Ashiana Housing Limited (523716) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Ashiana Housing Limited Q2 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 E&Y. Thank you, and over to you, sir.

Thanks, Anand. Welcome, everyone, and thanks for joining this Q2 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 today with us Mr. Varun Gupta, Whole-Time Director; and Mr. Vikash Dugar, CFO. We will 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'll find on our website. With that said, I'll now hand over the call to Mr. Vikash Dugar. Over to you, sir.

Varun here. Good afternoon, everyone. Hope all of you and your families are keeping healthy. I welcome you to discuss the performance of the second quarter of FY '24 for Ashiana Housing. Thank you for joining us today. Overall, it was a good quarter in terms of acquisitions, launches and delivery. We acquired one new land parcel in Jaisingpura Road, Jaipur having a developer potential of around 11 lakh square foot. This parcel is very near to our current project, Ashiana Ekansh. We further strengthened our foray in the Pune market with the launch of Ashiana Amodh in Talegaon. It's a senior living project, making it the seventh senior living project of the company. In the existing projects, we launched second phase of Ashiana Prakriti in Jamshedpur and last phase of Ashiana Shubham in Chennai. The area booked in Q2 FY '24 was INR 5.92 lakh square foot as compared to 6.53 lakh square foot in Q1 of FY '24 and 4.9 lakh square foot in the second quarter of the previous year. The value of area booked also went up to INR 325.6 crores in the second quarter of FY '24 vis-à-vis INR 240.19 crores in the Q2 of last year. We continue to see improvement in average realization price aided both by the change in mix of projects and also secular increase in price across geographies, in general. We recorded an average realization of around INR 5,500 per square foot for the last quarter. Deliveries commenced in the following 4 projects: Ashiana Daksh Phase 3 in Jaipur, Ashiana Amantran Phase 1 in Jaipur, Ashiana Aditya Phase 1 in Jamshedpur and Ashiana Tarang Phase 3 in Bhiwadi. I hand over to Vikashji to give an update on the financials of the company.

Thank you, Varunji. As far as financial update is concerned, in the quarter gone by, we successfully completed our maiden buyback of shares worth INR 55 crores. Pretax operating cash flows were recorded at INR 75.29 crores vis-à-vis INR 83.15 crores in the quarter 1 of FY '24. Total revenue reported at INR 351.02 crores in the quarter gone by vis-à-vis INR 129.29 crores in the previous quarter, increased due to higher deliveries. Profit after tax increased to INR 27.35 crores in Q2 FY '24 from INR 10.87 crores in Q1 FY '24. TCI also improved to INR 27.52 crores in Q2 FY '24 from INR 11.2 crores in Q1 FY '24. Improvement in margins due to higher revenue. 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. Thank you.

[Operator Instructions] The first question is from the line of [ Harsh Beria ], who's a professional investor.

My first -- and it's great to see that some of our efforts in the past has also -- we can see that on our reported P&L, and we are maintaining a good healthy run rate of pre-sales. So congrats for that. I was looking at our current pipeline of products which we have, and it seems that about [indiscernible].

Harsh, we lost you in the last. You were saying given the current pipeline, and then your voice broke off. Can you repeat the question, please?

Yes. So my question was the current pipeline, including our ongoing projects, future projects and land, excluding Milakpur and Kolkata, is about 1.17 crore -- or sorry, yes, it's 1.17 crore square feet. This pipeline, how long should it last for us? Like how long presales can we do from this pipeline?

So we'll keep adding to the pipeline. But generally, this kind of a pipeline is probably a 5-year pipeline. We are doing about -- we did 25 lakh square foot of presales last year. And right now, with -- we have a 1.20 crore-odd lakh square foot to sell about 13-odd lakhs in ongoing projects, about 83 lakhs in future projects. And in the land available for future development, I don't consider Bhiwadi and Calcutta because of the challenges there, but Gurgaon and Jaipur of 21 lakhs is reasonably there. So we have about 1.20 crore-odd lakh square foot. So that's about a 5-year sales on this -- on the current run rate that we have. As and when run rate increases, we'll need to add to the pipe. And as we continue to add to the pipe, we remain -- as I said, we remain wary of land prices, and we want to be very careful in how we add acquisition without overpaying for it. Till now, whatever we've been doing, I'm quite satisfied with how things are going so far.

