Ashiana Housing Limited (523716) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Ashiana Housing Limited Q4 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 LLP. Thank you, and over to you, sir.

Thanks, Seema. Welcome, everyone, and thanks for joining this Q4 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 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 at 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.

Thank you, Binay. Good afternoon, everyone. I hope all of you and your families are keeping healthy. I welcome you to discuss the performance of the fourth quarter and the year ended March '24 for Ashiana Housing. Thank you for joining us today. On operations, this year saw the launch of 10 projects, 4 greenfield projects and 6 new phases of existing projects to the tune of 23.19 lakhs square foot. Ashiana, [Amarah second centric] project in Gurugram, which was launched in October '22 last year, launched its 2 new phases in April '23 and March '24, respectively. Both of them were fully booked on launch. A senior living project was launched in Talegaon Pune, by the name Ashiana Amodh in July '23, and another senior living project was launched in Chennai, name Ashiana Vatsalya in March '24. Two new projects launched in Jaipur, Ashiana Nitara and One44 and both in [Indiscernible] housing segment. Other projects where new phases were launched included Phase 2 Ashiana Prakriti, Jamshedpur; Phase 5 of Ashiana Shubham, Chennai; Phase 5 of Ashiana Tarang Bhiwadi and Phase 2 of Ashiana Malhar, Pune. We achieved the sales value of INR 1,798.22 crores for the financial year 2023-'24, which is highest ever. The same was INR 1,313.43 crores in FY '23. Sales price improved to INR 6,811 for the year on a per square feet basis vis-a-vis INR 5,080 per square feet in the previous year, an increase of 34% on a year-on-year basis. This was driven by increasing prices across projects and also changing mix towards higher-priced projects. In the last quarter, 10.6 lakh square feet of area were booked compared to 3.35 lakhs square foot in Q3 FY '24. In Q4, bookings were driven by Ashiana Amarah phase3, 144 in Jaipur and Vatsalya in Chennai. We handed over 24.78 lakh square feet in FY '24 vis-a-vis 10.51 lakhs square foot in FY '23. Total revenue more than doubled to INR 966.52 crores in FY '24 versus INR 425.19 crore in FY '23 due to higher deliveries and also due to mix towards higher-priced projects. Total comprehensive income, that is TCI, also recorded at INR 84.24 crores in FY '24 versus INR 28.78 crores in FY '23. Handovers during their included Jaipur Ashiana Daksh Phase 2 and 3, Amantaran Phase 1 and 2 and Umang Phase 5, all in Jaipur. Phase 3 of Tarang and Nirmay Phase 4 in Bhiwadi, Aditya Phase 1 and 2 in Jamshedpur and Dwarka Phase 4 in Jodhpur. For the last quarter, total revenue reported was INR 296.96 crores vis-a-vis INR 189.25 crores in the previous quarter. TCI declined to INR 17.45 crores vis-a-vis INR 28.08 crores in the previous quarter. During the year, we recorded pretax operating cash flows of INR 304.46 crores, which was the highest ever. Equivalent area constructed was 20.68 lakh square foot in FY '24 vis-a-vis INR 16.73 lakhs square foot in FY '23. Quarterly equivalent area constructed was at 6.97 lakh square feet versus 4.77 lakh square feet in the previous quarter, and the same was 5.08 lakh square feet in Q4 FY '23. In FY '24, we successfully completed our maiden buyback of INR 55 crores. 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 take our first question from the line of Lavanya Sharma, an individual investor.

First of all, congratulations on the great numbers, everything looks really good and positive. I have 2 questions. Can you just shed some light on the decreased margin. That is one. And the second thing is, last year, you performed buyback. And this year, you've announced dividend. So why are you not going for buyback option again?

