Ashiana Housing Limited (523716) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Ashiana Housing Limited Q2 FY '26 Earnings Conference Call hosted by EY. [Operator Instructions] Please note this conference is being recorded. I now hand the conference over to Mr. Kanav Khanna from EY. Thank you, and over to you, sir.

Thanks, and welcome, everyone, and thank you for joining the Q2 FY '26 Earnings Call for Ashiana Housing Limited. The results and the investor presentation has been mailed to you and is also available on the stock exchanges. In case you have not received the same, kindly write to us, we'll be happy to send it over. Now to take us through the results of the quarter and half year and answer to all your queries, we have with us the management of Ashiana Housing Limited, Mr. Varun Gupta, Whole-Time Director; and Mr. Vikash Dugar, CFO. We will start the call with a brief overview of the company's performance for the quarter and half year and then follow it up with question and answers. I would like to remind you that everything said on this call that reflects an outlook for the future or which has any forward-looking statements must be reviewed in conjunction with the uncertainties and risks that we might face. These uncertainties and risks are included but not limited to, what we have mentioned in the prospectus filed with the SEBI and subsequent annual reports, which you will find on our website. Now with this being said, I would like to hand over the call to the management. Over to you, sir.

Good afternoon, everyone. I hope you and your loved ones are keeping well. I welcome you all to Q2 FY '26 earnings call, and thank you for taking the time to join us today. Q2 FY '26 has been a quarter of steady operational progress for Ashiana marked by consistent sales performance and strong cash flow generation. We achieved value of area booked of INR 303.43 crores for the quarter vis-a-vis INR 430.97 crores in the first quarter. High value of area booked in the first quarter, driven by new launches, Aravali in Jaipur and Tarang Phase 6 in Bhiwadi. We launched Ashiana Swarang Phase 2 in Chennai in the second quarter. Equivalent area constructed for Q2 FY '26 at 7.25 lakh square feet, higher by around 18% versus 6.15 lakh square feet in the first quarter. Total revenue for the quarter came in at INR 176.18 crores vis-a-vis INR 302.72 crores in Q1 FY '26, lower revenue attributable to lower deliveries. PAT for second quarter stood at INR 27.54 crores compared to PAT of INR 12.72 crores in the first quarter, higher profit driven by mix in favor of better margin projects delivered in second quarter. The company posted pretax operating cash flow of INR 122.62 crores during the quarter. Cash flow continues to be healthy, driven by better collections. We acquired 22.7 acres on perpetual lease at MWC Chennai to develop a senior living project. This project has a sales value potential of approximately INR 1,200 crores. Ashiana Aurum got funded by International Finance Corporation through allotment of INR 100 crores of listed entities. The company also settled a long pending dispute related to development agreement for Project Maitri, Kolkata and received INR 18.5 crores as full and final settlement against security deposit of INR 12.8 crores and other expenses incurred thereof. We also initiated handovers for Advik Phase 1 and Tarang Phase 4B in Bhiwadi during the quarter gone by. With this, I conclude my opening remarks and look forward to your questions and suggestions.

[Operator Instructions] Our first question comes from the line of Himanshu from Steadfort Investment Managers.

One of my questions was based on what we have given in our annual report, okay? On Page 47, we have stated that we have a launch pipeline of INR 11,000 crores till FY '30. But if you look at our future projects, which are nearly 5 million square feet and land available for future development, if we include the World City, then again, it remains around 5 million square feet, and it includes Milakpur also. Effectively, if you take 7 million to 8 million square feet, this INR 11,000 crores seems a much further task. so what all is getting included in when you are saying that the launch pipeline is around INR 11,000 crores?