Great. So how many greenfield launches will we see in FY '25? And which -- what are the projects which will be launched next year?

So in FY '20 -- so we have about 6 projects to launch, I believe, fresh projects. These are not phases. So we have, in Jaipur 3 projects, a project called One44, Nitara and a new project that we have taken in Jaisingpura. We have the Sector 80 land in Gurgaon and 2 senior living projects in Chennai. I hope to launch 4 of these projects by -- in the Q4 of next year, the 2 in Chennai and 2 in Jaipur. And we hope to launch one in Jaipur and one in Gurgaon in the next financial year.

Okay. So all these 6 would be launched by the end of FY '25?

Yes. And phase-wise launches will continue wherever we have stock to sell, markets are good. We will keep launching phases as we go along.

So given a very healthy launch pipeline, will we see an improvement in our presales quarterly run rate? I think annually, we are doing 25 lakhs, which you talked about earlier. Can we see this going to 30 lakhs, 35 lakhs in the coming year?

Yes, it's the expectation. So just I might have said something. We expect to launch 4 of those projects, One44, Nitara, Swarang and Vatsalya in the next quarter, which is the Q4 of this financial year, if I got that wrong, and 2 projects in the next financial year in Sector 80 and the land in Jaisingpura -- on Jaisingpura Road in Jaipur. We do expect this presales number to move up further. So I would expect this 25 lakh square foot number to move up further. We are aiming to get to a higher run rate and cross the 30 lakh square foot run rate. But that said, I think a large part of our focus now will be also increasing prices. So we will focus more on value than volume. We believe there is room to increase prices, and we are also getting into higher-priced projects. And this is particularly the case in senior living. I think in senior living, we have found -- we have got a new sense of confidence in pricing senior living that we did not have earlier. And I think that will continue as we go along.

Great. That's great to hear. My next question is about a recent development, which is happening in real estate companies, which is a horizontal plotted development. We see a lot of real estate companies now adopting that model, which also gives a quicker turnaround time and very high EBITDA margins. Is this something that we have also considered?

So Harsh, can I also -- I'll take this question. Can I request you to get into the question queue after this. We have -- do have a queue, and I would like to give people a chance to ask those questions. No, we do not plan to do horizontal plotted development. It's -- we are not in the business, as I said, of just doing real estate development. We are -- I would say what we consider as homebuilders. We like to make homes. We like to see people live in our developments, enjoy our developments, create value through design, create value through services and make a difference in people's lives as and when we make profits as well. So the only reason we ever evaluate plotted development is as an exit mechanism in case our plans to do built-out developments fail. In that situation, we might go ahead and do plotted development. This has happened once maybe 20 years ago, we ended up doing that, but we do not evaluate horizontal plotted development, and we don't intend to do it.

The next question is from the line of Himanshu Upadhyay from o3 Capital.

Happy Diwali and happy new Samvat to everyone in the organization. My first question was, I was going through the annual report. And this year, you have taken the theme of increasing execution capabilities and maintaining desired level of quality, which seems in line with our last 5 years, where we have booked area of 8.5 million square feet. And the area constructed has been 6.2 million square feet. Even in the last 2 quarters, means Q1 and Q2, you have seen the sales is much ahead of the area under -- area constructed. Can you tell what initiatives are you taking in FY '24 in line with our theme? And what target have you stated -- means kept for yourself for area construction in FY '24 and '25? So that was my first question. And how worried should we be of -- as analysts or investors that the area sales is much ahead of area under construction?

