Q1 2027 Ashiana Housing Ltd Earnings Call
Speaker #4: Ladies and gentlemen, good day, and welcome to the Ashiana Housing Limited Q1 FY27 earnings call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.
Speaker #4: Should you need assistance during this conference call, please signal an operator by pressing star, then zero, on your touch-tone phone. Please note that this conference is being recorded.
Speaker #4: I now hand the conference over to Ms. Kunjal Agarwal from Meridian Capital Markets. Thank you, and over to you.
Speaker #2: Understood.
Speaker #5: Hello, and good evening to everyone. On behalf of Arian Capital Markets Limited, I thank you all for joining the Q1 FY27 earnings conference call of Ashiana Housing Limited.
Speaker #5: Today, from the management, we have Mr. Varun Gupta, the Whole-Time Director, and Mr. Vikas Duggal, the CFO of the company. So, without any further delay, I would hand over the call to the management for their opening remarks.
Speaker #5: Over to you, sir.
Speaker #6: Thank you. Good evening, everyone, and a warm welcome to all of you for joining our earnings conference call. For the first quarter of financial year 2027, the real estate sector entered FY27 on a more moderated note, after the strong momentum witnessed through FY26.
Speaker #6: Residential demand across key markets softened somewhat during the quarter, weighed down by global economic uncertainty and a cautious wait-and-watch approach among some homebuyers. At the same time, developers continued to remain confident in the medium- to long-term outlook, with new project launches holding firm and prices remaining resilient across most markets.
Speaker #6: Premiumization continued to be a defining trend, with buyers increasingly gravitating toward larger, well-designed homes from established and financially disciplined developers, reinforcing the ongoing shift toward organized and branded players.
Speaker #6: The senior living segment continued to remain relatively insulated from these broader demand fluctuations, supported by structural, demographic-led growth drivers. Changing family structures, rising urbanization, and a growing preference for community-based living among senior citizens continued to strengthen the long-term case for this segment.
Speaker #6: With organized supply still limited relative to the size of India's aging population, the opportunity for established players in this space remains significant and largely unaffected by short-term cyclicality in the broader housing market.
Speaker #6: I will now take you through our operating highlights for the quarter, followed by our financial performance. Starting with our operational performance for the quarter, the company recorded a booking value of Rs.
Speaker #6: 358 crores during the quarter gone by, with 3.6 lakh square feet of area sold across 234 units. While bookings moderated compared to the exceptionally strong preceding quarter, our collections remained healthy at Rs.
Speaker #6: 409 crore, registering a 6% year-on-year growth. Reflecting sustained customer confidence and strong collection efficiency, average realization also improved significantly to Rs 9,923 per square foot, representing a 37% year-on-year increase, driven by a favorable product mix and continued pricing resilience across the portfolio.
Speaker #6: During the quarter, we made a significant investment toward our future growth pipeline through the acquisition of 28.55 acres of land at Vadgaon, Maval, in Pune. This is the largest-ever land acquisition undertaken by the company for a senior living project.
Speaker #6: With an estimated sellable area of approximately 20 lakh square feet and a potential sales value of around ₹1,800 crore. On the execution front, we commenced handover for Phase One of Ashiana Nitara in Jaipur during the quarter, marking another important milestone in our project delivery.
Speaker #6: Overall, we continue to make meaningful progress across the key pillars of our long-term growth strategy by maintaining a diversified geographical presence, expanding our senior living portfolio, strengthening our development pipeline, and progressing steadily on project execution.
Speaker #6: Coming to the financial performance, revenue from operations for the quarter stood at Rs 107 crore, compared to Rs 293 crore in Q1 FY26. Revenue recognition in Q1 FY27 was primarily driven by handovers at Ashiana Nitara in Jaipur.
Speaker #6: Higher revenue in FY26 was attributable to more deliveries. Pack revenue for Q1 FY27 was lower vis-à-vis Q4 of FY26 due to lower deliveries. Importantly, our operating cash generation remained healthy during the quarter, at Rs.
Speaker #6: Rs. 121 crores, compared to Rs. 108 crores in the same quarter last year. This reflects the strength of our collections, disciplined execution, and efficient working capital management despite lower reported revenues.
Speaker #6: We also commenced the redemption of NCDs issued to ICSA Prudential Mutual Fund during the quarter. ₹31.25 crore, representing 25% of the original issue, was redeemed.
Speaker #6: Overall, while the reported revenue for the quarter was impacted by the timing of project handovers, the company continued to demonstrate healthy operating cash flow generation, maintained a disciplined approach toward capital allocation, and strengthened its development pipeline, particularly in the senior living segment.
Speaker #6: With this, I would like to open the floor for the Q&A session. Thank you.
Speaker #4: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and 1 on the touchtone telephone.
Speaker #4: If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question.
Speaker #4: Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rohan Joshi, an individual investor.
