ARVSMARTNSESeptember 30, 2022

Arvind SmartSpaces Limited

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9analyst exchanges
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Key numbers — 40 extracted
3%
with a momentum across sustenance as well as new launches. During the quarter, bookings grew by 3% year-on-year to Rs. 189 Crore. Two projects were launched in Ahmedabad, the first being Fruits of
Rs. 189 Crore
ross sustenance as well as new launches. During the quarter, bookings grew by 3% year-on-year to Rs. 189 Crore. Two projects were launched in Ahmedabad, the first being Fruits of Life, which witnessed an over
Rs.90 Crore
ng Fruits of Life, which witnessed an overwhelming response with the entire launched inventory of Rs.90 Crore sold within 36 hours. The acquisition to launch cycle in this project is noteworthy, which was jus
Rs. 113 Crore
ealthy traction with the higher price realizations. Our Q2 financial year 2023 collection stood at Rs. 113 Crore as against Rs. 161 Crore last year, where collections have been subdued this quarter. However, we
Rs. 161 Crore
igher price realizations. Our Q2 financial year 2023 collection stood at Rs. 113 Crore as against Rs. 161 Crore last year, where collections have been subdued this quarter. However, we expect them to improve me
250 Crore
We acquired a new project admeasuring around 27 acres of land with a potential top line of around 250 Crore plus at Doddaballapur Road under HDFC Platform 2. Further, we acquired a new project admeasuring 1
150 Crore
form 2. Further, we acquired a new project admeasuring 18 acres of land with a top line of around 150 Crore near IVC Road North Bangalore. This project actually is getting close to or rather adjacent to the
100%
en doing in Devanahalli and is fully owned by the company. This is not under the platform. This is 100% owned by the company. There is a potential opportunity to increase the size of both these project
2x
y. There is a potential opportunity to increase the size of both these projects significantly by 2x to 3x subject to technical, analytical diligences, and we are very hopeful that this should be don
3x
re is a potential opportunity to increase the size of both these projects significantly by 2x to 3x subject to technical, analytical diligences, and we are very hopeful that this should be done. B
rs,
e is our second home, where Arvind Group has significant operations and human capital. Over the years, Arvind SmartSpaces has leveraged the group’s brand equity in Bengaluru and has built a meaningful
Rs. 111 Crore
Moving on from operational updates to the financial highlights. In H1, we reported a revenue of Rs. 111 Crore, up 110% on a year-on-year basis. EBITDA for H1 grew by 32% to Rs. 20 Crore. PAT for the H1 grew 1
Guidance — 20 items
Kamal Singal
opening
“We have the balance sheet, brand, geographical presence, product mix, capital allocation strategies, operational excellence and digital capabilities to successfully achieve this milestone in the medium term.”
Kamal Singal
opening
“The acquisition to launch cycle in this project is noteworthy, which was just about 3 months.”
Kamal Singal
opening
“This is the fifth phase of a large project called Forreste, and this was launched towards the end of the quarter, and it has also witnessed a healthy traction with the higher price realizations.”
Kamal Singal
opening
“However, we expect them to improve meaningfully with some of the important milestones getting achieved and completed in the coming weeks and months.”
Kamal Singal
opening
“We acquired a new project admeasuring around 27 acres of land with a potential top line of around 250 Crore plus at Doddaballapur Road under HDFC Platform 2.”
Kamal Singal
opening
“Further, we acquired a new project admeasuring 18 acres of land with a top line of around 150 Crore near IVC Road North Bangalore.”
Kamal Singal
opening
“This project actually is getting close to or rather adjacent to the first one that we have been doing in Devanahalli and is fully owned by the company.”
Kamal Singal
opening
“Arvind SmartSpaces Limited has launched a digital sales platform for its project – Arvind Bel Air in Yelahanka, Bengaluru.”
Kamal Singal
opening
“The 27-acre project acquisition under the newly created HDFC Platform 2.”
Kamal Singal
opening
“You would remember that under the first platform, we had already acquired a project in Bangalore.”
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Risks & concerns — 6 flagged
Please do note that anything said on this call, which reflects the outlook towards the future which could be construed as a forward- looking statement must be reviewed in conjunction with the risk that the company faces.
— Kamal Singal
Of course, we will be very, very cautious, while money is there and resources are there.
— Kamal Singal
To give you that number, it is a little difficult and that kind of becomes a guidance, which we do not give.