So Lavanya, 2 things. The buyback options are expensive to execute if the amount is small because there are a lot of fixed costs involved in buyback. So from a distribution perspective, buybacks make sense when we are willing to distribute a larger amount of cash. At this point of time, we would like to have some more cash with the company as we are looking at a few more acquisitions going forward, and we would like to have that flexibility. So the amount of dividend -- dividend was given at that quantum of remark. Buybacks will not happen every year. We hope that we do buybacks every 3 to 5 years, depending on the cash flow availability of the company. And now the first question of margins. This is with respect to -- I'm getting the quarterly margins and not annual margins because the annual margins as compared to last year are very similar. So in terms -- or actually better. In terms of quarterly margins, our margins vary depending on which project is getting delivered. So let's say in Q3, we have very healthy margins because we had the delivery of Ashiana Nirmay senior living projects in Bhiwadi, which has enjoyed good margins, historical land cost, premium pricing for senior living as compared to -- this year's deliveries we had this quarter a large quantum of delivery came from Ashiana Aditya in Jamshedpur and a little bit from Ashiana Dwarka in Jodhpur, if I'm correct. Ashiana Aditya and Ashiana Amantaran, all the 3 of them are joint venture projects, and we have done well on return on capital employed. But our margins are relatively less there because the land costs are heavier. And also in Aditya and Amantaran, we had cost overruns a little bit more than expected. So these things there will be variation in quarter-on-quarter margins in our company because different projects enjoy different margins. So I would urge to look at annual margins rather than quarterly numbers for us. They will be very non-representative [of the company].

[Operator Instructions] The next question is from the line of Rohit from ithought PMS.

So I have 3 questions. So one is, if I go to your Slide #17, you've given the year-wise delivery for FY '25, '26 and '27. So I just want to understand, I mean, you've talked in the past that some of the older projects the margins were not that great. So can you talk about in these 3 years how the margin would shape up on some of these projects or [indiscernible] how do you see the margins, let's say, for the deliveries that are there for the next 3 years, as you see right now, obviously, things can change.

So we see margin expansion. I don't think we have exact numbers. We are going to -- we plot them as we go forward. But like last year, we have been -- on a PAT margin has been at about 9% for last year, if I'm correct. And we expect that market to improve in the next year and in the year after that, I think -- as the cycle keeps going, we'll probably get to after-tax profit margins and the TCI margins are closer to 17%, 18% gradually as we go ahead. So this year's margin would be better than FY '24, FY '26 margin should be better than FY '25 and '27 should be better than '26. And this -- most of this is happening for 2 reasons that gross profit margins are expanding. And our revenues, let's say, FY '27, our indirect costs as a percentage of revenues in '27 should be lower than what it is in '24. In some years, like in '25 probably our indirect expenses as a percentage might be a little higher than '24 because the revenue mix will not change that much. But I see overall margin expansion to happen as we go forward.

That's very helpful, Varun. So another question was in terms of the new land purchases that we've been talking about looking at other geographies also and also within the same geography, I think bought something in Jaipur couple of quarters back, I think 3 quarters back if my memory serves me right. So how do you see that? Because now as I see in terms of presentation, we have about 80 lakh square feet is the amount left for us, both -- and excluding the [Indiscernible] land in the table that you mentioned. So as we sort of grow and as we cycle sort of continues in our favor, so how are you thinking any sort of broad target or thought process if you can share?

So I think, Rohit, I don't -- we don't have a broad target as to where we -- what we will do exactly what I think -- we will be overall try to focus on returns on capital more and growth less. So we might have years that might be cyclically off. And I think we, as a management team, have decided that we should be comfortable with those and take calculated risks where we see opportunity. At this moment of time, my view is that overall larger opportunities will come in the senior living space. It's a space where I see expansion. We have some term sheets under negotiation, and we hope to close some things. We are looking for more parcels as well in elsewhere. But I think overall, I think Senior Living will play a larger mix as we go forward because we see that business relatively less competitive. So we'll enjoy -- continue to enjoy some differentiation and therefore some better margins and returns because we can make some off-location lands work in senior living. Outside of that, we will be looking at how do we just keep things chugging along and wait for opportunities until we do something bigger. We have -- given the current kind of [Indiscernible] and the kind of pricing we see, we seem to we've seen -- we'll continue to enjoy very good cash flows and profits from the existing stock more than we thought we would. And we would like to enjoy the up cycle like that and make sure that we have our heads on -- focus on returns on capital more and be patience if we have to be.

