Release Date: August 13, 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 new phases in multiple projects, including Ashiana Ekansh Jaipur and Ashiana Advik Bhiwadi, indicating ongoing expansion.
- The company received the completion certificate for Phase 4 of Ashiana Utsav, Lavasa, showing progress in project completions.
- Despite a challenging quarter, Ashiana Housing Ltd (BOM:523716) maintained its guidance of INR2,000 crores of presales for FY25.
- The company reported a healthy pretax operating cash flow of INR74.92 crores in Q1 FY25.
- Ashiana Housing Ltd (BOM:523716) has plans to launch new projects in the senior living segment, which is expected to be less cyclical and more stable.
Negative Points
- The area booked in Q1 FY25 was significantly lower at 4.43 lakh square feet compared to 10.60 lakh square feet in the previous quarter.
- The value of area booked dropped to INR235.32 crores in Q1 FY25 from INR862.54 crores in the last quarter of FY24.
- The company reported a negative PAT of INR5.45 crores in Q1 FY25, compared to a positive INR10.87 crores in Q1 FY24.
- Ashiana Housing Ltd (BOM:523716) faced one-off costs in Q1 FY25, including a one-time incentive to staff and interest paid to customers for delayed delivery.
- The company anticipates reporting losses in the second quarter of the current year due to lower planned deliveries.
Q & A Highlights
Highlights from Ashiana Housing Ltd (BOM:523716) Q1 FY25 Earnings Call
Q: Why are the gross margins lower in Ashiana Shubham Phase 4, a senior living project?
A: (Varun Gupta, Whole Time Director) The lower margins are due to high land costs from a 2015 agreement, unexpected cost overruns, and environmental compliance costs. These issues have been addressed in newer projects.
Q: Are the issues in Ashiana Shubham Phase 4 affecting other projects in Chennai?
A: (Varun Gupta, Whole Time Director) No, newer projects like Ashiana Vatsalya and Swarang have better cost structures. Phase 4b and Phase 5 of Shubham should also see improved margins due to higher selling prices.
Q: Why were there negative sales in Ashiana Surbhi and One44?
A: (Varun Gupta, Whole Time Director) Negative sales in One44 were due to cancellations within the 30-day period allowed to customers. In Ashiana Surbhi, cancellations were from investors who transferred their money to other projects.
Q: Can you comment on the sales velocity in different micro markets?
A: (Varun Gupta, Whole Time Director) Sales velocity has been good, especially in Bhiwadi. The company achieved INR235 crores in sales without new project launches in Q1. However, the rate of price increases is expected to slow down.
Q: Why are revenues inconsistent despite healthy booking pace?
A: (Varun Gupta, Whole Time Director) Quarterly variations in deliveries are part of the business due to the project life cycle. The company focuses on year-on-year numbers and economic profit rather than quarterly reported revenues.
Q: What is the aspirational pipeline of new launches?
A: (Varun Gupta, Whole Time Director) The company aims to complete 84-85 lakh square feet of launches in five to six financial years. Upcoming launches include Ashiana Amarah Phase 4, Malhar Phase 3, and One44 Phase 2.
Q: How does the company plan to avoid being saddled with large inventory during a downturn?
A: (Varun Gupta, Whole Time Director) The company has reduced unsold inventory and improved customer quality. Pivoting towards senior living projects, which are less cyclical, also helps mitigate this risk.
Q: Why is Ashiana Housing not entering the premium segment despite market trends?
A: (Varun Gupta, Whole Time Director) The company focuses on premium mid-market housing, where it sees less competition and better value creation. The luxury segment is currently overcrowded.
Q: What is the company's approach to maintaining a healthy balance sheet?
A: (Varun Gupta, Whole Time Director) The company is comfortable with taking a bit more leverage due to good visibility of cash flows over the next three years. However, it will continue to maintain a conservative approach compared to the industry.
Q: When will the HSIIDC land parcel come live?
A: (Varun Gupta, Whole Time Director) The project is expected to go live in Q1 of the next financial year due to delays in approvals.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