So we do expect sales to be ahead of construction in general. That's a good sign if the lag is not too much because then that's a sign that most construction will get financed through customer receipts instead of our capital getting deployed. So we are looking for construction to follow sales, okay? What you don't want is it to be really, really behind. So this year, we hope to cross 2 million square foot, which we did not do last year. So we expect the area constructed to cross 2 million square foot. If you see the year in FY '22, actually, we constructed more than we booked. But there has been a little bit of a lag. And we hope to cross 2 million square foot. Anywhere between 2 million to 2.2 million square foot is where I think we will hit this year. A little bit now with Gurgaon and Bhiwadi. We are little dependent on how the pollution here plays out and how much -- what time frame there is -- the construction is banned for. So depending on how that plays out, a little bit of it will vary. So but -- it's 2 million to 2.2 million square foot that we would expect this year. The steps being taken have been a few. So in terms of improving quality, we have reviewed a lot of our checklist that we had for quality. We have also reviewed the systems in place to ensure those checklists are implemented. So overall, we are taking steps on, I would say, improving fundamental quality of construction. We have changed some of our shuttering systems as an experiment in a couple of projects. And the overall governance mechanism that we have for how we manage construction, how we manage the other parts of the organization to improve discipline has also been taken up, which is -- some of it is through internal audit processes, just overall improving discipline in the systems. And to speed up construction, I think there has been a renewed focus on improving our practices around labor that will allow us to get -- we have more workers available with us. So our labor practices and their welfare and the safety and their upkeep and the -- so there are -- there is steps being taken to improve that further so that we are able to attract and retain workers better. And those are the 2 fundamental steps that we have taken.

Okay. And second question was, last year, we had around 33,000 leads, okay, and 6,515 visits, and we sold somewhere around 1,700 units. So nearly 5% of leads we were able to convert or 22% of site visit conversion happened. How would this number have changed in last 5 years? And what is -- what impact this conversion ratio is okay? And what further can we do to improve this conversion ratio? Can you give some thoughts on that?

Sorry, I don't have that data on me, and I am not able to connect with the data that you have as well fully myself. So...

See, this data is in the annual report of this year. So what data is stated.

I just don't have it in front of me, so I've just called for it because I couldn't follow the exact data that you gave as well, and I don't remember it on top of my head. Can you tell me the data of leads, visits and bookings that you said?

So in the annual report, it is stated that you had 33,000 leads and 6,515 site visits, okay? And we sold 1,700 units from last year. So based on that, we have seen 5% lead conversion, okay, or 22% of site conversions have happened, okay? I wanted to know, how has this number changed in the last 5 years? And what has -- what the efforts are we making to improve it further? And what impacts this conversion ratio? So some thoughts on that, this means our sales has become more effective. That is the base question.

Yes. So one, I think let's be -- one thing that we have to the market has changed, okay? I think the market that was 5 years ago and the market today is very different. People's confidence to book has improved. The amount of supply that's in the market is reduced. So every consumer, so closing rates of a particular developer will be more because there is less supply chasing that demand than compared to earlier, so the closing rates will improve henceforth in the market in general. Second, I think our closing rates this year, conversion ratios were much higher. And then in general, we would expect because our closing rates in particularly in Amarah launch was very high and our launches were very high. So the closing rates of this nature of 25% of visits is not a very common phenomena to see. Actually, in a regular running project, a high single-digit or a low double-digit closing rates is, I would, something consider good. I knew -- I know in the trough periods, closing rates were down to like 2%, 3% of site visits, were getting closed into bookings. Again, launches are very, very different. We had a very heavy launch year last year, okay? And the launches, we just get a much higher closing rates at launches. So that also skewed this. But thirdly, I think over the last 5 years, our sales system, our sales processes have changed significantly. The way our salesperson will handle the client today as compared to the same salesperson handling a client 5 years ago is dramatically different. It's hard to explain the process unless and until you see it, but we've changed the process significantly, and that has also made a difference.

Okay, okay. And one last question, then I'll join back in the queue. You stated in the annual report that there is a project under planning which is much bigger size than our traditional sizes in Jaipur, okay? I wanted to understand how do -- what are the challenges which come up with the bigger launches, okay? And how important is it to launch such projects in bull markets? And what type of percentage of sales will we expect at the time of launch in this project?

Okay. So I guess the new project is much bigger.

Yes, that is what is written. And the previous comment I stated was also on Page #89.

Can you say which page number is this? I am glad you have gone to this depth that is there. Okay. So...

This is Page #47.

Can you tell me which question are we here?

Fifth.