Speaker #4: Please go ahead.
Speaker #7: Hi, sir. Am I audible?
Speaker #6: Yeah, you are audible, Rohan. Please go on.
Speaker #7: Hi, sir. Thank you for giving me the opportunity. My question is regarding the line that Q1 bookings suggest a back-ended year versus the full-year target.
Speaker #7: So, I wanted to know which specific launches are expected to drive the bookings in Q2, and what gives you the confidence in hitting the FY27 guidance that you have given in previous calls, given this soft start?
Speaker #6: Rohan, you are there?
Speaker #7: Yeah, I'm there with you. Why don't you take it up, though?
Speaker #6: Yeah, so you are right that Q1 has been relatively softer, but we have got launches lined up, and there are a couple of launches lined up in Q4 that we have in the present year.
Speaker #7: Okay. Good, sir. And so, just I will just I'll come in. Sorry. In July, we take out took out an operational update. So, in July, we had a great launch of a project called Ashiana Oma, so as of 31st July, our full-year sales had reached about 859 odd crores, if I were to say, so if you look at.
Speaker #7: The month of July was better than actually the entire first quarter. So, I would say in the first half itself, by September 30th, we should be somewhere between 1,050 and 1,100 crores of sales.
Speaker #7: So, the run rate will be maintained from there on, and in the second half of the year, the big launch that is lined up is Ashiana Aaroham's Phase 3 in Gurgaon. That will be critical in taking us through to the guidance.
Speaker #7: So, that will be in either Q3 or Q4 of this year. Okay, got it. Got it, sir. My second question was regarding the pace of sales growth that we will have.
Speaker #7: So, pay sales grew very well last year, as we have seen. What is the sustainable pay sales trajectory from here onwards for the next 3 to 5 years?
Speaker #7: So, on that front, we are not as looking for sustained pre-sales growth in the near term. I think what we are planning is, how do we what do we do in the long-term thing?
Speaker #7: So, we might actually have a little bit of a dip in pre-sales this year or the next, and then, let's say, get back to a certain number in 2028-29 or 2029-30.
Speaker #7: A little bit of that is being driven by a lack of inventory to sell coming up in Gurgaon and Jaipur, and with Diwali in some of our key markets in the regular housing space.
Speaker #7: This is primarily happening because the company is shifting more and more capital toward the senior living space, where we see a much longer and deeper opportunity.
Speaker #7: So, I think in the senior living space, we are looking for about 25% CAGR to be maintained over the long term. Though at a low base—we had started at about ₹100 crore five years ago, and pre-sales were about ₹570 crore last year in senior living.
Speaker #7: And we are looking to really, really actually expand that, even at a faster CAGR than that. So, for a couple of years, we may not have very large pre-sales growth or that, but we are comfortable with that because we are seeing margin expansion and ROEs now. As we have guided earlier, we are looking to get to at least 15% ROE.
Speaker #7: And we can see 15% ROE sustaining going forward. And with an increasing capital base—because we don't intend to dividend out significant amounts of capital—dividends will remain the way they are, growing a little bit.
Speaker #7: So, I think the company's focus would be on maintaining that ROE trajectory—making sure it doesn't fall below 15 and sustains above 15 year-on-year, every year. There might be a little bit of fluctuation here or there in the pre-sales or top line and stuff like that.
Speaker #7: So, there is compounding of the net worth that happens over a long period of time. I think that's the intent. So, I just thought I'd put that out there.
Speaker #7: That said, I think senior living, as I articulated, we expect to see strong momentum in senior living sales going forward. Sure, sir. That was informative.
Speaker #7: Thank you so much. Thank you. Thank you.
Speaker #4: Thank you. Ladies and gentlemen, as a reminder, if you wish to ask a question, please press star 1 on your touch-tone telephone. Ladies and gentlemen, if you wish to ask a question, please press star 1 on your touch-tone telephone.
Speaker #4: The next question is from the line of Rohit from iThought PMS. Please go ahead.
Speaker #2: Yeah, hi. Good afternoon. I'm sorry, I just joined when you were answering the question, Rohan, so I apologize if I missed it. When you were giving the update on the July month, that was for pre-sales, right?
Speaker #2: Is that correct?
Speaker #7: Yes.
Speaker #2: Or so. Then, just following on from there—so, for this year, are you confident about holding on to that ₹2,500 crore kind of pre-sales target for FY27?
Speaker #2: Is that correct? Because I think you said there could be a dip in the near term. So, and you.
Speaker #7: Yeah, so I think 2,200 is what we are, sorry.
Speaker #2: Sorry, 2,200. I'm sorry. Yeah.
Speaker #7: 2,200.
Speaker #2: 2,200.
Speaker #7: Yeah, 2,200—we are confident of holding it this year. At this moment of time, it looks good. We should exit H1 at about 1,100, as I indicated, between 1,050 and 1,100, given that we hit 860 by July.
