shaped?

Again, it's a difficult thing to call for how long. But the first sign of affordability is when unit size in apartment starts compressing. So if developers start making smaller and smaller units, whereby 2-bedroom units will start outselling 3-bedroom units, the size of 3-bedroom units will reduce, the size of 2-bedroom units, that will be the first sign whereby affordability is getting hurt, okay? Right now, the demand for bigger-size apartments continue, and we continue to see apartment sizes increasing. So the signs of affordability issues are not yet there.

Got it. So that's a very helpful indicator.

[Operator Instructions] We'll take our next question from the line of V.P. Rajesh from Banyan Capital Advisors.

So you had some good launches in the quarter. My question -- hello?

Yes, please use your handset mode.

Yes. I'm using handset. Are you able to hear now?

Can you be a little louder, V.P.? Just a tad bit louder.

Okay. Sure. Okay. So my first question was that in your projects that you are launching, are you starting to see more investor interest? Are you tracking that? And what's the sense you're getting as to the customer that is buying those units?

Yes. So, V.P., 2 things on -- there are 2 kinds of investors. One are people who buy to hold and buy to let, okay, investors. And there is a different investor who wants to exit at possession, okay? We have -- we are designing the firm a little bit more to be unattractive to this investor who wants to buy at launch and sell at possession because that can hurt a little bit. So we are telling all our customers that we will not allow any trade without you getting a sale deed registered and stamped, which increases the transaction cost of that. So hopefully, in my view, it's keeping that buy-to-flip investor at a very low proportion of our sales right now. But we are getting interest from buy-to-let investor significantly, but which has always been the case in our proportion of our sales. I think proportionately, they are changing. They make up about 50% of our apartment sales in general, and 50% would be owner occupiers of the units which are not sold to buy-to-flip investors, which are very low right now.

Got it. And then the second question about the Noida market. You were looking at it a couple of years ago. Just was curious what's your prognosis now and is that of interest to you still?

I'm not able to make sense of the land prices there to do senior living there. I don't see margins are commensurate to the investment. So I find it difficult to make returns in that market as of now.

Right. And in terms of your markets now, would you consider Pune as an established market for us? Or do you think it still is to be seen? And if you can just comment like where are you aside from...

I don't think it's established yet. I don't think it's established yet. But the start has been good, and we are looking at it to do well for us. I think from a senior -- expectations from a senior living market of Bombay-Pune, not just Pune, Bombay-Pune as one sort of [indiscernible]. And doing senior living there, I have -- we have high expectations of doing well there. And the prognosis that we had gone in with in terms of demand for senior living and the kind of gentry we can attract there. In Ashiana Amodh, that diagnosis is coming through in the -- it seems to be going well.

Got it. And just one quick question on the last year. What was your economic profit or ROI based on the economic profit -- ROE rather?

Economic ROE, we were in low double digits, okay, last year. And this year, we are looking at economic ROE to be in the high teens.

High teens? Okay.

Yes. In this year, we should -- this year, we should cross our projection sales. We will cross 15% quite handsomely. First quarter is giving a sense that we are on the right track.

[Operator Instructions] We have a question from the line of Ajay Vora from Nuvama Asset Management.

Congratulations on good set of numbers. Just want to understand your thought process. So going forward, you said that we have broadly 10 million square feet kind of a pipeline, which we can build up over the next 4 or 5 years. Is there a mechanism or what is your thought in terms of having a particular or, I would say, steady state EBITDA margins on each of the projects? So the realization may keep changing and the land cost and all the construction cost. But is there a mechanism where we are targeting a particular EBITDA margin on all the projects which we plan to launch going forward?

So margins do vary again project to project. We do have, what I would call, inventory gains and inventory losses, whereby -- what we -- by the time -- between the time we do the deal and then we sell the project, markets can change dynamically. We look to underwrite 30% GP generally when we take projects. For own outright purchase projects, we look for a slightly higher number. For JV, we can leave a little bit. And this is at the project-level GP. Project-level GP to us is sales, less construction, less land, less approval costs. All project-related costs excluding sales and marketing costs. And then from that, we reduce the sales and marketing costs. Sales and marketing costs right now is averaging about 4% in the company, maybe 4%, 4.25%, but ranging between 3% and 6% depending on where it is. And the other overheads are a little bit of a fixed item, right, which gets spread. And there is a degree of operating leverage there, depending on how much we are able to sell inventory.

No. But if I look at your historical trend, it has been extremely volatile at the company level. So I understand it changes at the project level. But at a consolidated, I'm not even asking for quarterly thing, but at the annual level, what sort of number post all the expenses and all, are we targeting any particular number, say, 15%, 20%, 25%?

Okay. Sure. Let me put it this way that the EBITDA margins at the company level have been depressed significantly because of this fixed costs that we are talking about overheads, which is leading to a high degree of operating leverage. So as and when revenues go up, our fixed costs will not go up significantly. So margins should definitely improve at the company level. I think from a PAT perspective, I don't know so much of EBITDA, again, as we don't do the exact math. But from a PAT perspective, I think getting -- crossing 10% initially and going up to 13%, 14% is where we would like to get to under total comprehensive income margin. So TCI margins right now annually have varied between -- we have had losses and has gone up to 10.6% over the last 5, 6 years. I think getting to that 10% threshold and then going up to hopefully 14%, 15% in peak years as the PAT margin is what would be ideal, and hopefully averaging around 12% or 13%.

That was helpful. And considering the free cash flow which we will generate, broadly, that will be utilized for land acquisition and JVs, right, going forward? Or is there any other thought behind that?

No, there isn't. So we might sit on the cash also for a little bit if we don't see a lot of good deals coming in. So I think we will not -- as I've said earlier, we made the mistake of chasing top line growth. And therefore, we lost sight of whether that -- a little bit whether the terms of the deal were making as much sense as it should be? Were we reasonably conservative enough earlier? So we might sit on the capital also, but ideally, it will be to deploy into land and JV to grow the business. That's the ideal piece.

[Operator Instructions] As there are no further questions, I would now like to hand the conference over to management for closing comments. Over to you.

We would like to thank all of you for being on this call 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 call. A lot of material we've spoken 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 call. Thank you.

Thank you. On behalf of Ashiana Housing Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.