Okay. The size of the -- that's what I was checking. Project size itself is not bigger. The unit sizes of the projects are bigger. So I was a little confused because we don't have -- and I just wanted to see if anything, so I read the annual report and just clarifying. We are launching a project with bigger units. This is Project One44 in Jaipur. This is the first time we are going into such big sizes of units. So it does change the target audience that we have into a little bit more upper-end customer as compared to our traditional. It's more expensive on a ticket-size basis than what we have usually done in Jaipur. So it does have its own challenges in terms of attracting consumers of that size, of that economic capability to our projects because we've not done that traditionally. So I think that's the big challenge over there. That said, I think we had a lot of time to prepare. I think one of the things, I think, for any challenge, I think overall, the most critical thing for a management team to do is a lot of preparation. We had a lot of time to do preparation while designing the project. We have had a lot of time to think about how to sell the project, and we are excited about its launch, which is in the next quarter. Let's see how that goes.

Okay. And such projects are important to be launched in bull market. Would that be the right thought? Because more easy to sale such projects. Or do you think over a period of time, such projects we also like to do in bear markets and so on? You think this is...

I don't know, Himanshu. You're right. This just coincided with bull markets right now. We were evaluating this for about 3, 4, 5 years. We were not getting appropriate land for it. The appropriate land came at this time and in its timed again at this. And I think at the end of the day, as a company, we will need to take, trying some new things no matter what the market, okay? So we've been -- we are actually otherwise a very sort of a conservative company which tries in very close to its boundaries. Like, we push our boundaries little by little, except when we probably when we did senior living, which was a big drag and changed into a different realm. But I think we need to keep pushing boundaries at different points of time. I think also it was more than the bull market. It was an evolution of the micro market that we are targeting. That micromarket, we had launched another project earlier, and we had not done a high-end units there because otherwise, the micromarket ecosystem in terms of the quality of schools, the quality of shopping, the quality of restaurants, the quality of roads, the quality of gyms, whatever you would like, the neighborhood was to at that point of time, five years ago not suitable for a higher-end project. I think that micromarket has evolved and now suitable for this kind of a project. So I don't think it's a bull market or a bear market thing for us. It's just finding a suitable location for it.

The next question is from the line of Piyush Goyal from India Capital.

My question is -- Varun and Vikashji, can you talk a little bit about the supply dynamics in your key markets, particularly Gurgaon and Jaipur maybe? Like how has it changed since last 1 or 2 years? Are you seeing a lot of new supply coming or it's still gradual?

So supply is coming. So the amount of supply, new launches last year vis-à-vis the year before that is substantially more, okay? So if I look at trailing 12 quarters of launches in Gurgaon and Jaipur and I compare it to trailing, let's say, 12 -- 4 quarters before that or 4 quarters before that, the quantum of launches is a lot more than what was earlier. That said, right now, the offtake is more than launches. So absolute quantities of unsold inventory is actually still reducing because offtake is still outpacing launches. From a launch and supply perspective, I'm more comfortable with the dynamics in Jaipur overall as compared to Gurgaon. Gurgaon, the increase in launches have been a lot faster than the increase in launches in Jaipur.

Okay. Understood. My second question is, do you have like anything to share on your experience working a little bit now with channel partners, which I think you started doing with Amarah and, I think, Ashiana Anmol also, which was something you didn't do earlier? So how has the experience been? Do you plan to work more with them and so on?

So we plan to work more with them, Piyush, in markets where we think the markets are complex. So I think a channel partner in Gurgaon and in Bhiwadi adds a lot of value to the -- Gurgaon, Bhiwadi and Pune adds a lot of value. So basically, NCR and Pune adds a lot of value to the consumer because the consumer has so many options to explore. He is not able to even shortlist which projects to see. There are so many. And he needs an adviser who tells him, look at only these 4, 5 projects and don't look at a whole host of projects. So I think that does make a difference in these 2 markets. In Jaipur or, let's say, in Jamshedpur or in senior living, it's not a very complex dynamic for the consumer. And therefore, I don't think working with channel partners there is either required or a value to either us or to the consumer in those 2 aspects of what we do.

