Ashiana Housing Limited (523716) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Ashiana Housing Limited Q3 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. Thank you, and over to you, sir.

Thanks, Viren. Welcome, everyone, and thanks for joining this Q3 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'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 represents an outlook for the future, which may be constituted as a forward-looking statement, must be viewed in convention with uncertainties and risks that they face. These uncertainties and risks are included, but not limited to what we have mentioned in the prospectus file 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.

Thank you, Binay. Good afternoon, everyone. Hope all of you and your families are keeping healthy. I welcome you to discuss the performance of the third quarter of FY '24 for Ashiana Housing Limited. Thank you for joining us today. Area booked for Q3 FY '24 was at 3.35 lakhs square feet as compared to 5.92 lakhs square feet in Q2 FY '24 and 9.03 lakhs square feet in the third quarter of the previous year. Value of area booked recorded at INR 173.89 crores in the third quarter vis-a-vis INR 325.6 crores in the previous quarter. In the third quarter of the current year, we had limited inventory to sell in Chennai and Gurugram and did not launch any new project in the quarter. We expect new launches in Q4 and as a result, improvement in value of area booked. Second phase of Ashiana Malhar Pune and Tarang Phase 5 Bhiwadi launched in November '23. Handover commenced in the following two projects, Phase 5 of Ashiana Umang in Jaipur and Phase 4 of Ashiana Nirmay in Bhiwadi. Area constructed at 4.77 lakhs square feet in Q3 FY '24 versus 4.59 lakhs square feet in Q2 FY '24. Total revenue reported at INR 189.25 crores in the third quarter vis-a-vis INR 351.02 crores in the previous quarter. PAT increased to INR 27.8 crores in Q3 versus INR 27.35 crores in Q2. Improvement in PAT despite lower reported revenue due to, a, change in mix of projects with higher margin projects being delivered in Q3, and b, sale of Marine Plaza Project in Jamshedpur, which was a litigated noncore assets, the sale happened in Q2 with a loss at gross margin level. Total comprehensive income also improved to INR 28.08 crores in Q3 FY '24 from INR 27.52 crores in Q2 FY '24. Pretax operating cash flows at INR 53.83 crores in the third quarter vis-a-vis INR 75.29 crores in the previous quarter. For the 9 months of the current financial year, pretax operating cash flows were at INR 212.27 crores versus INR 84.85 crores for the full year FY '23. On this note, I would like to conclude my remarks. We will now be happy to discuss any questions or suggestions that you may have.

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

My question is twofold. One is how are you looking at next 2, 3 years in terms of -- both in terms of area of sales booked and in terms of the construction, which we are looking to do? And which cities would it be? Are we going forward to look at more at places like Gurgaon or traditional areas which we are strong in like Jamshedpur, Jaipur, etc?

Pravin, right?

Yes.

Pravin, so I would say according to me, the future next 2, 3 years look bright, we are launching more projects. So we have a project to launch in Gurgaon, a new phase is to launch in Gurgaon. We have 3 projects to launch in Jaipur, 2 in Chennai. So we have a few projects coming up all over the place. I would say Gurgaon will -- in terms of value of bookings will become a much larger play within the company because of the sheer sales price that is there as compared to rest of the stock that we have. But that said, we have also seen improvement in sales prices across the board. We expect senior living to start contributing more. So we will have more contributions from Chennai where we are launching two projects, we expect low contributions from Pune as well, more from the senior living in Bhiwadi. So I would say -- and as I said, Jaipur, we are also launching projects. I think, secularly, we will see good sales, good construction to continue going forward. So I think that will be across the board right now. And I see the next 2, 3 years to be quite bright.

Would it be fair to estimate a 15%, 20% type of growth in the value of area booked per annum...

Yes. So I would just say that given lumpy nature of businesses, we might have a very large growth in one year and then maybe a little less in the next year or maybe a little degrowth also in a year. So I wouldn't like to do a very straightforward 15%, 20% increases. As you can see that we have had a great year overall this year right now, but we had a bad third quarter because we didn't have enough launches. So it could be a little bit lumpy here or there, but I think overall, from a 3-, 4-year view that kind of an annualized growth rate, I think we would be fair to assume or at least that's what I would expect fairly to do.

That's great. So one other question is, in the previous calls, you mentioned that we had certain low-margin projects which you were executing. So are there still some projects which you are still to hand over on those lower-margin projects or we are now...

