Ajmera Realty & Infra India Ltd Q2 FY2024 Concall Summary

Key Takeaways

• Sales momentum intact, financials face tough comps: Sales value grew 50%+ YoY on sustained launch momentum, but reported revenue and profit were flat YoY because Q2 FY23 included Manhattan's first revenue recognition, creating a high base.
• Land bank reloaded for the 5X vision: Five new project additions this quarter across Vikhroli, Versova, Borivali, Bhandup and Bangalore add a combined ₹1,710 crore of GDV, all structured as low-capex redevelopment or JDA deals that conserve cash.
• Revenue visibility is deep but back-ended: The company cites ₹4,750 crore of total revenue visibility, with ₹780 crore of unrecognised revenue from already-sold inventory that will flow through the P&L progressively as execution advances.
• Debt cost ticked up, leverage discipline stays: Weighted average cost of debt rose marginally to 12.1% on RBI CRR requirements and floating-rate resets, while management reiterated a commitment to keep debt-to-equity below 1x.
• What to watch next quarter: Whether the ₹1,000 crore full-year sales target stays on track after H1, the pace of revenue conversion from the 1,000 possessions handed over, and any progress on the long-pending demerger petition.

Sales & Launch Momentum

• 50%+ sales growth YoY: Driven by sustained launch momentum of Ajmera Eden and significant contribution from Manhattan and other ongoing projects, keeping the company on track for its ₹1,000 crore FY24 sales target.
• Eden as proof of concept: The project achieved 30%+ sales within four months of launch, giving management confidence that new launches can scale quickly and contribute meaningfully to the full-year number.
• Inventory buffer supports the target: Ongoing unsold inventory of ₹1,500 crore plus Eden's demonstrated velocity provide the runway, though management did not name specific upcoming launches that will close the gap to ₹1,000 crore.
• Balance inventory push: Management hopes to sell down remaining stock in Ajmera Lugaano and Florenza faster, and expects commercial leasing momentum to pick up in coming quarters.

Dhaval Ajmera: "India as an economy and we are looking very positive and in a great position. It's a very optimistic surrounding where the Indian economy currently looks like, this positive outlook is unpinned by several growth or catalyst which I can say which is really helping expand our country to very different level and propelling consumer spending."

Project Additions & Business Development

• Five new projects, zero land buys: All five additions this quarter are structured as redevelopment, SRA or JDA, requiring minimal upfront capital. Management argues this lets the company do four to five projects for the same capital as one outright land purchase.
• Vikhroli land acquisition: A valuable land parcel with a GDV of ₹550 crore, the largest of the new additions.
• Three Mumbai redevelopments: Versova (Andheri, ₹360 crore GDV), Yogi Nagar (Borivali, four societies, ₹330 crore GDV), and Bhandup (SRA, slum vacated, 1.7 lakh sq ft, ₹320 crore GDV) deepen the pipeline in prime micro-markets.
• Bangalore entry via JDA: Land in Electronic City Phase-2 under a joint development agreement with a GDV of approximately ₹150 crore, marking a geographic diversification bet.
• Acquisition pause ahead: Management indicated that most acquisitions for the year are done and no more are expected very recently; the focus now shifts to securing approvals and starting construction on the newly added projects.

Dhaval Ajmera: "if we do a JV, JDA or we do a redevelopment where the capital investment is less, we can probably do 4-5 projects versus doing 1 project and buying the entire land."

Revenue Recognition & Financial Performance

• The YoY comparison trap: Q2 FY23 included Manhattan's first-ever revenue recognition eligibility, making year-on-year comparisons for revenue and profit "not comparable" in management's words. Revenue was flat YoY but rose 26% QoQ to ₹148 crore.
• ₹780 crore of unrecognised revenue: Revenue from already-sold units sits unrecognised and will flow into the P&L progressively as construction advances. Faster execution directly accelerates this conversion.
• Manhattan's remaining contribution: ₹507 crore of Manhattan presales revenue is yet to be recognised, forming a material part of the near-term revenue pipeline.
• 1,000 possessions handed over: OC was obtained for Ajmera Greenfinity and Ajmera Sikova well ahead of RERA timelines, and 1,000 possessions were handed over across clubbed projects in approximately 24 hours. Revenue from these projects is already participating in the cycle on a progressive basis.
• EBITDA margin at 27%: Management believes this level is maintainable going forward with a well-balanced project mix, though EBITDA and PAT are always a function of which projects enter the revenue cycle at a given reporting date.
• H1 revenue degrowth: An analyst flagged that H1 top line and bottom line showed degrowth. Management attributed this to project composition and progressive recognition timing, and did not directly confirm whether H2 will be materially better.

Nitin Bavisi: "Let me clarify upfront that last year similar period Q2 FY23 we had Manhattan as a project which got had the revenue recognition eligibility for the first time. So on YoY basis, the financial numbers are to that extent on a limited purpose is not comparable."

Execution & Delivery Track Record

• Construction pace accelerating: Ajmera Prive achieved slab construction at an average of 14 days per slab, a metric management highlighted as evidence of execution capability.
• OC ahead of schedule: Ajmera Greenfinity and Sikova received occupation certificates on average nine months to one year before their RERA-committed timelines, reinforcing the company's delivery credibility.
• Project progress across the portfolio: Ajmera Eden reached ground level, Manhattan Tower B is at mezzanine level with Tower A following, Ajmera Nucleus C Wing is nearly finished, and Ajmera Lugaano and Florenza are progressing rapidly.
• Pollution compliance costs unquantified: New government and BMC guidelines require water fogging, tyre cleaning, building netting, peripheral walls, AQI monitors and sensor systems. Management acknowledged the expense will come but did not quantify it.

Dhaval Ajmera: "we've got occupation certificate of two of our projects, Ajmera Greenfinity and Sikova, way before the RERA timeline committed, at least on an average nine months to one year before."

Balance Sheet & Cash Flows

• Debt cost edged up: Weighted average cost of debt rose marginally to 12.1%, driven by RBI CRR requirements and a couple of loans with annual floating-rate resets.
• Debt-to-equity discipline: Management reiterated an endeavour to sustain debt-to-equity below 1x on a continuous basis, with give and take for aggressive business development activity.
• ₹960 crore of net cash flows expected: Estimated net cash flows from the existing portfolio over approximately 30 months, which will help manage debt. The low-capex structure of six of seven new projects conserves cash further.
• Bahrain repatriation: ₹200-250 crore of repatriation is expected, with some part arriving by the end of this financial year and the majority in the later part of FY25.
• Demerger stalled: The petition for the asset transfer from the holding company to a 100% subsidiary is not coming up for hearing. Management described it as a plain-vanilla transfer and remains hopeful of getting it through at the first opportunity.

Market Outlook & Strategy

• Redevelopment as the Mumbai playbook: High land costs and limited land availability in Mumbai make redevelopment, JV and JDA the preferred route. The company evaluates each opportunity on IRR and top-line potential.
• No oversupply, no sharp price hikes: Management sees the real estate market as buoyant for at least the next few years, with infrastructure projects progressing well, but does not expect great price increases or an oversupply scenario.
• Interest rate sensitivity: A decline in rates would boost liquidity and sales, but even with stable rates, management sees steady progress continuing.
• Development management model: The company is exploring this asset-light model but has nothing tied up yet and is not currently participating in it.

Dhaval Ajmera: "if there is a decline in interest rate, obviously liquidity will be there in the market, which will boost up the sales is what our feeling is, but definitely with the current state, even if it's being stable, I think there has been a steady progress."

Guidance & Commitments

Key Metrics