Arihant Superstructures Ltd Q1 FY2024 Concall Summary

Key Takeaways

• Sales value flat, mix shifting premium: Sales value grew just +4.4% YoY to ₹245 crores as affordable projects sold out; premium and mid-income now drive the book, lifting average price to ₹6,282/sq ft.
• Revenue and EBITDA up strongly on execution: Consolidated revenue rose 35% YoY to ₹121 crores, EBITDA grew 38.7% YoY to ₹26.4 crores, and margin inched up 50 bps to 21.8% as older launches converted.
• Land bank target hit a year early: The 200-acre goal for end-2024 was crossed in Q1 FY24 itself, reaching 217 acres, all of it already deployed into projects with no idle land held for investment.
• Collections slipped on external disruption: Raw material price increases cost 2.5 to 3 weeks across major businesses, pulling collections below last year; management expects recovery over the coming three quarters.
• What to watch next quarter: Whether the ₹1,000 crore FY24 pre-sales target stays on track after a soft ₹245 crore Q1, clarity on the Arihant Aakarshan project, and the pace of collections recovery.

Sales Mix & Pricing

• Affordable sold out, premium steps in: The QoQ and YoY sales decline reflects major affordable projects being mostly sold out, not a structural demand slowdown. Contribution is now shifting to premium housing (Arihant Aalishan, Arihant Arabica) and mid-income (Arihant Aarohi, Arihant Aspire).
• Average price jump: Average price per sq ft rose to ₹6,282 from ₹5,797, and average price per unit rose to ₹54 lakhs from ₹44 lakhs, driven by the growing premium mix and Villa pricing at ~₹600/sq ft on carpet area.
• Margins intact despite costlier land: Price hikes have offset higher land acquisition costs, so project margins remain at guided levels.
• Q1 base effect: The prior quarter included the big Arihant Aspire launch, making the QoQ comparison look weaker than the underlying trend.

Chhajer: "company is getting a good feeling that the Villas can do well over the next decade from here on, and that is something that will change the real estate, landscape and real estate market also."

Land Bank & New Acquisitions

• 217 acres, fully deployed: The land bank grew from 165 acres to 217 acres in Q1 FY24, hitting the 200-acre target set for end-2024 a full year early. Every acre is already converted into projects or square footage; none is held idle as investment.
• Shil Phata completion: The remaining 3,630 sq meters were signed, bringing the total to 31,860 sq meters (approx. eight acres) at a prime Shil Phata road location. Approval procedures have started.
• Chowk addition: An additional 51 acres were added to the existing 25 acres at Chowk, totaling 76 acres of fully paid-up land acquired over eight months. This will host constructed villas and annuity income assets.
• Geographical spread: The company now operates across 11 micro markets in MMR, the widest footprint of any developer in the region.
• New project margins: Projects acquired long ago (2011-13) may carry lower margins because of accumulated interest costs. New acquisitions deliver margins at the guided levels of 30-35% IRR and 20-25% PAT.

Launches & Project Pipeline

• Arihant World Villa: A new premium Villa project with total revenue expected around ₹1,000 crores. Launch is targeted for January/February 2024 (Q4 FY24), after RERA approval; membership can launch immediately as it does not require RERA.
• Shil Phata launch: The Shil Phata project (Arihant Avanti) is expected to launch in Q4 FY24.
• Multiple launches lined up: Further phases at Badlapur, Kharjat, Kalyan, and Panvel are planned for FY24, alongside the two big fresh launches at Shil Phata and Chowk. Sales will begin as approvals come through.
• Seven-year revenue visibility: Total top line of ~₹9,900 crores from 1.7 crore sq ft developable area is to be constructed over the next seven years, with 75% of sales expected in the first five years and the balance in years six and seven.
• Gymkhana and resort: Will be managed internally by recruiting experts, not outsourced. Construction starts alongside Villa construction and is expected to take two years.

Arihant Aakarshan: The Contingent Asset

• Status quo, clarity expected soon: The project remains unchanged from the last call. Management expects clarity from authorities by the end of Q2 FY24.
• Two outcomes, both positive: Either the authorities allow development, or the government acquires the land with compensation. Both paths generate cash flows for the company.
• No opinion offered: When asked to predict the outcome, management declined, stating they must wait for the authorities' decision.

Chhajer: "it is going to yield cash flows to the company either ways."

Balance Sheet & Capital

• Debt ratios improving: Secured debt-to-equity fell to 0.57:1, contributing to lower interest costs. Secured debt (₹156 crores) will reduce per its repayment schedule; unsecured debt (₹262 crores) has no fixed reduction deadline and will be paid down when surplus free cash flows arrive from projects.
• ₹500 crore fundraising is precautionary: The resolution is an enabling one renewed annually. Any capital raised would fund only new project acquisitions, not debt repayment. Debt will be serviced from internal cash flows. No specific requirement or plan was disclosed.
• Villa segment conviction: Management is actively exploring more Villa opportunities in MMR, a segment it believes is rare in the region and will do well over the next decade, provided land can be acquired at the right cost and parameters.
• No luxury-only pivot: The company will continue to look at opportunities across affordable, mid-income, and luxury segments, not just luxury.

Guidance & Commitments

Key Metrics