Yes. Yes. Ashiana Anmol Phase 2, 3 and Ashiana Malhar as a whole project. So those two projects remain low margin. And I would say even Ashiana Aditya Phase 2, which is to be handed over this quarter and Amantran Phase 2 have some low-margin projects. But overall, we expect the margin -- gross margin expansion, and particularly from what we have sold this year and what we expect to sell going forward, we will see improving margins. So lower margin projects are the ones I listed out there, more or less.

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

Sir, I want to ask that what would be the amount of launches that you'll be doing in Q4 and in FY '25?

In Q4, we are looking to launch three fresh projects, Ashiana Nitara in Jaipur, where phase 1 is villas and which we've launched 144 in Jaipur which we plan to launch in a week.

Yes. So what would be the amount?

Yes. So these projects put together, the 6 sizes might be bigger. The projects together would be about 24 lakhs, 25 lakhs square foot put together. Of the 24 lakh, 25 lakh square foot, I think we will launch -- of the 25 lakh square foot, we would launch about 6-odd lakh square foot -- about 5-odd lakh square foot -- 5 to 6 lakh square foot within this quarter. There is Ashiana Amarah phase 3, which is a 3.77 square foot phase. And that phase we have applied for RERA. So in case we get RERA within the next, let's say, a couple of weeks, then we launch in this quarter. Otherwise, it will slip into the next financial year. In the next financial year, we have 2 -- 3 projects tunning total about 30 lakh square foot to be launched. And we will not launch the whole thing, we will launch like a few phases of that projects in FY '25 and existing phases of certain projects. We haven't planned out exactly how much we will launch in the next year yet. We will do that planning probably in March. So when you have a May call, we can give you a sense of where we will be launching, how much we will be launching in the next financial year exactly.

Okay. And sir, in your Slide #24, you have given the future project summary of 80 lakh saleable square feet and the land available for future development. So this comes out to be a total of 130 lakh square feet, if I add both or all the future projects include the land available for future development?

No, they are mutually exclusive.

Okay. They -- both of them are different. So can you tell any monetize -- any ballpark figure that how much value of sales can we get from future projects and from the land available for future development?

Okay. So in land available for future development, there is a 30 lakh square foot project called Milakpur, where it's under some sort of litigation. And I would -- excluding that, we have about 1 crore square foot. And right now, I would say we can -- of the portfolio that we can have, can average INR 6,500 square foot according to me, so about INR 6,500 crores would be over that INR 1 crore square foot. And we would -- and we have got 15 lakh, 16 lakh square foot to sell between ongoing projects and completed unsold inventory as well, so that would be probably another INR 700 crores, INR 800 crores. So that's roughly the...

Around INR 7,200 crores over a period of how many years?

I would say, about the overall life cycle, probably 5 years. From now, maybe 5, maybe 6. Some projects which shall finish within 3 as well, some will probably finish a little earlier. The last-odd project should be probably 6 years' time now.

Okay. And will you be able to meet your guidance of INR 1,500 crores of presales in this fiscal year?

So it's dependent on if we get the RERA for Ashiana Amarah in Gurgaon. If we get that, then we will cross the INR 1,500 crore number. If we don't get RERA and that flips into the next quarter, then we'll probably do about INR 1,250 crores to INR 1,300 crores this year.

And sir, how much PAT there and sir, how much revenue do you see in the top line being reflected in the next fiscal year as your some projects are being completed and delivered?

So that is provided to a large extent in the presentation. We have given a delivery schedule and the value of the bookings that has happened in the delivery schedule. I would urge you to look at the presentation over there, Shivam. That information is provided.

Okay. Any ballpark figure that you can give me for FY '25 of the P&L?

I wouldn't like to give a profit estimation, if that's okay. So the revenue estimation is provided, the value of area booked and the delivery schedule is provided in the presentation. I would urge you to provide a -- put a margin there. And as I said earlier, I would expect margin profiles to improve now. And I think, hopefully, GP margins of 30% should apply next year.

[Operator Instructions] The next question is from the line of [ Shrey ]. Hello? As there is no response from the participant, I would like to take the next. The next question is from the line of [ Prathibha Doraiswamy ], an individual investor.

