Ajmera Realty & Infra India Ltd Q2 FY2023 Concall Summary

Key Takeaways

• Sales value more than doubled YoY: H1 FY23 sales of ₹566 crore already exceeded full-year FY22, driven by the Ajmera Manhattan launch and steady existing-project velocity.
• Realization and margins both jumped: H1 realization rose to ₹23,844/sq ft from ₹17,460 a year ago, while PAT of ₹46 crore in H1 matched the entire FY22 annual profit, aided by high-margin, unlevered projects.
• Launch pipeline is fully loaded: Four upcoming launches carry a combined revenue potential of ~₹2,200 crore, adding to ₹2,100 crore from ongoing projects for total visibility of ~₹4,300 crore.
• Debt rose but leverage held steady: Absolute debt increased to ₹826 crore to close the Ghatkopar land deal, yet the debt-equity ratio stayed at 1.11 as net worth also expanded; UK repatriation has begun.
• What to watch next quarter: Pace of sales at newly launched Ajmera Prive (Juhu), closure of the NCLT demerger process, and any concrete announcements on asset-light JV/JDA deals or PE platform tie-ups.

Sales & Launch Momentum

• Manhattan drove the H1 beat: Launched at the start of FY23, Ajmera Manhattan sold ~33% of inventory in six months and was recognized as the top-selling project in Mumbai's eastern suburbs for April–June 2022. Prices were raised ~5–6% over that period.
• Existing projects kept converting: Greenfinity (Wadala) reached 73% sold and the finishing stage; Sikova (Ghatkopar) commercial hit 66% sold; Ajmera Nucleus (Bengaluru) residential reached 77% sold and received OC during the quarter.
• Two near-term launches add fuel: Ajmera Prive (Juhu) received RERA approval in October 2022, with foundation and excavation work now started. The Codename Ghatkopar project achieved financial closure with a global bank and acquired land rights from Tata Communications, targeting ~1 lakh sq ft of carpet area.
• Two more Central Mumbai launches planned during FY23 and FY24, taking the total launch pipeline to four projects with an estimated ~₹2,200 crore revenue potential.
• Bengaluru commercial ready to contribute: Nucleus Commercial received OC and management expressed confidence in selling it over the coming few quarters, citing good demand from diverse sectors.
• Price hikes are demand-dependent: Manhattan's ~5–6% increase over six months was absorbed; future calls will balance velocity and realization, with the stated aim of maintaining momentum for a "great sell out."

Dhaval Ajmera: "So, so far, we've not seen too much of resistance coming due to the higher interest rates. So, I mean, my good sense is that maybe going forward if the interest is really blow up higher, then probably might be a resistance coming from the customer. But looking at the scenario with the way demand and real estate is moving, I mean at least I believe that the government probably would not jump in or hike in too much of interest rates costs, which will continue with this momentum which is going right"

Margin Quality & Trajectory

• Product mix is lifting margins structurally: High-margin Ajmera Manhattan provided an immediate kicker, while Greenfinity (Wadala) and Ajmera Prive (Juhu) are both unlevered, self-funded projects that carry no financing cost drag.
• Realization improvement was sharp: H1 FY23 realization of ₹23,844/sq ft compared to ₹17,460 in H1 FY22; Q2 FY23 realization of ₹20,760/sq ft versus ₹16,867 in Q2 FY22. The mix shift toward premium, own-land-bank projects is the driver.
• Commodity costs softened but not fully: Input costs rose significantly post-COVID and have softened from their peak over the last six months, though they have not returned to pre-COVID levels, leaving some cost-side pressure in the system.
• PAT already at full-year scale: H1 FY23 PAT of ₹46 crore equaled the entire FY22 annual PAT, reflecting both revenue acceleration and the front-ended cost and approval premiums paid in December 2021 under a concessional window, which improved revenue visibility.
• Own land bank is the margin moat: Projects on owned land like Wadala are expected to deliver structurally better margins than acquired-land projects, and management expressed confidence that the margin expansion is sustainable as the launch mix shifts further toward such projects.

Nitin Bavisi: "So, all these steps put together, we are very confident that going forward, we should have a good traction in the margin as well."

