Ajmera Realty & Infra India Ltd Q3 FY2023 Concall Summary

Key Takeaways

• Sales momentum accelerated sharply: 9M FY23 sales value grew 126% YoY to Rs. 701 crore, driven by recent launches, while Q3 collections rose 40% YoY.
• Profitability transformed: 9M PAT margin expanded 720 bps YoY to 17%, nearly doubling from the ~9% range that prevailed until FY22.
• Balance sheet strengthening in progress: Debt reduced by Rs. 38 crore this quarter, pulling the debt-equity ratio below 1.1x, with management promising a "pleasant surprise" on corporate-level debt reduction soon.
• Launch pipeline is the growth engine: Three more launches targeted across FY23 and FY24 carry an estimated revenue potential of Rs. 2,000 crore, with two expected in coming quarters.
• What to watch next quarter: Whether the two near-term launches (Ghatkopar, Central Mumbai 2) actually hit the March 2023 timeline, the promised corporate debt reduction materializes, and whether the slight elongation in site-visit-to-closure timelines for mid-segment buyers stabilizes or worsens.

Sales Performance & Realization

• Launch-led growth: The 126% YoY jump in 9M sales value to Rs. 701 crore was powered by recent project launches during the period, not just steady-state sell-through.
• Collections kept pace: Q3 collections improved 40% YoY to Rs. 116 crore, reflecting sustained conversion of booked sales into cash.
• Pricing power evident: Realization per square foot improved 16% YoY in Q3, suggesting the portfolio mix is shifting toward higher-value projects or that underlying price increases are sticking.
• Project-level traction: Ajmera Manhattan, recognized as a top-selling housing project in Mumbai's Eastern suburbs, had booked sales of Rs. 526 crore (37% of inventory) as of December 2022. Ajmera Prive in Juhu, launched only in October after receiving its OC and RERA certificate, had already sold about 10% of inventory.
• Demand resilience at the top end: Top-end projects and houses remain in demand and are not being affected by current interest rates. Mid-segment and affordable buyers are showing slight hesitance due to rate hikes, with the site-visit-to-closure timeline shifting from roughly one month to about one and a half months, a slowdown management characterized as not large.

Dhaval Ajmera: "...post-COVID is that people are preferring to buy A either it is a ready house with an occupation certificate or B they would probably invest in projects with those developers who are either established, who have delivered, who are been in this business since a longer time, and also if it adds on as a thing. At least what I personally feel is that if the player is listed because they are more I mean they are perceived and they are more transparent probably than others so because everything is open to the public at large so that as Ajmera I feel we stand an advantage..."

Margins & Profitability

• Structural margin shift: 9M FY23 PAT margin reached 17%, up 720 bps YoY and roughly 88% above the 9% margin band that prevailed until FY22. This is not a one-quarter aberration but a 9-month trend.
• Realization tailwind: The 16% YoY improvement in per-square-foot realization is flowing through to profitability, alongside operating leverage from higher sales volumes.
• Interest cost headwind: The weighted average cost of debt sits at about 13%, pushed up by RBI repo rate revisions. Management is explicitly trying to keep its interest outgo in check given the peak of the rate cycle.

Nitin Bavisi: "...we are putting a very striking the balance between the business development side, which is a low CAPEX growth proposition versus the deleveraging because that's the at a peak level of interest rate cycle, we want to keep our interest outgo on our check."

Balance Sheet & Deleveraging

• Quarterly debt reduction: Debt fell by Rs. 38 crore (roughly 5% of the total debt book) during Q3, driven by sustained sales momentum, robust collections from the UK and repatriation, and domestic sales collections, even while the company actively pursued business development.
• Debt-equity improving: The ratio improved to 1.04x from 1.1x in the prior quarter. Management guided to operate below 1x and expressed confidence in bringing it further down in coming quarters.
• Corporate debt catalyst teased: On the Rs. 550 crore of corporate-level debt, management stated there are "very exciting things on the table" and that it expects to "pleasantly surprise" investors, with a timeline of "very soon" and "hopefully" next quarter. No specifics were disclosed.
• International repatriation flowing: Approximately Rs. 14 crore was received this quarter from the UK (London), representing 35-40% of total expected repatriation from that market. Further repatriation is expected in the next one to two quarters to complete the UK cycle. Bahrain repatriation is at least 1.5 to 2 years away, as the under-construction property must first come into existence.