Sure. So you talk about 15% ROE as a target. So probably this year, you will hit that number? [indiscernible] double-digit.

So it may not be this year. And I think because these deliveries get a little lumpy. So reported ROEs becoming a little bit challenging; like '26, we will definitely hit 15% over ROEs if things go as per deliveries. But internally, we have created metric more around economic ROE. This year, we crossed the 15% threshold in the company from an economic ROE perspective in FY '24. And it's a 12- to 24-month lag. So if not this year, then next year, we should get it. But again, deliveries can be very lumpy, and therefore, we tend to keep a track on economic ROE internally better. And we are well beyond 15% now in [indiscernible] and it will reflect in the numbers sooner than later in the reported [indiscernible].

And last question is in terms of [Indiscernible] sales cost for FY '25, anything you can share, what are you...

Say that again, please?

So I was just asking for presales for FY '25. Anything that you can share or any thoughts? Last year was close to 1,800...

So this year, we have a target of INR 2,000 crores internally to get to -- again, it's assumed that the market will remain buoyant the way it is, and we get to launch the phases as scheduled. It will continue to be heavily dependent on Gurugram as it contributes a large part of our expected sales value right now.

Perfect. So can I ask one more question?

Yes. Yes, go ahead please.

So I think in your last [con-Q] interaction, you've talked about Bangalore as well. So any update or anything that I think also we had posted something on LinkedIn about the same. So I just wanted to ask if you have any update or if you'd like to share?

We have 2 term sheets in Bangalore for senior living, and we are hoping to close transactions there on revenue share. So -- but these things are 50% of the term sheet slips somewhere or the other during diligence or something or the other. I'm hopeful that we'll close, but they can slip through the cracks. But we are excited about doing some senior living in Bangalore.

[Operator Instructions] We'll take the next question from the line of Mr. Kunal.

First of all congratulations on your Q4 2024 results. My question is specifically around Gurugram. So as you can see that your projects are [indiscernible] significant premium in this Gurugram geography. So after the Ashiana Amarah launch, Phases 4 and 5, are there any specific plans to acquire land or start of any new projects in the coming financial year?

So we have Ashiana Amarah Phase 4 and 5 to launch. We are hoping to launch it in this financial year, both those phases. And we have Ashiana another project in Sector 80 in Gurugram, which is not too far away from Ashiana Amarah. And we are hoping that we can launch that in the fourth quarter of this year and if not fourth quarter of this year then the first quarter of next year. So yes, that we are -- so those -- that project is under approval [Indiscernible] and applied for EC, putting the rest of the approvals on as well. So I hope to launch that in this financial year.

[Operator Instructions] We'll take the next question from the line of Rehaan from Sicomoro Advisors.

Yes, congrats on a good financial year results. Just wanted to ask about an update on the IFC project. Where is that at right now and like what can we expect going forward?

So on IFC, we have 3 projects on the first platform, which is Ashiana Daksh, which is complete in terms of construction, and we have a few connections still left on [Indiscernible] from a few customers and a few last expenses that have to be done, which have to be done. But more or less effectively complete, a little bit of IFC capital is still left to be paid out. Other than that, there are 2 projects that we have invested in Ashiana Amarah and Ashiana Vatsalya. Both the projects are launched, under construction and different phases which are updated in the investor updates for each project in terms of how much [Indiscernible] much is how is collected, how much [Indiscernible] is constructed. So you can look at those from the investor update specifically. On Platform 2, we are yet to deploy any capital. We are actively engaging with them and a few projects to see where we get deployed from platform 2 [indiscernible].

Okay. Sure. And what is the land acquisition pipeline like? I think you spoke about Bangalore. But last quarter, you also spoke about looking at some land for a senior project closer to Mumbai. So what's happening on that front?