Himanshu, I think the launch pipeline remains strong is one word, with INR 11,000 crores in overall visibility of sale value up to FY '30. I think that sale value is including revenue potential, so includes launched projects, the sold value of the launch project, the unsold value of it. So all put together, I think the FY '30, what we are talking about is the potential revenue that we can recognize in the company. It excludes some of the launch pipeline because some of what will get launched may not get recognized by revenue by FY '30. I think it's the revenue potential for FY '30 that it means. Sorry for the ambiguity in the language, if you think, in the reading. But if I read it carefully, that the launch pipeline remains strong and the sales visibility is not referring to the launch pipeline.

Okay. Okay. So there was some confusion on that part.

Yes. So I apologize for the language maybe being hawk but it's a total revenue potential that we're looking at in the company.

And one more thing. On Page 89, we have -- last year, we did a sales of 1,843 residential units, okay? And on Page 89, we have shown 521 units booked out of 24,000 leads generated, okay? But the balance INR 1,300 crores would be on reference sale? Or how do -- how do we tally that figure then? Because there is a huge gap between two leads and what...

There is a huge -- this is just about online lead generation. There is a huge sales through CPs also now and through references. I think this is more about within the -- if you read this is in the category of E, which is the digital performance and lead generation within the marketing framework. So this is only and only booking that has been generated through the digital marketing platform.

Okay. Because on the headline, we don't see anything. It is lead generation and...

No, if you go back -- if you look at the -- go back to 7 and go to 1, it is under the subhead of E digital performance and lead generation.

And generally, when we do...

One second Vikashji, wants to intervene with that question in the context.

So when we -- yes, Himanshu, Vikash here, so when we talk about digital performance and lead generation, which is the heading for the E, if you look at the seventh point under which this data appears, it talks about engaged through different online sources. So Google, Meta, website, LinkedIn, social media, et cetera. So basically talking about the subset of overall bookings. So that's how it has to be read.

Okay. And what would be a reference sale, let's say, what contribution would be from reference sales out of the 1,000...

1,800. I would say probably -- so Gurgaon doesn't have such a large reference generation pool. If you exclude Gurgaon and Ashiana Malhar in Pune, more than 50% of our bookings come from referral bookings. These 2 markets have a very large channel partner contribution. So if you exclude those 2, probably near 2/3, 60-odd -- between 60% and 70% of our bookings in different projects come through referrals.

And one last bookkeeping question. Ashiana Town, what is the case about? And was this a case or something, which was going on for some period or some differences of opinion was going on for some period and hence, it to this INR 50 crore compensation being asked for or some clarity will be helpful.

So on the suit, yes, 226 customers have gone to the consumer forum and it's also they're trying to make it a class action suit and therefore, I think we had to disclose because of that, the various parameters that they have used to go to suit on it. We are challenging the matter and replying and disclosed on that. According to us, there is -- the prayers are not correct, and we are going to challenge them and fight that in court. Overall, otherwise, in general, our sense is that overall customers in Ashiana Town are happy. We do periodic Net Promoter Score surveys, and it's been doing well overall in terms of customer satisfaction. So I'm a little surprised as well with that kind of satisfaction that this has happened. But their suit and the grounds to us are incorrect, and we will contest them in court.

And one last thing. This Ashiana Aaroham, we wanted to launch by FY '25 and then the first half FY '26, now we are in the second half. What is the thing because of which the project has taken much more than what we anticipated in terms of launch of leads and what is the process?

We got stuck in some approval issues in our interpretation of the building bylaws and other building code and fire codes and our interpretation and the town planning interpretations were different. So we had to recalibrate our drawings a little bit. And also, there were some other things that happened, which we had not read correctly in the drawings, we realized that there were some benefits available to us because of that, which overall saleable area increased a little bit and the way we were able to design the project improved. So in that process, we lost a little bit of time. Now we have all approvals in place, excluding RERA. We have applied for RERA. We're expecting RERA by end of this month and hopefully should launch in the beginning of next month, we should launch the project.

And in last year's annual report, we have stated that around INR 2,500 crores.

