Ajmera Realty & Infra India Ltd Q1 FY2024 Concall Summary

Key Takeaways

• Sales volume doubled QoQ, driven by Bangalore and a new launch: Sales value hit INR 225 cr (up 60% QoQ) and volume reached 1,35,000 sq ft (up 96% QoQ), powered by a revamped strategy for Lugaano and Florenza in Bangalore and the mid-June launch of Ajmera Eden in Ghatkopar.
• Debt-to-equity fell below 1x for the first time: The ratio improved to 0.97:1 from 1.1:1 a year ago, while the average cost of debt dropped to 11.9% from 13.7%, aided by an improved credit profile and an RBI rate pause.
• Revenue visibility stands at nearly INR 4,000 cr, with INR 980 cr in net cash flow expected: The visible pipeline splits into INR 233 cr from advanced-stage projects (6-12 months) and INR 1,900 cr from mid-stage projects (up to 36 months), with the balance from the existing portfolio.
• Management is confident of crossing the INR 1,000 cr sales target for FY24: Unsold inventory of INR 1,472 cr and a launched pipeline worth INR 1,800 cr in sales potential underpin the target, with three more launches planned, weighted toward the last quarter.
• What to watch next quarter: Whether the Pune slum rehabilitation project clears its remaining slums and gets a launch timeline, the pace of monetization for land parcels under discussion, and any announcement on new society redevelopment wins.

Quarterly Performance & Financial Health

• Sales surge was strategy-led, not organic: The 60% QoQ jump in sales value and 96% jump in volume came from a revamped sales approach for two Bangalore projects plus the launch of Ajmera Eden, which sold 14% of its inventory within weeks.
• Bangalore is now a material contributor: The mid-luxury Ajmera Nucleus is 96% sold and set for completion this fiscal year, while Lugaano and Florenza together delivered 31% of total sales value and 24% of collections this quarter.
• YoY comparisons are distorted by a one-off: Last year's Q1 included the massive launch of the Manhattan project, so year-on-year growth rates are not directly comparable.
• Profitability tracked revenue growth closely: Revenue rose 113% YoY to INR 118 cr, EBITDA rose 112% YoY to INR 39 cr, and PAT rose 82% YoY to INR 21 cr, reflecting operating leverage from the sales pickup.
• Debt metrics improved on both leverage and cost: Debt-to-equity fell below 1x for the first time, to 0.97:1 from 1.1:1 in Q1 FY23, while the average cost of debt dropped 180 bps to 11.9%, helped by a better credit profile and the RBI's rate pause.
• Cash flow visibility is quantified at INR 980 cr net: This figure is derived from balance receivables minus cost to complete and minus project-level debt, across the ongoing portfolio over its life cycle.
• Interest cost is expected to stay within the current trajectory: Management cited floating-rate borrowings and the RBI's pause on hikes as reasons for stability, with an endeavor to keep the overall cost of debt around current levels.

Dhaval Ajmera: "…as far as, you know, group level debt or the corporate level debt is concerned, we will definitely make it to as low as zero, but operationally, project wise, you know, if there are debt required, we will continue to have."

Launch Pipeline & Project Updates

• Three more launches are planned this year, weighted to Q4: The upcoming launches, including a recently acquired Vikhroli project and others in Mumbai, carry an estimated sales potential of INR 1,800 cr across roughly 9,00,000 sq ft of carpet area.
• Quarterly sales will be lumpy: Management expects Q2 and Q3 to deliver sustainable numbers roughly in line with Q1, with a significant spike in Q4 when the major launches hit the market.
• Two projects are set for delivery in Q2 FY24: Ajmera Greenfinity and Ajmera Sikova are 84% and 89% sold respectively and will be completed and handed over this quarter, triggering revenue recognition.
• Ajmera Manhattan is progressing on two towers: Tower B has reached ground level and Tower A is nearly done with its basement, keeping the flagship project on track.
• Ajmera Prive in Juhu is moving above ground: The project has completed its third slab and sold 24% of inventory, with revenue eligibility beginning next quarter.
• The company has shifted to carpet area terminology: This aligns disclosures with RERA's recognition of carpet area rather than saleable area, a change noted this quarter.
• Land monetization is under discussion for one or two parcels: These are investment properties being monetized due to value accretion, not primarily for debt reduction, though any proceeds would help on that front.

Growth Ambition & The 5x Target

• The 5x growth target is anchored to FY22 as the base year: Management aims for 5x growth within five years from FY22, placing the achievement window in FY26 or FY27, with the target sales range defined as INR 1,200-1,500 cr on an average basis.
• The target math includes unsold inventory, new launches, and land bank: The INR 1,200-1,500 cr range draws on roughly INR 1,400 cr of unsold inventory, plus new launches, phase-wise development from the Wadala land bank, and new acquisitions.
• A new micro market entry is planned for H2 FY24: The company is about to enter a new micro market in Mumbai's suburbs, covering both Western and Central Mumbai, but details are withheld under NDA.
• The Wadala land bank offers 0.36 cr sq ft of potential: Development will proceed in phases as demand picks up, providing a long-duration supply of launch inventory.
• FY25 revenue guidance was explicitly declined: When asked for a specific FY25 estimate, management said it does not want to put a number out, preferring to show results, though it pointed to the INR 4,000 cr existing project pipeline plus new launches contributing another INR 4,000 cr over three years.

Dhaval Ajmera: "2025 is a number which I would wish and want to target, but we are aiming towards the 5x growth in the next five years starting FY22 onwards. So, within FY26, FY27, definitely we should be there."

Redevelopment & New Business Opportunities

• Cluster redevelopment regulation is a tailwind: The new regulation offers discounts on premiums, lowering costs, and makes it more attractive for old societies and larger layouts to enter the redevelopment process, which management sees as a multi-thousand-crore opportunity across South, Central, and Western Mumbai.
• The company is actively working on society offers: Nothing has been factored into projections yet, but management said it will announce any wins to the market if and when they materialize.
• The Pune slum rehabilitation project is at a tipping point: 50% of slums have been vacated and the balance is on the verge of clearance, but no launch timeline is given due to the inherent complexity of such projects.
• New acquisitions are in progress but details are sealed: Management cited NDAs in declining to disclose specifics, confirming only that acquisitions are in different micro markets across Mumbai's Western and Central suburbs.

Dhaval Ajmera: "…it can be as great as, you know, couple of thousand crores because if we look at, you know, every slot in South Mumbai if, you know, at least 5, 7, 10 buildings coming together or maybe in the Central parts of Mumbai or the Western parts of old societies of Mumbai…"

Margins, Returns & Capital Allocation

• EBITDA margins on new projects range from 25% to 32%: The variance depends on the project type: historical land bank (like Wadala), redevelopment, JV/JDA, or slum rehabilitation each carry different margin profiles, and management did not provide a project-specific forward margin for the FY24 launches.
• The stated margin envelope is 30%+ EBITDA and 15%+ PAT: Management said it endeavors to remain in this range, though individual project margins will differ.
• The minimum IRR hurdle for new projects is 24-25%: Management said anything below that threshold does not make sense given the uncertainties inherent in real estate development.
• Revenue recognition will be lumpy across the year: Advanced-stage projects (Sikova, Greenfinity, Nucleus C wing) are expected to contribute revenue within this fiscal year, alongside sustained sales from Manhattan and the Bangalore market, with Prive becoming revenue-eligible from next quarter.

Dhaval Ajmera: "…anywhere above 24%, 25% is what minimum we look at and going beyond that because below that we don't really make, it makes sense for us to put in our hands on the project."

Guidance & Commitments

Key Metrics