Understood. That's helpful. My last question is that it seems like the senior living market is suddenly getting to a stage where it's having a critical scale in the country as a whole. I see like -- living in Pune, I see a lot of new advertisements around -- there was this India Today report also on senior living, which prominently featured Ashiana. So are you seeing that as well? Do you think that from 25%, 30% of your business, it could become 50% of your business in 3 to 5 years? Are you headed in that direction?

We are definitely headed in that direction. So in terms of our acquisitions, senior living is probably a much bigger pie of our acquisitions than earlier in the last, let's say -- over whatever we have acquired in the last, let's say, 36 months. And the proportion that senior living is forming of those acquisitions wouldn't have been true for the, let's say, 36 or 72 months prior to that time frame. We see senior living to become a much bigger pie of our business. And I think even though senior living, a lot of people are coming, I don't think people are committing to senior living the way we are committed to it in terms of the size and scale of the projects we are doing. So we find it an interesting space to be in.

Understood. Sorry, I can either come back to the question queue, or I can just add a very small question also. Does the pricing cycle or demand cycle in senior living also move a little bit in tandem with broader real estate cycle, which seems to be moving upwards in pricing? Or you think they operate independently of each other?

I think they operate independently of each other more. So there is some sync. It's not like that they're completely out of sync. But in the past, it has been less cyclical than the regular residential real estate sector, primarily because of lack of supply, okay? With so many people showing interest, will that change? I don't know. The current stage, I still think it will be less cyclical than the current business. So let's say, senior living prices in [indiscernible] NCR have not gone up in the same proportion that the regular residential prices have gone up. So Gurgaon residential prices would have doubled in the last 2 years. Senior living prices would have gone up by -- in Bhiwadi about 20%. But that said, senior living prices went up by 20% in the 7 years when Gurgaon land prices decreased by 50%. So it's a little less driven, but there is benchmarking, right, and there are some linkages.

The next question is from the line of [ Abhishek Singh ] from Deloitte.

Wishing you and your team a very happy Diwali, first of all. My first question being, sir, we have recently seen some news surfacing around where the cement companies have recently taken a price hike of around 10%-plus. So can you add some flavor on the building materials if you can see some kind of a pressure when you're going out for these materials? Like are you seeing some kind of margin pressure takeover there?

Happy Diwali to you as well, [ Abhishek ]. We know right now overall, we -- I think 18 months ago, we were seeing significant run-up in our input costs, and construction costs ramped up by about, let's say, 20%, 30% in a time frame of about 12 to 18 months. That run-up in cost has now stopped. I think overall increasing -- increase in construction costs now would generally mimic inflation. I don't see a very different increase in construction costs as compared to the general inflation in the quarter.

Got it. Got it. Got it, sir. Sir, second one is a very quick question. So in the last call, I think we said that land prices are soaring like anything. So are we planning to sign more JVs or profit-sharing models going forward or we'll still keep the same ratio as to what we were doing before, like doing most of -- I mean doing most of the development on lands, what we buy and less of the JVs?

So mostly, we do only -- we prefer to do revenue share transaction. So we'll continue to do mostly revenue share transactions. Even the transaction in Jaipur, we closed right now is revenue share. I think the last 4, 5 -- 5 transactions in Jaipur has been all revenue share transactions. Our transactions in Pune and Chennai are generally revenue share transactions earlier on and one profit share. We did an outright transaction in Chennai for senior living on the IFC platform. But I think going forward, I think mostly, I think we will do revenue share transactions in general or area share transactions. Some outright purchases, we will do depending on the market, particularly Gurgaon as a market seems where it's difficult to find JDA partners for revenue share. But outside of Gurgaon, I think mostly everywhere else, we are able to find JDA. So we'll continue to focus on that as much as we can.

So that being said that we will keep on treating land as a raw material and not like a -- just not like other companies where they keep on holding the lands, right? That is your...

So we have a fundamental view, which might -- other companies don't hold. My fundamental world view is the appreciation in land prices in long term is below the cost of capital. So therefore, one would like to hold as little land as one can to keep the operating business kicking up to improve returns. So given the approval environment, given our project life cycle, given the time it takes to do a deal, you keep a sense of how much inventory you can work with at any point of time, with really no intent to hold on to land from an appreciation perspective.

