Release Date: May 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ashiana Housing Ltd (BOM:523716, Financial) launched 10 projects and 16 new phases of existing projects, totaling 23.19 lakh square feet.
- The company achieved a record sales value of INR1,798.22 crores for FY24, up from INR1,313.43 crores in FY23.
- Sales price per square foot increased by 34% year-on-year, reaching INR6,811.
- Total revenue more than doubled to INR966.52 crores in FY24 from INR425.19 crores in FY23.
- The company successfully completed its maiden buyback of INR55 crores in FY24.
Negative Points
- Quarterly comprehensive income (TCI) declined to INR17.45 crores in Q4 FY24 from INR28.08 crores in the previous quarter.
- Margins varied significantly due to different project deliveries, with some projects experiencing cost overruns.
- The company faces uncertainties and risks, including those mentioned in their SEBI filings and annual reports.
- Pre-tax operating cash flows, although at a record high, indicate a need for careful cash management for future acquisitions.
- The company has a conservative outlook on future sales, with a target of INR2,000 crores for FY25, which may be seen as cautious given past performance.
Q & A Highlights
Q: Can you shed some light on the decreased margin and why you chose dividends over buybacks this year?
A: Buybacks are expensive to execute and make sense when distributing a larger amount of cash. We prefer to keep more cash for potential acquisitions. Margins vary by project; quarterly margins can be misleading due to different project deliveries. Annual margins are a better indicator.
Q: How do you see margins shaping up over the next three years?
A: We expect margin expansion. Gross profit margins are improving, and indirect costs as a percentage of revenue should decrease. We anticipate better margins in FY25, FY26, and FY27.
Q: What is your strategy for new land purchases and geographic expansion?
A: We focus on returns on capital rather than growth. Senior living presents significant opportunities due to less competition and better margins. We are also exploring other geographies and maintaining flexibility for larger opportunities.
Q: What are your pre-sales targets for FY25?
A: We aim for INR2,000 crores in pre-sales, assuming market conditions remain favorable and we can launch scheduled phases. Gurugram will contribute significantly to this target.
Q: Any updates on the Bangalore senior living projects?
A: We have two term sheets in Bangalore for senior living projects and are hopeful to close these transactions. However, there is always a risk of deals falling through during due diligence.
Q: What is the status of the IFC project?
A: We have three projects under the first platform with IFC, including Ashiana Daksh, Ashiana Amarah, and Ashiana Vatsalya. We are yet to deploy capital for the second platform but are actively engaging with IFC on potential projects.
Q: How do you plan to maintain the pace of construction given the slowdown in land bank acquisition?
A: We expect to construct 25-26 lakh square feet this year. Quarterly numbers may vary, but we have sufficient headroom within our launched projects to maintain this pace.
Q: What gross profit margins are you factoring in while bidding for land parcels?
A: We typically look for 27-30% gross profit margins on JV projects. For outright projects, the margins are adjusted to cover financing costs and our rate structure.
Q: Are there any noticeable cost overruns in your important projects?
A: No, we do not have noticeable cost overruns. We expect margins to improve going forward.
Q: What is your approach to senior living projects in terms of location and scale?
A: We focus on larger scale projects to create value and are open to both city and outskirts locations. We aim to deliver a differentiated lifestyle and are not considering hybrid projects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