Speaker #7: So, 850.
Speaker #2: Right, right, right, right. Okay, that's good to hear. Sorry, just two small things. One was on this Bangalore CP that we were looking at.
Speaker #2: Anything further on that? We haven't heard any update, so just wanted to check.
Speaker #7: So, there has been progress, Rohit. On the CPs being resolved in Bangalore, I'm hoping that we should have the final, definitive documentation signed off sooner rather than later.
Speaker #7: So, there has been progress there. And we have actually put a team deployed, two people there, on team who are gearing up to make things ready to get the project launch going.
Speaker #7: So, I'm quite confident that Bangalore—South Bangalore—should happen soon.
Speaker #2: Okay, this is in South Bangalore. Okay, got it. I just wanted to check where you are in Bangalore. I just came to know that.
Speaker #7: This is this is in this is on Kanakpura Road.
Speaker #2: Right. Right. Right. I figured. I think I just remembered the listing that you had posted when you had acquired this when you were given this notification.
Speaker #2: So, sorry, one more question, Rohan. If we were to look at the presentation where you give quarterly delivery, of course, it can change here and there a bit.
Speaker #2: But it seems that—if I may—you said 15% ROE. I think we were at 15% ROE last year also, or just about there.
Speaker #7: Yeah. Yeah.
Speaker #2: So, I think based on what you are saying and what I mean, given that margins can significantly increase from here, and given the projects that we have for delivery, they must have very good margins going forward because of the realization growth.
Speaker #2: And in general, operating leverage—so, I mean, is it not fair to say that we will probably cross 20% ROE this year on a reported basis?
Speaker #7: Yes, that is fair. So, when I say 15%, the goal of the company is to make 15% ROE, the floor ROE in a long-term basis, yeah.
Speaker #7: So, and have years higher than that. So, the first was to get to 15, but the strategic objective is to make that the floor.
Speaker #2: Sure. No, I think that is a very—
Speaker #7: And check it out, how do you say that?
Speaker #2: Sure. No, that's a very well-taken point, given the fact that it's a very cyclical industry. If you're able to do it, then I think it will be a phenomenal achievement.
Speaker #2: Rohan, I mean, I understand, and I think we've spoken about this in the past few con-calls, that you are not so much driven by the—hello?
Speaker #7: Yes. Yes, sir. Hi, sir?
Speaker #2: Yeah. Hello?
Speaker #7: Yes, sir. Please go ahead, Rohit.
Speaker #2: Yeah, yeah, yeah. So, sorry, I was saying that if I mean, I understand your point that you're not so much fixated by the pre-sales growth, at least in the near term.
Speaker #2: But even if you were to, sort of, let's say, one or two years, you're not going to grow because you don't have that much inventory.
Speaker #7: Right. You're not, you're not, right, concerned sometimes, sir. We'll keep our documentation. There is one more connection here.
Speaker #2: Yeah, I'm not sure if it is, yeah. Sorry. Hello?
Speaker #7: Okay. Koresh, can someone check if there is any other connection on the line, please? Okay. Sorry. Rohit, go ahead. Yeah.
Speaker #6: Yeah, yeah. So, I was just saying that—
Speaker #2: while this while I'm while I understand your point on not going to pre-sales immediately, and you may not have the inventory, but how do we sort of in the quest of trying to balance that 15% ROE aspiration and also grow because ultimately, that is what all of us also want as a company.
Speaker #2: So, yeah, how do we balance that? I'm not saying that we should—I mean, of course, we don't have land. We'll probably get land in the next one or two years, and subsequently launch.
Speaker #2: But just to understand from your perspective, let's say three, four years out, how do we sort of ready ourselves for the to sort of grow from this 2,200, 2,300 pre-sales that we will sort of be at, given the inventory position?
Speaker #2: How do we sort of go from that level to the next level whenever that happens? Let's say three to four years.
Speaker #7: Okay.
Speaker #2: So, any thoughts on that? Yeah.
Speaker #7: So, Rohit, two things. If our capital base is not reducing, if we're not dividending out our capital or doing buybacks, which we don't intend to do, and we are looking to increase our capital base, there is no way ROEs can sustain without earning growth, right, that sheer mathematics.
Speaker #7: For ROE to sustain, we will have to have long-term earnings growth. So, from a long-term perspective, we do want to get to, let's say, in the medium term, maybe Rs. 3,000–4,000 crore of pre-sales that we'll need to hit.
Speaker #7: All I was saying was, momentarily, for some quarters of challenge, we could go through if that sustained momentum will take to get there.
Speaker #7: And I think the strategy of the company is, okay, let's invest more and more in senior living because we see that as a structural business.