Got it, sir. Perfect. And the last question from my side. So currently, we are more of a premium brand with a very strong customer trust. But are we planning or doing something extra to migrate towards the luxury segment as well like developing more of villa projects or something else on those fronts?

We don't intend to go into the luxury segment. We are not -- that's not where our capability lies. We will play in this premium housing segment where we believe we have an edge competitively in our design, in our quality of construction, in our customer service and our maintenance. In all of that, we believe we add a lot of value there, and we want to continue to be in that segment.

Sure, sir. Sure, sir. And so just a very quick last question. Actually, I was going through some Twitter feeds, and I saw a few of the open problems like in looking few of the delivered projects, what we have. And somehow, I'm not sure a few of the places I have seen people from your team reaching out, but it looks like some [ issues ] are long due pending like for more than 2 years-or-so, like some kind of a society issues. So I just want to understand like these things, does the team get to know about it? Or there is like a social media kind of a team which you have dedicated and they kind of reach out to these people and address that?

So there is a social media team, which reaches out and responds on social media. There is a team which listens to the consumers as well and works on in the society. But some of these comments are part and parcel of the maintenance business. We also have a customer care team with a unified single e-mail address who also addresses consumer concerns. Some of these concerns have always been there in terms of when we do maintenance of a project, and I think we'll continue to be there. Social media has just provided another voice to the consumer, which is rightly so. They should have more voice than they usually have. But some of the problems are also such that we can't solve them on ground because at the end of the day, some problems, you can -- if you can resolve -- you cannot make every consumer happy in a society completely. But that said, I think we are endeavoring to further improve how our -- the satisfaction levels of our consumer base in general. I think we are working to improve that as we go along all the time. And we measure that through Net Promoter Score as well within the company. And yes, so that's about it.

The next question is from the line of V.P. Rajesh from Banyan Capital.

So Varun, one question was regarding Pune. If you can just comment about what you are seeing in the senior living side over there and how confident you are to think or at least indicate that it is becoming a core market for us?

Where?

Senior living in Pune, Mumbai highway.

So one thing I want to correct. We use Pune -- actually it's Bombay-Pune both. And Talegaon has been chosen because it services Bombay as well. So I'm very happy with the quality of the kind of response we've gotten at launch in our first project there. And I think it will -- I'm very confident that will become a core senior living market for us.

Excellent. My second question is on the inflation side. So if you look at from the last peak, whatever you consider it to be, whether 2014, '15, '16, from there on, if you see in your -- the projects that you have sold, has the price increases per square foot caught up with the cost inflation in the last, whatever, 7, 8 years? Any sense on that?

I would say actually, the peak was 2013, so about a 10-year peak. In 10 years, probably prices in most micromarkets would have gone up by 50% to 70% of our 2013 peak, or general at Ashiana, we were selling in 2015 at INR 3,000. We are now at about INR 5,500. So we are up by 80%, but we have a change in mix because we moved -- Gurgaon is a much smaller proportion. It has moved, and pricing power in senior living has gone up. And I would say 10 years on an inflation index would have doubled if I look at it. So it's mostly, we're making the same thing, maybe not double. If I look at my construction cost as a proportion of my selling price, they remain in a very similar kind of range right now.

So there is no room for more pricing hikes in the near future, which can catch up to the cost? Is that what you're trying to say or there is?