Balance Sheet & Capital Management

• Debt rose for a specific reason: The increase to ₹826 crore was driven entirely by closing the Ghatkopar land deal during the quarter; it was not a result of operational cash burn.
• Leverage ratio held stable at 1.11: Net worth expanded alongside the debt increase, keeping the debt-equity ratio unchanged. Management is working to bring debt "much, much below one" through operating cash flow and asset monetization.
• UK repatriation has begun: A first tranche of ~₹5 crore was received immediately after Q2 close, with a further ~₹70 crore+ expected within FY23, though no specific quarter-by-quarter timeline was provided for the balance.
• Bahrain repatriation is further out: Management expects to initiate the process within 1.5–2 years.
• Asset monetization is in progress: Alongside UK cash flows, an asset monetization process is "under the card and progressing well," which management expects will further reduce debt to sustainable levels.
• NCLT demerger is procedural: The final hearing is expected in November, with monthly dates scheduled; the process was described as a "plain vanilla" transfer to a 100% wholly-owned subsidiary.

Nitin Bavisi: "the kind of operating cash flow repatriation from the UK market, which has started in this particular, post this quarter two, so, that all and the monetization of an asset is also under the card and which is progressing well. So, things of that sort, all put together should really help us to bring down this particular debt to a very sustainable..."

Land Bank & Pipeline Visibility

• Total revenue visibility stands at ~₹4,300 crore: ₹2,100 crore from ongoing projects plus ~₹2,200 crore from four planned launches, to be recognized broadly over 3 to 5 years, with OC and advanced-stage projects converting earlier.
• Wadala is the long-duration anchor: The land bank will be launched in phased steps based on micro-market demand absorption; management explicitly noted that launching ~0.2 crore sq ft at once would outstrip demand, so a step-by-step approach preserves pricing and velocity.
• Wadala commercial timing tied to infrastructure: Management is waiting for the Sewri-Nhava Sheva link road (connecting to the new airport) to complete next year, expecting that to drive greater momentum and demand, at which point the commercial component will be "put on the block" for the right valuation.
• Kanjurmarg is the next unlock: Loose-end approvals (environment clearance, government NOC, police housing NOC) are expected in the next 6–9 months, after which the project can be brought "up on the table" for launch.
• Pune project being refined: Planning is being finalized and tweaked for better sales velocity and approvals; management is hopeful of a launch "in the coming year."
• Bengaluru expansion continues: Lugaano & Florenza are under construction with better demand and numbers expected in the coming quarter; management is hopeful of adding a few more projects in the region.

Dhaval Ajmera: "So right now, the Wadala commercial belt is now slowly starting to see some momentum because of the connectivity and our belief is by next year, when the connectivity of the Sewri-Nhava Sheva link road which is connecting to the new airport, which will be done, by then we will see a greater momentum and demand coming. So, I think we fit in well and that's when we feel we should really put the project on the block so that we get the right kind of valuation."

Growth Strategy: Asset-Light & Partnerships

• 5x growth ambition is land-bank-backed: Management stated that existing land holdings within the Mumbai region are sufficient to grow the company 5x from current scale, with asset-light models layered on top to take potential even higher.
• Asset-light models under active evaluation: The company is pursuing JV, JDA, and DM models, plus redevelopment opportunities in Mumbai, with 10–14 redevelopment prospects being actively worked.
• PE platform discussions are live: Management is in active discussions with private equity players for platform-level deals or greenfield/brownfield project tie-ups and expressed hope to "crack some deals soon," though no specific timeline was committed.
• Redevelopment closures targeted near-term: Of the 10–14 opportunities under evaluation, management is hopeful of closing a few "in the coming quarters."

Dhaval Ajmera: "Moving forward, with our existing land banks, our strategy is very clear that we already own a significant amount of land within Mumbai region to make our company grow from where we are today and reach at 5x."

Demand Environment & Interest Rate Sensitivity

• Demand has held through rate hikes so far: Management reported consistent demand despite the rising rate cycle and attributed it to strong underlying real estate momentum.
• The 9% home-loan threshold is the psychological line: Management believes that if home loan rates cross 9%, customers may start feeling resistance, but does not see that happening too soon.
• Government policy is seen as supportive: Management's base case is that the government will not hike rates too aggressively to avoid disrupting the current demand momentum.
• Mitigation option exists: If rates do rise further, management indicated willingness to absorb some of the interest rate impact to maintain sales velocity, though this was framed as a contingency, not a plan.
• Commercial demand is completion-linked: Sikova (Ghatkopar) commercial is 66% sold, with the balance one-third expected to move in the next two quarters as the project nears OC, a pattern management described as typical for commercial assets.

Dhaval Ajmera: "I personally believe that, psychologically, the interest rate when it is you know around 8% or something 8% to 9%, but when the home loan threshold goes beyond 9%, that's when people would start feeling a little jittery or probably stop being a little resistant. But I am not seeing that happening too soon."

Guidance & Commitments

Key Metrics