Speaker #7: So, the change is, and second, it's less cyclical because it's a structural change, due to the change in the demographics. And it's less cyclical because it's less competitive, with less supply on the table as of June.
Speaker #7: And we have a sort of a significant advantage of being a pioneer there and having our sort of brand placed in everything. So, the long-term earnings growth and also pre-sales growth is going to be driven by how senior living does.
Speaker #7: And right now, it's a small base, but as we increase the senior living piece in the pie, when that increases—when it becomes a larger part of the business—it will just keep driving the growth of the business.
Speaker #7: That is where we are coming from. So, let's say the FY 2029-30 financial year target is actually to look at ₹1,500 crores of pre-sales from senior living itself.
Speaker #7: And once that has kicked in, I think senior living and then pre-sales growth will happen. So, we are looking at a couple of quarters of maybe not as much top-line growth, and through those quarters, I think, though, we will continue to have earnings—reported earnings are doing well.
Speaker #7: We'll continue to have reported ROEs doing well. We will continue to generate positive cash and deploy into senior living. We have already deployed into five projects—four right now—with roughly 5.1 lakh square feet in the future pipeline, including the Bangalore one coming up.
Speaker #7: We are in active discussions for a few more. I think maybe the first place to get to would be about ₹10,000 crores of GDV in senior living.
Speaker #7: Once we have that, I think then we can see just senior living driving the momentum of the company going forward. I think that's the basic key.
Speaker #7: So, I think we will need to get to Rs 3,000–4,000 crores of GDV in pre-sales, probably closer to Rs 4,000 crores in the medium term, to be able to sustain those ROEs.
Speaker #7: And instead of just saying that, instead of a straight-line path, maybe there's a little bit of a dip for a couple of years, and we can live with that and pick that up and live there.
Speaker #7: I think that's the basic thing you said.
Speaker #2: Very good, very good. All the very best to you. Thank you.
Speaker #7: Thank you.
Speaker #1: Thank you. The next question is from the line of Chetan Thakkar from M3 Investment Private Limited. Please go ahead.
Speaker #2: Good afternoon, sir.
Speaker #7: Sir, just a question on the ROE. I think earlier we were highlighting a 20% plus ROE, and today you've commented that in the long run it remains at 15%.
Speaker #7: So, what has changed between those two assumptions?
Speaker #2: Okay, Chetan, maybe I'm wrong, but from what I remember, we've been talking about getting to 15% for the longest time, and we hit 15% last year and reported earnings.
Speaker #2: I would, maybe I'll go back and check the transcripts if I've said otherwise. But that said, as was on the current call and the previous question, I think this year we will hit 20% ROE, and we should hit 20% ROE for a few more years, given the plan that we have in place.
Speaker #2: I think that is something that we can do. But as I said, a 15% ROE has been the long-term goal. That's the minimum rate that the capital should sort of compound at going forward.
Speaker #2: That's been the intent, at 15.
Speaker #7: So, structurally, how should we look at the ROEs when we build it up from a project to the ROE perspective? How does the project margin change for you in the longer run, not just for a year or two?
Speaker #7: But how does the project margin change for you, which gets you to 15?
Speaker #2: I think if we are able to achieve about a 30% gross margin, and...
Speaker #1: Hello, sir. Your voice is not audible. Hello, Varun sir.
Speaker #2: Hi. It's muffled, sir. Okay. Why don't you—this is better. This is better.
Speaker #3: Yeah, yeah. This is better. If you want to continue, I'll send it.
Speaker #7: I just—so, as I said, we generally target about a 30% gross profit margin at the project level, about 18% PBD margin, about 12% SG&A, and an 18% PBD margin, and thirteen and a half pack points.
Speaker #7: If you're able to sustain that, whenever—whichever year—I think, overall, generally, our ROEs should translate into the teams. And if we are able to improve the margin profile further from here, then that takes us to about 20.
Speaker #7: That's the general sort of view for me.
Speaker #2: And levers to improve the margin—would it be more pricing power, given the brand and given how we are placed in the senior citizen market?
Speaker #2: That would be one key lever. Or are there any other levers as well there?
Speaker #7: So, one, pricing power is definitely a key lever. And we enjoy pricing power in senior living. What we are also intending to do in senior living is to increase our product profile into a little bit more higher-end segment.
Speaker #7: So, if you see, our pricing has been increasing on a ticket size basis also. We are going up to more premiumized products, as was mentioned in his opening; premiumization is the main thing.
Speaker #7: So, as we move to premiumize our products and enter higher categories of products, their margins should also improve.
Speaker #2: But.
Speaker #3: And if I may just add to that, Varun ji, I think the other factor is the operating leverage fully playing out in the long run.
Speaker #3: Because if we are talking about senior living, which is relatively more resilient towards cyclical fluctuations, if that attains a critical mark—something like ₹1,500 crore of pre-sales that you talked about—the kind of operating leverage which will flow through will also give a sustained kind of impact on the margins in the long run.