Congratulations on the results. My question was on the senior living space. I think Ashiana has been in this space for a few years now, and we've also now, I think, doing it in Pune, right. We were in Chennai. Now we've gone to Pune. I just wanted to understand how you're seeing the demand? Do you see demand picking up now? I mean, do you see it picking up over the last few years? Do you see that the demand is picking up? And how do you see the demand in Pune right now? That's my first question. And my second question was, is there plans to move into other cities as well with senior living?

So we see good demand for senior living and I would see improving demand for senior living as we move forward. Because I think two things is happening: one, the concept is getting more established and people are more informed, educated and aware of the concept and the services being provided; and second, I think we are seeing more financially independent retirees in India is what we were seeing a few years ago. I think both of those are playing well into demand. If you were asking specifically for Pune, yes, we're seeing good. And I would say it's just not Pune, actually it's the location is in Talegaon, which is between Bombay and Pune, and we consider that to be actually servicing both markets. So we're getting customers from Mumbai and as well Pune and demands continue, and we see good progress there. We are actively looking at Bangalore as well. So hopefully, we'll be able to get something going there in the next couple of years. Getting a project going there takes a while. We haven't even closed the transaction yet. So -- but we are actively looking for land transactions in Bangalore, at this moment of time for senior livings.

The next question is from the line of [ Himanshu Dugar from SafeGainz ].

Two questions for me. First question was, could you just talk about the pricing trends in Jaipur and Chennai. How you are seeing that on a year-over-year or a 2, 3 years period like what do you expect going ahead? And secondly, in that, could you also talk about gross margins? Because when I see some of the JVs are now coming at, say, 80% profit share, is that -- does that indicate the gross margins are expected to go ahead in some of these projects?

So I couldn't hear your questions clearly. I will repeat them and you can confirm whether I got them right. So one, you asked that how do I see pricing in Chennai and in Jaipur? And second, how do we see margins going forward? And you were talking about the transaction structures that we have done. Now we haven't done a profit share transaction with anyone. We don't -- we have done revenue share transactions. So I'll clarify both. Is my understanding of the questions correct?

And just on the margin part, the question was when you're doing this revenue share up 80%, that is adjusting for the cost, right -- for the land cost, so would that imply that your gross margins are higher in these projects, like in Jaipur, Nitara?

Okay. All right. So we gave revenue share to the landlords towards the land, okay? So depending on the location, depending on the sale price and the construction cost and the revenue share given, different transactions have different margin profiles, okay? Some projects have it a little better. Some projects don't have it as well. But overall, as I said, projects that have been signed off in the last 2, 3 years can display good margins because sale prices are higher than what we had underwritten the projects at and therefore, margin profiles have improved across these projects. And interlinked in Chennai and Jaipur, both places we see better sales pricing as compared to other -- as compared to before. New projects are getting launched at higher prices than what we had underwritten the projects at. And we've been able to increase prices over the last 24-odd-months. So pricing remains good there.

Could you quantify like what kind of price realization [indiscernible]?

It's difficult to say because a lot of the increase has happened in newer projects as compared to what we thought we would launch the project at. But let's say, projects that we took up -- signed off two years ago, we're launching at prices 20% to 30% higher than what we thought would be two years ago. So let's say, 30% over a 2-year period could be something what we are doing right now.

Got it. Got it. Last question for me was overall structurally or like a future strategic view is what my question is. So now that you're kind of doing 20 lakh per feet on an annual basis and I think your previous peak was around 23 lakh back in FY '15-'16, do you see yourself going towards that 30 lakh and for that, do you see any headwinds or some strategic things that you're doing, because the land bank kind of continues at that INR 1 crore number. But are you seeing a faster churn to, say, like that inventory turnover goes up to, say, 4x or something like that, higher?

Yes. So we are seeing a higher churn, and we want to operate at a lower inventory, if you can get a higher throughput. We are looking to get to that 30 lakh square foot number. That's definitely something we are aspiring to do and working towards getting there. The only headwind that I see right now, if I see any, are increasing land prices. And those can become a barrier to getting more and more projects. But right now, from a 30 lakh square foot perspective, we have enough stock. We have about [ 1 crore and 16 crore ] square foot between land bank and future development if I exclude Milakpur. And we have about 16-odd lakh square foot in between ongoing projects to sell and in a completed stock from a sales perspective. You will have a similar area to construct as well. So 30 lakh square foot annually right now, we can do with the kind of inventory that we have. Challenges would be replacing the inventory and growing the inventory to even grow faster. And in that situation, the land costs right now in various markets are a little bit of a concern.