Nitin Bavisi: "Yes, we do have very exciting things on the table and we should be coming back and we will pleasantly surprise on this score as well."

Project Pipeline & Launches

• Near-term launches: Two projects, Ghatkopar and Central Mumbai 2, are slated for March 2023. Central Mumbai 1, earlier planned for sooner, has been pushed to a conservative December 2023 timeline based on current approval status, though management is confident of launching prior to that.
• Three-launch revenue pool: The three potential launches across the balance of FY23 and FY24 carry an estimated carpet area of 0.1 crore square feet and an estimated revenue potential of Rs. 2,000 crore. Management is confident of launching two of these in the coming quarters.
• Total revenue visibility: Approximately Rs. 4,000 crore from existing and ongoing projects, broken down as: Rs. 141 crore from OC-received projects (expected to clock into the income statement in about six months), Rs. 257 crore from advantage projects (envisaged in less than a year), and Rs. 1,700-plus crore from mid-stage projects (within a lifecycle of about 36 months).
• Estimated cash flow: About Rs. 900-plus crore from the existing project portfolio.
• Manhattan Phase 2 gated: No established timeline; management wants to reach 60-70% sales in the current phase before launching Phase 2, looking at "probably one year time."
• Kanjurmarg remains unbounded: Management declined to commit to a timeline, calling the land "one of the rarest pieces" and stating it wants to bring the project in a "very different style" with all approvals cleared at one stage. When pressed by two analysts, the response was "maybe probably year or year and half ahead," but framed as bringing it up "at the right time," not a committed launch date.

Dhaval Ajmera: "Kanjurmarg is something which is like one of the rarest pieces of land available for any developer like us. And we want to really bring out the best of the value to the project for which we are ensuring that we bring in the best of the design best of the name, the best of the tie up to make sure that we get the better valuation, which will ensure our long term capability and vision for our company..."

Growth Strategy & Business Development

• Land bank unlock: A further potential development of 1.18 crore square feet from own land banks in Mumbai and the MMR region will be unlocked according to market demand and supply in the years to come. The success of Ajmera Manhattan is expected to accelerate this unlocking.
• Asset-light push: The company continues to aggressively evaluate asset-light JDA models alongside its owned-land-bank strategy.
• Redevelopment focus: Management is "very, very gung-ho" about redevelopment, calling it the future for Mumbai given clean-title land in established locations. Active discussions are underway with societies across Mumbai suburbs, with declarations expected once NOCs and LOIs are in place, timeline "next couple of quarters."
• JV/JD pursuits active: The company is actively pursuing joint ventures and joint developments, though it acknowledged that getting favorable terms is challenging. Discussions are underway on many projects and management is hopeful of closing.
• Sales volume target: Targeting half a million to 600,000 square feet in the coming financial year, supported by launching pipeline projects and sustaining sales from existing unsold inventory.
• 5X growth ambition: A 5X growth plan was mentioned, with strong brand value cited as an enabler. No specifics on the base, metric, or timeline were provided.

Dhaval Ajmera: "I personally believe that redevelopment is the future for Mumbai because that's where the land which A is available with clean title, B it is available in an established location and 3rd micro market with better projects like these will only upgrade the living lifestyle, so we are very, very gung-ho about redevelopment..."

Project Execution & Completions

• Greenfinity progress: Superstructure constructed in around 13 months; currently at finishing and MEP stages, with completion expected in Q1 FY24.
• Sikova (commercial): Boutique offices at Ghatkopar, completion expected in Q1 FY24.
• Nucleus OC received: Received occupation certificate for residential wings A and B (ready to move in) and for the commercial project.
• Commercial portfolio: Two commercial projects in the portfolio: one almost ready, to be delivered by Q1 FY24; one in Bangalore ready with OC, under discussion with buyers.
• Ajmera Luxe SPV: ARIIL is making a private limited company (Ajmera Luxe or similar) a 100% subsidiary; this company will serve as a project SPV eyed for business development.
• Demerger update: The NCLT process is at the last leg; the petition hearing is likely to happen soon, and management is very hopeful of having the asset travel into the SPV level.

Guidance & Commitments

Key Metrics