Speaker #3: And hence, the ROEs as well.
Speaker #2: Understood, sir. Thank you, sir. That's helpful. All the best.
Speaker #1: Thank you. The next question is from the line of Ankit Shah from White Equity Investment Advisors. Please go ahead.
Speaker #2: Thank you for taking my question. Sir, apart from Bangalore, are there any other business developments near closure, particularly in Jaipur or Gurgaon, that you can share?
Speaker #7: Hi.
Speaker #1: Sorry to interrupt. Sir, your voice is not audible. No, sir, we are not able to hear you.
Speaker #3: Hello?
Speaker #1: Yes, sir. Please continue. The Varun line has gotten disconnected.
Speaker #3: He's there. He's there. Just give him a moment. Just give us a moment.
Speaker #1: Okay.
Speaker #2: Sure.
Speaker #3: Awesome. On the business development front, we have active conversations going on in Jamshedpur, something in Chennai, something in Bombay, and Pune. In MCR, I think we should get something done, even a small thing, in Jamshedpur, hopefully sooner rather than later.
Speaker #3: And outside that, in Bangalore, things are in advanced stages of discussion, but they're still in discussions. I don't think we'll have any announcements in the coming quarter, but hopefully in the third quarter of this year, we should announce those transactions as well.
Speaker #2: Okay, that's it from our side. Thank you.
Speaker #1: Thank you. The next question is from the line of Aditya Banerjee, an individual investor. Please go ahead.
Speaker #7: Oh, yeah. Hi. Thank you for the opportunity. So, I have a few questions on the side of the revenue quality. My first question is: What's the underlying rent rate for bookings?
Speaker #7: Is Q1 FY27—358 crore—closer to steady state, or is the big launch due later in FY27 going to normalize the number?
Speaker #3: So, Aditya, one thing. The numbers in the deliveries are not given by launches. So, when you're talking about quarters, that's dependent on the handover, and that's driven by OC.
Speaker #3: For this year, I think we give a delivery schedule and a revenue schedule. It seems like he's talking about three things—he's talking about launches.
Speaker #3: Are you talking about pre-sales when you said 50 crores for the quarter, or are you talking about revenue in the financial statement? I think he talked.
Speaker #2: Revenue in the financial statement.
Speaker #3: You're talking about the financial statement. You're talking about the reported revenue, correct?
Speaker #2: Yeah. Yes.
Speaker #3: Sorry. So, yeah. Reported revenues—in slide 15 of the deck, we have given an indication of how much we expect to report this year.
Speaker #3: And this year is expected round about 2,000 crores of revenue is expected this year. So, definitely Q1, as that number was not at all normal.
Speaker #3: I would also say quarterly revenues for a real estate company and quarterly profits are not so valuable because our revenues keep fluctuating depending on delivery.
Speaker #3: So, two projects—Ashiana A3 and Ashiana Amara, Phase One—total to about ₹532 crore of revenue. We got those OC (Occupancy Certificates) in the middle of July.
Speaker #3: So, they're coming in July, August, September. We gave that update. If that occupancy certificate had come in on, let's say, 25th June, we would have been able to recognize that entire revenue in June itself.
Speaker #3: But since it came in on 15th July, everything is in the middle of July, not the 15th. In the middle of July, everything is coming in the second quarter.
Speaker #3: Now, that kind of fluctuation, I don't have any ability to control in our business, and that will remain. So, he said Q1 was reflective, and I would say Q2 may not be reflective as well.
Speaker #3: We should look at revenues and reported profits on a year-on-year basis. Therefore, in our slide decks, we have given a sense of what kind of annual revenue we should expect.
Speaker #3: And what we're trying to do is make sure those get met out in the year. That means they don't slip from one year to the other.
Speaker #3: And I think that's the endeavor that the company has.
Speaker #7: Okay. Okay. Got it. Got it. Somer, another question is that according to my understanding, this unit sold figures go from 407 to 234 year over year.
Speaker #7: Even as ticket sizes rose, is this deliberate or a genuine volume slowdown?
Speaker #3: Again, it's difficult to say. It's not deliberate. But also, as I had indicated earlier, we have some lesser inventory in some markets. So, that had an impact, and the launch happened in July.
Speaker #3: So, as I clarified earlier, by 31st July, our overall pre-sales for the year were ₹859 crore. We have guided for about ₹2,200 crore this year.
Speaker #3: And I think we are on track to meet that guidance as of now. As I said, in H1, we should exit at probably ₹1,050 to ₹1,100 crores of pre-sales.
Speaker #3: So, things are going all right.
Speaker #7: Okay. Okay. Okay. Sir, on the portfolio mix side, the ongoing portfolio mix has shifted to elite and premium homes at 36%, versus senior living at just 23%.