Himanshu, sorry, I love and appreciate the kind of depth you have. Can you get back in line? We will take all the questions that you have. We'll not do the call without the questions that you have. But I would like to give the opportunity to some of the people in line, and then we'll take your questions again. Is that okay with you?

Yes, yes, it is okay with me. Thank you so much, Himanshu. We'll take the next question. Please do get back in line. I will take all the questions that you would have.

We have the next question from the line of Rohit from ithought PMS.

So first question was on this -- so we had this point that you had shared in the last few con calls that we are going to like FY '25 to '30, INR 11,000 crores cumulative sales and cumulative profits of about INR 2,000 crores. So I can -- so we did INR 529 crores last year, and I think we've done about INR 480 crores this first half. And I think you mentioned that FY '26 is around INR 1,270 crores and you've given certain numbers. So for the next subsequent years, FY '27, '28. So -- just want to understand, so like if I just total all of them, that's like about INR 6,000-odd crores. So there is still like another INR 5,000-odd crores that is remaining for us to sort of book, which will get booked probably in FY '29 or '30. So can you just help us understand how do we -- what is the bridge there in terms of how do we plan to get there? What -- I mean, in terms of what is -- what are you thinking in terms of in the plan you have?

Okay. So you have about INR 6,000 sort of -- in the ongoing projects, the total value is about INR 6,300 crores, between '26 to '29, if you look at the project list. And we had about INR 500 crores last year. So about INR 6,800 crores -- INR 6,800 crores, INR 6,900 crores gets covered there. The rest, about INR 4,000-odd crores that we're looking for '30 will -- a large part of that will come from Ashiana Aaroham. Ashiana Aaroham across 3 phases is -- should have a sale value of between INR 1,500 crores to INR 1,800 crores, depending on how it plays out. Ashiana Amaya has a sale value of about INR 300-odd crores and Ashiana Oma would have a sale value of around INR 700-odd crores. And so put together, this is about INR 2,500 crores. I would expect about 2/3 of this to get delivered by FY '30, that's what -- so we launch, we would like to get them in FY '30 in place. So Aroha and Amaya are getting launched in the next few weeks. Amaya gets first and then Aaroham and Oma in the first week -- first quarter of the next year. And then outside of that, we have in our future phases of existing projects, we have multiple projects there. And let me just walk through that. So if you look at -- we have about 51.78 lakh square foot, of which Amaya is about 18-odd lakh square foot. So let's say, we are left with about 3 lakh, 34 lakh square foot. To me, that should generate another INR 2,000 crores, INR 2,500-odd crores. We are averaging at about INR 7,000, INR 7,500 a square foot, let's say, INR 2,500 crores. So we have INR 7,000, plus INR 2,000 crores, plus INR 2,500 crores, this about comes into INR 4,000 crores -- comes in around INR 11,000 crores. Is that a good number to get there, Rohit, or anything else you would like specifically?

That definitely helps. But just sort of stepping back, so I think in the first question by the previous participant, you mentioned that it's more the launch pipeline and not necessarily sales run rate, right? So you and you....

It's the top line revenue recognition that we expect by FY '30 within the company. That's what I clarified. He was looking at his launch pipeline. It's more the top line that we think we will recognize into our books by FY '30 by delivering the project and clocking this year.

So there's no change in that, right?

There is no change in that. No, no, absolutely.

So from that perspective, Varun, so in terms of like it takes 3 to 4 years for us to launch and deliver -- construct and then deliver, right? So FY '26 and '27 like we are halfway through. So in terms of launches this year, so like you mentioned Amaya and Aaroham would be like launched in this year, right? Because -- and some of the other phases that you have or some of the other ongoing projects, will we not be on a tight deadline to sort of construct and then deliver? Because like if we take even Amaya and Aaroham, it will be still like we are just about 12 to 15 quarters, we'll have to deliver. And then some of the others, we've not yet launched or we would...

