Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Arvind SmartSpaces Ltd (BOM:539301, Financial) achieved its highest-ever annual bookings of INR 1,107 crores, marking a 38% year-on-year growth.
- The company reported a 46% year-on-year growth in collections, reaching INR 876 crores, the highest in its history.
- FY '24 revenue increased by 33% year-on-year to INR 341 crores, with EBITDA growing by 57% to INR 85.5 crores and PAT by 62% to INR 41.6 crores.
- The company has a strong balance sheet with a net debt position of negative INR 41 crores as of March 31, 2024.
- Arvind SmartSpaces Ltd (BOM:539301) plans to launch 7-8 new projects in FY '25, including phases of existing projects and new ones, indicating robust future growth.
Negative Points
- The company faces challenges in the Bangalore market due to ongoing water crises, which could impact future projects.
- Despite strong performance, the company did not provide specific financial guidance for FY '25, creating some uncertainty for investors.
- The company has a significant reliance on horizontal projects, which may not be sustainable in the long term as market dynamics shift.
- There is a potential risk of delays in project launches due to regulatory approvals and other external factors.
- The company's ambitious growth targets may require substantial capital deployment, which could strain financial resources if not managed carefully.
Q & A Highlights
Q: How many project launches are anticipated for this year, and what is the target for business development (BD) and HDFC Platform 2 investments?
A: We anticipate launching six to eight projects this year, including new phases of existing projects. For HDFC Platform 2, we have deployed around INR 300 crores and aim to exhaust the remaining INR 600 crores this year. Our presales target is to grow by 30-35% across major operating parameters.
Q: What are the revenue and EBITDA margin targets for FY '25-'26?
A: We do not provide specific financial guidance, but we aim for a 30-35% growth in all major metrics, including top line and EBITDA.
Q: Can you provide details on the IRRs achieved from the HDFC Platform 2 project exits?
A: While specific IRRs are confidential, both partners achieved their expected returns. The higher operating cash flow to presales ratio of 40% is attributed to the faster cash generation from horizontal projects.
Q: What is the expected mix of vertical versus horizontal projects in the future?
A: We aim to maintain a balance, with vertical projects comprising 33-50% of our portfolio. This year, we plan to launch at least three vertical projects.
Q: What is the business development pipeline for FY '25, and are there any plans for projects in Mumbai?
A: We aim to add INR 5,000 crores worth of projects this year, with a healthy pipeline already in place. We expect to acquire at least one or two large projects in Mumbai or Pune within the next two quarters.
Q: How do you plan to manage the water crisis in Bangalore, especially for projects on the outskirts?
A: We are implementing water-efficient construction methods and sourcing water from areas with better availability. The crisis is managed through cost adjustments and conservation efforts.
Q: What is the expected launch timeline for the Surat project, and will it be phased?
A: The Surat project will be launched towards the end of Q2 or early Q3 and will be phased. The first phase will cover 30-40 acres.
Q: What are the profit margins expected from horizontal projects?
A: Horizontal projects typically yield EBITDA margins of 30-40%, compared to the company's overall average of 25-26%.
Q: What percentage of sales comes from repeat customers and referrals?
A: In FY '24, 22% of our overall bookings came from referrals, indicating strong customer loyalty and repeat investments.
Q: How do you plan to balance vertical and horizontal projects in Ahmedabad?
A: While horizontal projects currently make more sense in Ahmedabad, we are open to vertical projects as well. The focus will remain on profitable and sustainable developments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