Speaker #7: Given Ashiana's brand is built on senior living leadership, is this a deliberate strategic pivot toward higher-ticket premium homes?
Speaker #3: No, actually, if you look at our company, even though we were known for senior living, senior living was probably 10% of our business five years ago.
Speaker #3: Okay. Let's say FY '22 or '23 would have been 10% of our business, which has become 23%. If you look at deliberate pivot, I would again, on the deck, urge you to go to slide number.
Speaker #3: I think, on slide number 19, which is our land available for future development, if you see, the entire 5 million square feet is senior living.
Speaker #3: Bangalore, which we had just spoken about on the call, will get added to this land available for future development, hopefully soon. It is also senior living.
Speaker #3: So, a large part of the pivot is happening towards senior living. Even in slide 18 of future projects, which is phases of existing developments—about 40–45% of that is also senior living.
Speaker #3: So, this mix will change decisively in favor of senior living in the next two to three years.
Speaker #7: Okay, okay, okay. Sir, I have this last question: ticket-centric homes are concentrated almost entirely in Gurugram. So, how are you thinking about the geographic concentration risk?
Speaker #7: And versus diversifying to other cities?
Speaker #3: So, we have done ticket-centric homes in Jaipur as well, and Bhiwadi as well. Then we have done Gurugram. Ticket-centric homes, as a concept, we are still sort of fine-tuning the recipe, if that's the way to put it, where we are learning how to differentiate the concept better as we go along.
Speaker #3: The senior living concept, we have differentiated. We have understood the model. We are in the zone of scaling it up. Senior living, our first two really, really differentiated, ticket-centric homes projects are in Gurugram.
Speaker #3: One, in Amara we've just delivered phase one. At Aroham, we have just launched. I think it will take us a few more years—I would say two or three more years—to sort of figure out ticket-centric homes better.
Speaker #3: And once we have figured it out better, I think we'll take the path of really scaling that up and taking it to more and more cities as we go forward.
Speaker #7: Okay. Okay, sir. Thank you so much.
Speaker #2: Thank you. Ladies and gentlemen, as a reminder, if you wish to ask a question, please press star and one on your touchtone telephone. Ladies and gentlemen, if you wish to ask a question, please press star and one on your touchtone telephone.
Speaker #2: The next question is from the line of Khurshid Solanki, an individual investor. Please go ahead.
Speaker #4: Hello. I'm audible.
Speaker #3: Yes. Hi.
Speaker #4: Yes. So.
Speaker #3: Yes.
Speaker #4: Yeah, so I wanted to ask about the Vadga Pune acquisition. Can you walk us through the payback assumptions on the ₹1,800 crore Vadga project?
Speaker #4: What type of effort and absorption pace are you underwriting currently?
Speaker #3: I couldn't understand you fully, Khurshid. The sound was a little muffled. Can you repeat that, please, for us?
Speaker #4: Hello. Am I audible now?
Speaker #3: Yes, you are.
Speaker #4: Yeah. So?
Speaker #2: Sorry to interrupt, Khurshid. Your voice is not audible.
Speaker #4: So can you hello?
Speaker #3: Yeah. Khurshid, I will say what I understood. Please say yes or no if I understood the question correctly. You said, regarding the new Vadga parcel that we have taken up, you were asking what are our assumptions to be able to do ₹1,800 crores of revenue and what kind of annual absorption do we expect in that project.
Speaker #3: Is my understanding correct?
Speaker #4: Yes. Yes. Right. Right, sir.
Speaker #3: Okay, so it's a 20 lakh square foot project. We are estimating about ₹9,000 to ₹10,000 of revenue per square foot on the sellable area.
Speaker #3: So that translates into about ₹1,800 to ₹2,000 crores. So that is our estimate at underwriting. And yeah, we expect to sell about 2 lakh square feet a year, so that makes for about a 10-year development time frame.
Speaker #3: So it's a slightly longer development time frame, but we hope to enjoy good margins here. That should take care of overall returns from that perspective.
Speaker #3: And if things go better than expected, then I would say we could probably do 3 lakh square feet a year, and wrap up the project in about seven or eight years.
Speaker #4: Okay, got it. And another thing—regarding the NCB funding for this land parcel specifically, while internal cash approvals given are ₹785 crore, the net cash positioning at FY26...
Speaker #3: So the NCB financing was actually done by the landlords themselves. The landlords wanted to have a partial revenue share position in the project; they didn't want to sell it fully.
Speaker #3: So they were keeping a very minority stake overall. Therefore, in our view, we wanted to take the title of the full land.
Speaker #3: We didn't want to do a part JDA, so we said we'll do a full acquisition, and we'll issue you debentures to basically mimic that.
Speaker #3: So basically, they wanted to keep a 25% equity. So they contributed 25% of the purchase value back to the debentures. And we had agreed on a 6% revenue share for the remaining, so they're getting a 6% revenue share, which actually helped structure the transaction immediately.