FY '30 will give us 4 years to deliver from now. And I took only, let's say, 2/3 of the project, right? So we are not looking to deliver the whole project. So the Phase 1 -- our delivery cycles are about 3 years in a particular phase, maybe 3.5 years in a particular phase. So we have about 4 years and 1 quarter in Oma -- both in Amaya and Aaroham. I think we should be able to clock in all of Amaya and 2/3 of Aaroham within that time.

Okay. Okay. And specifically then on the profitability, so starting this year, do you see like profitability to improve significantly in the reported side? Because I think now we'll probably start booking in the higher-margin projects and I think a couple of the lower margin ones. One, I think you finished or about to get over and one will come next year. I think Malhar will come next year is what you had mentioned. So what would you think about profitability from this year onwards?

So we should -- net profit margins should get into low double digits from this year is my expectation. We should hit low double-digit profit margins this year. And then keeps improving as the mix of the projects change more and more towards higher margin. I would say FY -- currently in FY '28 seems like where margins should substantially improve. But even like, let's say, if you look at the last 3 years, profit margins have been 6.5%, 8.6% and 3.27% at the net profit. And I'm expecting that we should be in double-digit profit margins this year and net profit margin. So things are getting better and improving, which was visible in this quarter when Ashiana Advik got delivered, which has a very high gross profit margins, profit margins have significantly improved. And this is happening. So I think overall, things should improve.

And can I ask one more question?

Yes, please. Last one, Rohit, and then you can get back in line. I'll take one and then back...

Sure. I think 2, 3 quarters back, we had -- or maybe 3, 4 quarters back probably, we had bought or we purchased -- got into an agreement to -- for a land purchase in Bangalore and also in Mumbai, Pune, I think, if I'm not wrong. So any update on that?

Neither, they have not been -- the condition precedents have not been satisfied in either of the 3. Jaipur, Panvel and Bangalore, we had said we are still waiting for the landlords to complete certain conditions that they are supposed to do for the transaction to fully go through.

So those are off...

They're all government approval linked -- they're all government approval linked CPs, so they can take much -- sometimes much longer than one would expect. Unfortunately, that is part of the business.

They're not off the discussion, right? I mean...

No, they are not off, but they are not on either. So they're still in the middle somewhere.

And any -- I know time line is not possible, but generally, like do you expect them to get done in maybe next 2, 3 quarters or it's like completely black box right now?

I would say either -- they will get done in the next 2, 3 quarters or if they don't come, we'll come off the transactions if they don't get done in the next 2, 3 quarters. I don't think it will drag further than that. So one way or the other, I think in the next 2, 3 quarters, we'll do. And we are actively looking for more projects simultaneously. I think particularly in the senior living space, I think the market should hear more from us. In the general housing space, we are a little concerned about the land prices in most markets we are in. We're looking. But senior living, we are very aggressive. So you should hear more from us in the future -- very future.

I have more questions, so I'll come back.

Yes, please do come back. We have one more person in line. Please go ahead.

[Operator Instructions] Our next question comes from the line of Rahul Jain, an Individual Investor.

First question is basically, we mentioned that we got some extraordinary income this quarter from some dispute, which is pending. So I wanted to know like this INR 27 crores or INR 28 crores of profit that you made, how much was -- what was the contribution from this other income?

The dispute that in Kolkata that got resolved, I think overall contribution of about -- I think -- so about approximately INR 4-odd crores at the PBT level would be from that number and then about INR 3-odd crores at the after-tax level would be from that dispute.

Okay. Got it. And so if I see the presentation, so we have about INR 700-odd crores to be booked in the next 2 quarters. So I wanted to understand like will the margins -- profit margins of the sales, which will happen be of the line of the -- that we saw in the first quarter? Or will it be what we saw in the second quarter?

So I said the full year profit should be in the low single digits, let's say, 10-odd percent, 10-odd, 10%, maybe 11% kind of net profit margins is what I think we will look at for this financial year.

Yes. So next question is basically, are we seeing any pricing pressures anywhere? Or do we -- are we able to increase prices? Or is it stable?