Yes. Yes, there is, but all we would just want to be careful is that the market doesn't start outpricing the affordability of the consumer. So I think a lot of the pricing will depend on what kind of a gentry gets attracted to a particular location or a particular project. So I would just like add on a little bit like in Gurgaon, we've seen incredible price increases in New Gurgaon. So, let's say, where our Ashiana Amarah project is, prices in that neighborhood have gone probably 2x to 3x of what prices were about 5 years ago, okay? And that's not just catching up to inflation. I think what has happened, the gentry of Gurgaon, which was unwilling to come to New Gurgaon earlier, now suddenly becomes willing to come to that location. So the social infrastructure, so again, the kind of restaurants that are there, the kind of shops that are available, the kind of schools that are available, the kind of external environment feel that is there has become conducive for a gentry, which was unwilling to move. So now suddenly, this gentry moves, this gentry is willing to pay more, is able to pay more and is demanding better products in return, okay? I think that needs to happen for prices to increase in any real estate market substantially. So for a micromarket, that should apply. For a project, that should apply. So we are seeing that in senior living. The kind of socioeconomic gentry that was coming to senior living and our first project in Bhiwadi 20 years ago, and the kind of senior living -- the cliental gentry that is coming to my project now in Bhiwadi 20 years later is a different gentry altogether. So in this 20 years, probably prices would have gone up on a per square -- or inflation index maybe 4x, but our sale prices have probably gone up 6x, 7x because there has been a delta of the gentry also that's kicked in. I think that's a very important piece for price increases to happen as and when we go along. And I don't mean you need to go from premium to luxury. You just need a certain kind of gentry in the -- because we are -- socioeconomic strata is very wide. In that one particular strata, you're getting the middle level of that strata, the top level of that strata or the bottom is a very important piece. So if you're transcending that, things change significantly. And we've seen this across projects, where significant price increases happened when this has kicked in.

Understood. And my last question is on the ROE journey. So if you just comment on where you are in terms of getting up to 15%. How are you feeling about it? And what it looks like after this first half?

No, so on an economic basis, I think we're well on track to now cross 15% this year. So on an economic ROE basis, I think we will be in high teens, hopefully this year. And the way things are progressing, I think we -- 15%-plus ROE on economic basis seems sustainable for the near future, yes, if not higher. Actually, probably higher. But yes, it looks sustainable going forward.

[Operator Instructions] The next question is from the line of [ Shivam ], who is an individual investor.

I would like to know what are the...

Hi, [ Shivam ], I am not able to understand you. Can you be a little louder, please?

Sure, sir. Hello? Now am I audible?

Shivam, sir, is it possible for you to use handset in case if you are using loudspeaker.

Yes, yes, I'm already on handset.

Yes. Now you're audible. Please go ahead.

So can you just guide on the presales target for the FY '24 and FY '25, according to like you've told about the launches in the first part of the call?

Okay. So -- yes, so this year FY '24, we have a INR 1,500 crores presales target. We are right now on track to get those. I think a large dependence is on the Phase 3 launch of Ashiana Amarah. We are just on the -- so Phase 1 and 2 went very well, but we decided to make some slight changes in the plans to capture some customer feedback that we got. We are in the final leg of the plan approval stage and then RERA, so we are hoping to get the launch in this -- in the fourth quarter. If we get that, I think I'm very confident that we'll hit the INR 1,500 crore number. And if we don't, I think we'll hit probably about INR 1,250 crores, INR 1,300 crore number this year. So I think overall this year, INR 1,500 crores, right now, we seem to be on track. Next year, we haven't done the numbers yet, but I hope that it should be higher than INR 1,500 crores for sure. We'll have more projects to sell, but that number will get a sense of probably in the fourth quarter this year when we go ahead and plan next year.

And sir, any number that you have done on the P&L that will be reflected in the revenue? And -- because you've given a list of deliveries that are mentioned in the next fiscal year, and that's a lot of deliveries in the presentation.

Yes. So the -- so let's say, if I exclude FY '24, FY '24, we are looking at about 26 lakh square foot of deliveries, and we seem to be mostly on track for them. We have handed over substantially and completed. The next 3 years, I think we are looking at about -- between FY '25 to FY '27, cumulatively put together, we will be looking at about 50, 55 lakh square foot, probably 50 lakh square foot of deliveries. There has been some -- a little bit of a typo error here in FY '27. It's about 13-something instead of 9.72 lakh square foot because we made a totaling error in all the projects there. So we have about 45 lakh, 46 lakh square foot planned between FY '25 and '27 already. We plan to launch more projects in the next quarter and in this quarter, Q3 and Q4, which we should deliver by FY '27. So -- and my expectations are that this 50 lakh to 55 lakh square foot would translate anywhere between INR 2,600 crores, INR 2,700 crores to INR 3,000 crores of revenue in that 3 years block. We have given year-wise delivery expectations but in our business we've seen like last year also, one quarter movement here or there is very, very much possible. If building is ready but OC does not come in, maybe -- and then 3, 4 months delay can move it from 1 year to the other. And sometimes, you can get it a couple of months earlier and move you from 1 year to the year before. So let's say, the 3 years total, we would look at about -- I'm quite hopeful to get to about INR 3,000 crores of revenues in FY '25 to '27 put together.