Speaker #4: Okay. And what is the expected launch time for this?
Speaker #3: About 18 months, so about, yeah. So let's say it's H2 of the next financial year when we expect to launch this.
Speaker #4: Okay, sir. Thank you.
Speaker #3: Thank you, Khurshid.
Speaker #2: Thank you. The next question is from the line of Himanshu from Stairford. Please go ahead.
Speaker #7: Small query. On the five, six projects that we are trying to acquire, what type are they? And in FY27, or let's say FY27–28, are the projects very near to completion or not?
Speaker #3: So, how near to completion are you?
Speaker #7: "Near to completion" means or "near to acquisition". Okay, we use these, go through.
Speaker #3: Yeah. So, we have a total budget of deploying about ₹800 crore in this financial year, including the about ₹180 crore that got deployed in the last quarter.
Speaker #3: So we are looking to deploy 800 for the year in total.
Speaker #7: And this includes all the deals we are talking about right now, or could there be something else which will—
Speaker #3: Yeah. Yeah. It includes the deal we have done in the last quarter, and all the deals that we are in active conversations with.
Speaker #3: And serious conversations with.
Speaker #7: And one more thing: in some of the projects, historically, IFC also used to come in, okay, or we had an agreement with IFC. So, were there agreements with IFC only for residential, or can they also be partners in senior living? Or will they always be on the other side? And do the agreements still continue, or are they over?
Speaker #3: So, they are partner in senior living. They're actually a partner in Ashiana Vadkalia there. They have provided capital there as well. Their first platform, we had fully exhausted.
Speaker #3: In the second platform, we were only able to deploy about ₹100 crore into Aaroham. But the platform timeline is over, and we have not been able to deploy the rest.
Speaker #3: Just because of some—by the time we timed some of the projects and what their criteria for investment in these other cities outside of Gurgaon were, we were not able to meet on the ticket prices.
Speaker #3: So, they have an upper cap on the ticket size that they can finance per unit. In Gurgaon, we had some relaxations in place, but like in Chennai (Aranya) or in Tatvam in Panvel, we were not—which were there where they could have deployed.
Speaker #3: We were not able to meet their ticket size requirements, so unfortunately, because of that, we were not able to go through.
Speaker #7: Okay. Now, there are no more, let's say, funds or agreements with them.
Speaker #3: There is no active agreement with them. We are discussing with them how we can work together in the future. It's a partnership, I think, that both of us have enjoyed.
Speaker #3: We're open to future deals. We enjoy IFC's—the kind of capital that IFC brings to the table. I think it works really well for an organization like us.
Speaker #3: And I think they have also enjoyed good returns on the projects that we have been able to do. So, we are actively discussing if we can do further capital development.
Speaker #7: Okay. Thank you from my side.
Speaker #3: Thank you.
Speaker #2: Thank you. The next question is from the line of Nikhil, an individual investor. Please go ahead.
Speaker #7: Yeah, thank you. So, just two questions. First, you said that you're trying to make the business less cyclical. So, I just wanted to get a broad understanding—what could be the low and high of pre-sales year on year?
Speaker #7: Just a broad understanding, if you could. And second is, in case of multiple projects, how does operating leverage work? I got a sense that if it's a big project, then it will work, but you are across so many jobs or uses.
Speaker #7: How would operating leverage work? That's all.
Speaker #3: Nikhil, so two things. One, I don't know what the high and the low of a cycle would be. I think at some point in time, a couple of years back, we were looking at this number.
Speaker #3: And the idea was to look at the higher top and higher bottom, what we typically call, in the case of a capital market cycle as well.
Speaker #3: But then, that was a while ago. We looked at a number of something like 1 million square feet. That is the minimum that we need.
Speaker #3: To kind of break even. But then after that, our product portfolio has changed. The component of senior living has been increasing. So I think we need to take a fresh look at what is the kind of number that we look at as the minimum.
Speaker #3: Numbers, in any kind of cycle, and the maximum number we can go to. So Nikhil, the intent has become: how do we get to a place where we can make 15% ROEs?
Speaker #3: Floor in the organization. I think at first it was an aspiration to get there. We got there on an economic basis two, three years ago. We were on a reported basis last year.
Speaker #3: I think what we are looking to do is create a floor in the business of a 15% return on equity. So, therefore, we are trying to get more structural products in the portfolio where we think senior living has got structural tailwinds behind it.
Speaker #3: As India's demographics change, and I would say also the first real private sector children of liberalization start retiring—economic liberalization of '91. And I think that's what we are playing at.
Speaker #3: It would be very hard to give a bottom or a top. And in terms of operating leverage, I think operating leverage plays out in two ways.