So we are increasing prices in most places. We don't have pricing pressures anywhere. But the pace of price increase is slower than what it was before.

Okay. And land prices are also like not increasing as much? Or is there a difference?

Land prices continue to remain out of whack in some markets and very expensive in some markets. For senior living, wherever we are able to operate, land prices seem more reasonable. given the product we are doing and pricing we are able to do. So our focus will be -- will remain on senior living projects in that way. Gurgaon, Jaipur, where we -- where there is a large focus on non-senior living developments, land prices do seem -- do continue to be a little bit out of whack accordingly.

Got it. Got it. And last question, you probably mentioned something about that margins would be expected to be far better in -- and is that part '28 or '27, what did you say?

I am not able to understand what you asked, Rahul. Sorry, can you repeat that with a little bit more being louder, please?

Yes. Yes. Yes. So I think I heard you answering one of the previous participants that profit margins should be substantially higher in the next years but I didn't get -- were you mentioning about '27, FY '27 or FY '23?

'27 should also be better. '28 is where I would say where we will see significant increases because there the mix of projects will shift more and more towards the higher-margin projects with basically all the low-margin projects will be completely out, except for Malhar, and we will have mix of much higher projects like even in Ashiana Amarah, the margins in Phase 3, 4 and 5 is substantially higher than Phase 1 and 2 because land was bought at the same price across the phases. But sales prices took a very, very serious jump Phase 3 onwards. And that is -- that makes a big difference. So some of those things will kick in. FY '28, the shift in margin should be significantly more.

Okay. And when you say like substantially higher, do you mean like mid-teens, 15%, 16% or more than?

I would not like to give exactly, but definitely in the teens. Mid- low, high teens, I don't want to get into but definitely, teens would be there. I would tend towards the mid- to high teens, let's say, mid- to high teens is where they would land at in FY '28, if you go as per the -- as per plans. It's still about 2 years out. But as per plan, we should be in the mid- to high teen percent.

The next question comes from the line of Himanshu from Steadfort Investment Managers.

Yes. My question was on Gurgaon market, okay? How is that market doing? And our Amarah Phase 4 and Phase 5, especially Phase 5, the inventory to be sold is still pretty large amount, which is spending, which means the velocity is now clearly very slow than what we saw in Phase 1, 2 and 3. So what is your view on that market and some thoughts there?

Well, what Phase 4 and 5 were also we priced Phase 4 and 5 significantly higher than Phase II. So we also had an intent in earlier phases to sell out a little faster, so we get the cash flows to build out. And Phase 4, 5, the intent has also been to now maximize profits. And we continue to sell quarter-on-quarter. I think the first 6 months of the year has gone decently well. That said, whatever I understand from the market, 2 things have happened in the market. One, the number of CPs in the market have significantly increased. So the business between the channel partners has become a little bit more fragmented. So that also plays a role in a very, very high CP-driven market. Second, I think what is happening in the Gurgaon market is -- it is now not a secular sales market for every developer. I think it is getting split a little bit between the development quality, the product quality, the positioning, the sales engine, the marketing engine, the brand positioning in the market. And there is a -- in my opinion, the market is splitting a little bit. And within that, our view is that Ashiana is somewhere in the middle. We do not enjoy pole position in the market where we have a very strong dominance in terms like what we probably enjoy in Jamshedpur, Jaipur, Rewari or in senior living space. But as Ashiana, we are also not in the lower category of developers who are having -- who are now struggling to sell in a nonsecular market. I think we are -- for the size of inventory that we have, we are doing well. And whatever sense we are getting from the market, right now, things in Aaroham look very positive. We'll get to know how that goes. But initial sense that we get as we prepare for launch, the initial sense is that it should be a good launch or whatever my sales team tells me in terms of how things are. So that's the current things which we are taking a sense from. Definitely, the market is not secular anymore that everybody is telling...

The Aaroham will have...

Say that again?