Okay. So we are looking in Panvel. We had a term sheet executed there. Unfortunately that term sheet slipped through, as I said. These term sheets have a 50% failure rate. Unfortunately, the one near Mumbai slipped. We have more projects that we are providing offers on. I'm hoping that something will succeed there. We are excited about Panvel after the success that we have received with Ashiana Amodh. We have a term sheet executed for a land in Jamshedpur as well, and we are actively quoting in Jaipur and Panvel at the moment for more projects.

[Operator Instructions] We take the next question from the line of [Himanshu Dugar] from [Safe Gains] Financial Advisors.

Great set of results, congratulations on that. I just had 1 query on the pace of construction going ahead, I think this quarter [Indiscernible] been phenomenally, you are touching almost 7 lakh square feet of equivalent area. Now that the land bank acquisition has kind of slowed down, do you think you'll be able to maintain the same pace for the next 4, 5 quarters or there is going to be some slowdown maybe go back to that 4 to 5 till we once again come back to the [Technical Difficulty].

Ladies and gentlemen, please stay connected, the line for the management has got disconnected. Thank you for patiently holding. Ladies and gentlemen, we have the line for the management reconnected. Himanshu, sir, I request you to go ahead with your question.

Sir, I just wanted to understand about the pace of construction going ahead. This quarter was like phenomenal. I think you touched almost 7 lakh square feet. Now that the pace of acquisition of the land bank has kind of slowed down, do you see the pace of construction also coming down in FY '25? Or do you think that there are probably the pipeline should convert and you are optimistic of maintaining the same pace of 7 lakh or maybe something about 6 lakh square feet?

So quarterly numbers will vary for us, Himanshu, quarterly numbers vary a lot for the year like in the third quarter, we have NGT bans in the NCR area. So construction slows down. In April, May, June because of election, workers have gone back. Because of Eid and Holi, workers have gone back, and that brings the quarter in -- first quarter down a little bit. So quarterly variations, I would not take quarterly run rates because of the variations that we have. We do expect to do 25 to 26 lakh square foot of construction this year. And I don't see the pace slowing down because we will continue to launch projects this year. And I think -- we have still headroom. So like out of 62 lakh square foot launch, we've done 28 lakh square foot of construction. So we have 34 lakhs square foot of construction to do within the launched pieces, and we have about 80, 90 lakh square foot to launch, about 90 lakhs square foot to launch excluding Milakpur between our future phases and land bank. And as and when we add that, that will also come in. So I don't see declining volume as of now, at least for the next 12, maybe 24 months. And maybe after 24 months, it might have a different scenario.

Got it. Got it. Just one last question from me. Around the Chennai [Indiscernible] project. So where you have this 50% of profit. So in this, how do you maintain your ROEs? Like this is ballpark, like what's the typical model there?

Yes, so we have taken up a 50-50 partnership with our local partners there in Arihant Group, they have a 50% stake, we have a 50% stake. We share profit 50-50. We bought the land at cost together, we charge a fee that covers our administrative costs. So the ROE of the project is effectively our ROE on that project, ROC on the project. And we see the project generating the required return yes. So functions like as any other outright project that we would have acquired where we saw the returns. So it's basically dependent on whether we are able to get the land value at a price where it returns makes sense.

Got it. Any comments around the cost of construction because the kind of comp this quarter was pretty high. I understand the seasonality aspect [Indiscernible], but is there some kind of increasing now in the cost of construction?

So cost of construction will go up for 2 reasons. So there is inflation, but inflation is not -- in construction, it is not like more than regular inflation in the economy right now. We had that a couple of years ago [indiscernible] there would be a few percentage points here or there [Indiscernible] it's not like crazy shift. But our projects as and when we have moved into higher priced projects, we have also moved into higher cost of construction projects. We are making basements, we're going taller, we're using [Indiscernible] have upgraded specs, we're doing better common areas, all of that increase cost of construction. So cost of construction will increase from that perspective. But as a percentage of sales [Indiscernible] as I said, we are going to see gross profit margin expansion. And I see as a percentage of sales price construction costs to come down.