Speaker #3: One, at the company level, I think Vikas ji, when he was talking about operating leverage, he was referring to the company level, as there are a lot of fixed costs at the company level.
Speaker #3: The second way it also plays out is at the location level. If you see, for any developer, they have a lot of location strength, location brand.
Speaker #3: So for us also, as we do more products in a location, our marketing costs fall. So, let's say, Chennai — it used to be around 8% in Ashiana Shubham.
Speaker #3: And we are now down to about 4% to 5% of sales and marketing costs. So, as we get more steady in a location, those things also come down.
Speaker #3: And then larger projects also help, where approvals are one-time, designing is one-time. As the phases get delivered later, we should be able to capture some of the value that we have created in the product through increasing prices.
Speaker #3: So there are three sort of levers, different levers, playing out at different points of time. That's what's happening.
Speaker #7: Yeah. Okay. Thank you. Thank you very much.
Speaker #3: Thank you.
Speaker #2: Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one on your touchscreen telephone. Ladies and gentlemen, if you wish to ask a question, please press star and one on your touchscreen telephone.
Speaker #2: The next question is from the line of Varun Yadav, an individual investor. Please go ahead.
Speaker #5: Hello.
Speaker #3: Yeah, Varun.
Speaker #5: I said Nirgu is another key. Anmol or— आपका Anmol Phase 3 और हमारा Phase 1 में मतलब approximately net margins कितना है, सर?
Speaker #3: I am not sure. But they are not. Individual margins होंगे, but low margin है दोनों. Anmol Phase 3 भी lower margin है. हमारा Phase 1 भी relatively lower margin है because हमारा, as a product, project has very good margins.
Speaker #3: But they are, Phase 3 onwards, margins are substantially better than हमारा. Would be hard to comment on a net margin. I don't know how to define a project-level net margin.
Speaker #3: But gross profit margin blended between Anmol and Hamara should be in the mid-20s. That is pre-selling cost and general administrative. We should be in the mid-20s.
Speaker #3: I don't think we are at the 30 level that we also expect to get. Blended across both those projects, we should be in the mid-20s.
Speaker #5: Also, second question.
Speaker #3: Sorry. Anmol 3 में what we can what we can tell you is कि हमारा जो margin है gradually phase over phases improve हुआ. Q1 के मुकाबले Q2, Q3 में थोड़ा pricing better हुआ.
Speaker #3: Improve हुआ. But still they were at a... Phase 1, Phase 2, Phase 3. Phase 1, Phase 2, Phase 3—I'm talking about Anmol. तो Phase 3 में margin उसके पहले वाले quarter, पहले वाले phases से better था.
Speaker #3: But still overall lower था.
Speaker #5: Yes. और जैसे अब ये Phase 1 की हमारा की position आ गया है, तो उसमें जैसे हमारा Phase 1, 4 और Phase 5 में अभी माल बचा हुआ है.
Speaker #5: तो उसमें फर्क पड़ेगा कुछ?
Speaker #3: In what way?
Speaker #5: मतलब selling hard हो जाएगा। जैसे Phase 1 में अगर resale आ गया तो?
Speaker #3: लेकिन उसका दूसरा पहलू भी है कि Phase 1 ready है। तो हमारे actually visits बढ़ गए हैं। हमारा clubhouse ready है दिखाने को।
Speaker #3: Landscape है दिखाने को, हमारा learning hub है दिखाने को। तो जो हम पहले सिर्फ plan से बेच रहे थे, model से बेच रहे थे, अब हम वो realities से बेच रहे हैं।
Speaker #3: दूसरी चीज, अब हमारे यहाँ end users ज्यादा हैं क्योंकि हमने गुड़गांव market में resale without registry allow नहीं करी थी, without possession allow नहीं करा था।
Speaker #3: तो शुरू में ही जो actually investors थे जिनको resale में बेचना था, वो कम ही आए। कुछ आए, but कम आए। तो overall resale का stock भी as a proportion of Phase 1 should be not more than 20%, I would say, as compared to where 80-90% of गुड़गांव sales by other developers used to be traded later.
Speaker #3: तो मुझे उतना प्रेशर नहीं दिखता, actually.
Speaker #5: Okay. Thanks sir. That's all.
Speaker #2: Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one on your touchscreen telephone. Ladies and gentlemen, that was the last question.
Speaker #2: I would now like to hand the conference over to the management for closing comments.
Speaker #3: Thank you all for participating in this earnings conference call. We remain focused on timely handovers in FY27 and on building long-term value through disciplined execution and customer-centric development.
Speaker #3: If you have any further questions or would like to know more about the company, please feel free to reach out to us directly. Alternatively, you can reach out to our investor relations managers at Vellorum Advisors.
Speaker #3: The investor presentation and relevant materials are available on our website, and we will be happy to provide any further clarifications you may need. Wishing you all good health and a productive year ahead.
Speaker #3: Thank you.