The next question is from the line of [ Harsh Beria ], who's an individual investor.

My question -- my next question is about the kid-centric projects. I think Ashiana Umang was the first one where we didn't retrofit and we designed from scratch, and Ashiana Amarah was another successful one where we designed from scratch. Can you talk more about how our product offering is getting accepted in this market? And are we at a stage where we are able to get a premium because of our offerings?

So [ Harsh ], I'll just correct you, Amarah the first one we have designed from scratch. Offtake in this market is good. Amarah has sold well. Umang is going well. We are planning 2 more kid-centric projects, 1 in Gurgaon, 1 in Jaipur to be launched. We are excited about the future. But on the premium pricing, it's a little early to say as to where we are. I think the first signs of it in Ashiana Umang are evident now where we are increasing prices. We are seeing consumers choose Umang as compared to a couple of our superior-located projects even though they had buying capacity to buy those superior-located projects because they preferred the kid-centric amenities and feel that they are giving. And that differentiator is kicking in. But I think it will take a lot more sustained work from us before that real pricing power kicks in, the kind we are seeing in senior living.

Great. And my last question is about our longer-term focus. So we have been able to create a differentiated offering in senior level. And I think we may want to maintain about a 30% or 35% profit share coming from this, which hopefully will not depend on real estate cycles. Have we tried to make another product of similar scale which -- where the offerings are not completely related to real estate cycles but are more annuity in nature?

So it's not annuity where senior living is differentiated. I don't think we're looking for annuity kind of business, but we are -- we look for things which are differentiated. Unfortunately, kid-centric homes has not kicked in that differentiation yet, okay? But that's an attempt also in that direction where we differentiate the way from the market, whereby -- and our view is that the real estate's dynamics are supply cycle-driven dynamics and not demand side-driven dynamics. That's the worldview we have. So senior living is not as cyclical because it's not as heavily supplied. It's not as easy to get into. It's not like we woke up one day, we have a piece of land, and we have chosen to become residential real estate developers, which a lot of people do and start off with the project. Senior living requires a little bit more knowledge. It requires a different kind of capability. We also believe senior living projects need to be larger in scale, maintenance capabilities, which create sort of a mode if that's the right word to use and protect it from excess supply coming into the business, okay? I think that's the larger part of it. And I hope senior living not just becomes 30%, 35% of our profit share, goes closer to 50% and, therefore, provides a lot more stability to the company. And I think that's the intent and that's the direction we are going in by deploying more and more funds and more and more resources towards senior living in the future.

Okay. Apart from experience, is there anything else that differentiates developers who are into senior living development?

Yes. The offerings are different. So the offerings in terms of care, the offerings in terms of services, the offerings in terms of size, in terms of amenities. So Ashiana's projects are typically bigger, have more amenities because we are bigger, we can afford to have more amenities. We are geared towards more active living. There are developers who focus on more assisted living. We are geared towards companionship and activities and also a lot of open spaces, a lot of greenery. There are developers who are focused more on care and more -- and the services that will make you a little bit more less -- you have to do less yourself in that way. So different companies have different offerings. Some are offering 2 towers in a large development. Some are doing more closer to the city development. So there are different kinds of developments. There are some people who are doing work in, let's say, Coimbatore and targeting the same Chennai clientele that we have, and they have weather as an offering. We have a closer proximity to Chennai as an offering. So there are different kinds of offerings available overall in the market.

And this premium that we realize is only when we sell the project and not over the life cycle of the project. So the services that offered to the community, we do not charge a profit on that. Is that understanding correct?

So we do charge a profit on over and above what we cost out in terms of direct costs. But effectively, the maintenance, we are on the net basis after other cost of maintenance or corporate maintenance costs. Across a portfolio of projects, we are effectively in a non-profit, no loss area -- or slight loses actually as a maintenance cost.

As there are no further questions, I would now like to hand the conference over to the management for closing comments.

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 the materials we have 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, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.