Just a follow-up on this question. If you could just touch upon the pipeline on the land acquisition.

So on the land acquisition front, we have active term sheets in a few locations. We have -- we are looking to acquire an actively -- in acquisition mode to senior living in Bangalore, as we spoke. We are looking at closer to Bombay as well on the Bombay-Puna access, one more senior living project closer to Bombay. We are in talks for lands in Jaipur, in Jamshedpur, in Gurgaon. So we are in conversations in a lot of places. And we have some active term sheets also. But nothing is done till it's done and dusted. So that's the progress right now.

The next question is from the line of Himanshu Upadhyay from BugleRock PMS.

I have this question on this HSIIDC land, where the payments were pending some. How is the payment and do we think this land closure will happen in the next 3 to 6 months now? Or do you think may take time? What is the progress on that?

Yes, Himanshu, we have time till June to make the payment, and we will close the payments before that. So in the next 3, 4 months, we should conclude all payments for HSIIDC sector-80 land.

As Mr. Himanshu has left the queue, I would like to take the next question. The next question is from the line of [ Pravin Agarwal ], an individual investor.

Just on the land question. So just wanted to get some color from you in terms of when we are underwriting a project now versus, say, 2, 3 years ago, does the unit economics still hold? Like I understand, let's take Gurgaon, for example. I understand between COVID and now, prices have moved up by 75%-80% on a land business. So are there the actual end prices of flats also moved in tandem as in consumer rate with that? So if you were to buy a plat, land parcel today, our returns will be similar to what it was when we were underwriting deposits 6 years ago.

So Pravin, that's what, some places, they have gone up -- land prices have gone out of whack as compared to apartment prices, and they don't make sense. In Gurgaon, that's my view. There have been some recent transactions where land prices have been transacted at prices that make me very uncomfortable given the sale price of apartments that I expect in those locations. So finding land today is harder than where unit economics make sense than before. So therefore, we'll have to work a little harder. So the land acquisition team will have to work harder to be able to find transactions where we can see earnings. And -- but different geographical markets, different micro markets are behaving differently at this point of time. So I guess our job will be to find those particular spots where it's still makes sense to do work.

And we will be very disciplined in terms of our unit economics in terms of whenever we are looking to buy a project like that point in time...

Okay. So we want to be disciplined. We want to be reasonably conservative. But sometimes, we might also go off track a little bit. I can't guarantee about the future completely. But the intent is to be disciplined and reasonably conservative in our assumptions.

The next question is from the line of Shrey.

[Foreign Language] So are we planning to do some aggressive projects, first of all?

I couldn't get your question completely. Can I request you to speak a little louder please and repeat the question, please?

Yes. Basically, I want to know, we are issuing some debentures and making some amendments in AOA and making some private issues. So are we planning to do some aggressive projects that do require a capital cost of induction?

So one, we have a large payment coming up for sector-80 in Gurgaon. So we have to make a payment for something that we have gotten into a transaction about 8, 10 months ago. So some proceeds will be utilized for that. And second, we want to have money available to be able to do transactions. I think that's the secondary aspect of it. So we don't want to be very aggressive on pricing. But that said, have the funds available to do transactions at this point. If the unit economics of a location makes sense to us and the line makes sense to us, we are looking at doing transaction. And it can be outright. It could be joint venture. It could be anything as long as the unit economics makes sense.

Okay. As in past conversations, you recorded that you are going to update some projects in Bombay, so what category of project will it be? It should be kids-centric, premium or elite?

In Panvel, we will be doing senior living projects around Bombay. We are looking for senior living only.

Okay. Third thing is, as we have a mole, we are planning some projects for some special kids, and we are also -- at present we are working with that. Are we planning that on with other kids-centric homes?

I am not able to get your questions completely. If you're on a speaker, can I ask you to be on a headset -- handset?

Basically, I think that's usually network. I will call back.

I think what he was asking that they are doing some projects related to specially-abled kids. In our kids-centric piece, do we have any such kind of related plan? If I take the question correctly. Shrey, if you can confirm. Or maybe we can move to the next question.

Yes. So yes, so if that question is there, we haven't made any specific plans for specially-abled children.

[Operator Instructions] The next question is from the line of [ Rajiv Agrawal ] from Sterling Capital.

I just want to know that what are the current realizations in your senior living projects and what are the realizations in premium homes and kid-centric homes in various markets right now? And my second question is, do whatever presales we are doing, we have done in FY '24, when can we expect the handovers to be completed?

Okay. So on the second -- on handovers, we provide a complete handing over schedule in our investor presentation along with phases and what yours and the value of the stock that's booked there, what's the unsold stock in terms of square feet. And I would urge you to look at that, because my memories would be weaker and that would be better. It's there, and you can look at that. From a price point perspective, our senior living projects are ranging anywhere between INR 5,000 to about INR 7,000 square foot depending on the micro market and the unit type that we pick, maybe INR 4,700, INR 4,800 onwards and up to INR 7,000 a square foot at this point in time. Premium homes, again, depending on the micro market is operating anywhere between INR 3,500 to INR 7,000 square foot again. And kid-centric homes are operating around -- if I exclude Ashiana Town in Bhiwadi, which is a completed project, between INR 4,500 square foot now. And currently, like last probably would have been INR 8,000 a square foot. But what we plan to launch in Amarah phase 3 will be substantially higher than this. So I would expect kid-centric homes to go really higher because the virtue of it being in Gurgaon, and pricing changing in Gurgaon substantially.

The next question is from the line of [ Rishi Singhal ], an individual investor.

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language] I would say north of 40% increase [indiscernible].

[Foreign Language]

[Foreign Language] in general, not everywhere, but in general, we should have margin expansion. [Foreign Language].

Get your point. Long-term [Foreign Language], can we do [Foreign Language] 10% additional volume, with a roughly 10% additional price [Foreign Language] price increase so that we can easily reach 20%. Is this possible?

[Foreign Language] I think it will be different a little bit year-on-year in that. [Foreign Language] going forward, I would say we should -- we are experiencing -- we expect to see good growth over the next 2, 3 years.

Okay. [Foreign Language] it is still healthy overall [Foreign Language].

[Foreign Language] It's not doing as well as everywhere else. [Foreign Language]

[Foreign Language].

[Foreign Language] But generally, [Foreign Language] is what I would expect, given cycles in real estate is supply-driven. [Foreign Language] Given the lack of liquidity still in the market, [Foreign Language]. In general, supply will continue to be favorable for at least 1, 1.5 years. And after that, we can assess again. But [Foreign Language] on blueprint, supply will be favorable. And delivered supply, I think, will remain favorable for a longer time because [Foreign Language] possession is not heavily expected in any micro market in general.

Next [Foreign Language] overall balance sheet level [Foreign Language], if you get the opportunities, debt-equity ratio, you are willing to go.

0.3, 0.4, if I exclude capital provided by IFC, because it's more project-level capital, which are linked to project cash flows and project returns, not defined repayment obligations. Defined repayment obligation debt, we will be comfortable maybe 0.3, 0.35 kind of thing.

Not something like 1:1 or something like that?

[Foreign Language]

Okay. Okay. [Foreign Language] senior living [Foreign Language], the sale price are definitely I think better than a normal kid-centric or whatever. [Foreign Language].

[Foreign Language]

[Operator Instructions] The next question is from the line of Shrey.

I hope my voice is now clear, first of all.

Yes.

[Foreign Language] It will be premium category or kids-centric or something like that?

[Foreign Language].

Okay. Second is [Foreign Language] that includes some special category of kids also. Are we going to communicate or proceed that in further projects over in India for kid-centric homes or some other sectors?

[Foreign Language].

Okay. Are we going to expand that towards Chennai and other regions?

Not at this intent [Foreign Language].

Okay. In respect of elite homes, we are launching it in Jaipur 144, are we planning to extend it over India, some other regions...

Elite homes are [Foreign Language] better specs, more luxury-oriented units there. [Foreign Language] we are very hopeful for it to be a very good success. And once that happens, [Foreign Language].

Okay. So like in Gurgaon, as per the prices are rising, can we expect it to be in near future with some acquisitions?

[Foreign Language].

And in respect of some maintenance margins, are we expecting to rise? Because as far as I see, these are very limited over a period of time with -- on regular consistency of limited percentage hikes. Are we expecting to have some increase so that we can communicate it further?

[Foreign Language].

[Foreign Language].

Maintenance charges, we are going to do hikes what we generally do year-on-year [Foreign Language] depending on inflation and budget, but nothing that will move the needle in terms of profitability at all or it will continue to be this very low profit, nearly no profit, no loss kind of a business.

That was the last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Thank 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'd like to conclude the call. A lot of the material 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.

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