— Kamal Singal
So the real impact of HDFC investments in terms of fresh sales will start coming from the second half of next financial, that is for the ones which are getting close now and between now and March.
— Kamal Singal
But on an average basis, I think towards the end of first half, early second half of next financial year is when the real impact of a lot of what we are doing until this new platform will start reflecting in the fresh sales, so to say.
— Kamal Singal
Yes, Kamal sir, because what I am just trying to sense, once you adjust the Rs.900 Crore, you will definitely get a lot of pressure from again, HDFC, to go for the next platform.
— Kamal Singal
Q&A — 9 exchanges
Q
My question is regarding the Slide #50 in the presentation that has been uploaded. Could you just give some brief on the acquisition target that you mentioned that you are targeting Rs.5000 Crore worth of acquisitions in the next 12 months? So, could you just give a brief on that?
Ankit Jain
Yes. Sure. So the new platform with HDFC is worth Rs.900 Crore, out of which Rs.600 Crore is to be invested by HDFC and Rs.300 Crore is to be invested by us from internal accruals and otherwise. Historically, we have noted that we have a multiple of around 5 to 6 between the top line cumulative and the amount of money invested in land. So, Rs.900 Crore should give us a number of around Rs.5000 cores and thereabouts. Although the primary target of acquiring any project is to consolidate and add up to the bottom line, of course, the free cash flows and EBITAs and PATs, etc., and generally, we ha
Q
So in the opening remarks, you mentioned that we are looking to be among the top 10 real estate players in India. Did I hear it right?
Kamal Singal
Yes. Correct. And this will be a part of what you have mentioned, strong balance sheet, brand HDFC tie up, etc. ? Yes. Okay sir, all the best and thank you.
Q
Yes. Sure. Sir, I have 2 questions. One, pertaining to our bookings guidance for the year, and if you could put some number for, say, FY2024, FY2025, and second, you are talking about entering the MMR region. So just wanted your thoughts on one of the reasons why you want to enter the MMR market, number one, and number two, would it be pure play land acquisition? Or are we looking at JV, JD or redevelopment mode as far as MMR market is concerned? Sure. I mean, as a policy, we do not give guidance per se on the critical parameters. We have been achieving a certain amount of trajectory in terms
Shreyans Mehta
And sir, last, if I may squeeze in. You talked about that currently, we are at a comfortable leverage. So just wanted to understand till what levels can we go? Is there any number which you are looking at in terms of leverage or absolute number? So, I mean, today, the net debt is still negative. I mean having a decent amount of money in the last 2 quarters outside the platform. I mean, within the platform, we are still negative. So, we have got a lot of headroom to raise funds through debt. Historically, we have been telling and we have been targeting to not go beyond 1:1 on debt equity, but t
Q
Congratulations on a good quarter. My first question is on the Mumbai and the Pune market. So, you are looking to make an entry in Mumbai market and consolidate further into Pune market. So what kind of gross development value projects in this financial year are you looking to add from the Mumbai market? So, see, we are not keeping any specific number in mind. For example, Pune, we took a little while before we said, okay, now we are on, and now we want to add and invest significantly there. To that extent, Pune will be easier to consolidate, and that is what is happening. We will be a little
Parikshit Kandpal
Sir, how are you looking to do? I mean, are you going to buy outright or JD, JVs in these 1 or 2 projects from the capital allocation point of view? So, what could be the investment in land? Or will this largely be assets like JD, JVs or redevelopment? So how is your strategy, and how are you thinking about the MMR market to start off because even a smaller sized project could be Rs.200 Crore to Rs.300 Crore GDV? So, just wanted some color on that. Yes. Great question. As such, in the medium-term, we want to do all the 3; JV, JDs and outright, and our idea is not to invest more than, say, Rs.1
Q
Just wanted to understand this. We have close to Rs.2000 Crore revenue potential from this business development, and you indicated that 2 or 3 more launches is expected in next 5 months, and then we have Rs.200 Crore of sales potential left from the completed and Rs.800 Crore from ongoing. So overall, Rs.3000 Crore worth of sales booking is still left from all 3 categories. So, what could be this year number in terms of sales
Kamal Singal
bookings and next year? Because I guess, next 15 to 18 months, we would be able to close all sales booking from at least these projects? Yes. To give you that number, it is a little difficult and that kind of becomes a guidance, which we do not give. But as I said in the very beginning, we have been growing at 30-odd percent and mixes of 30% year-on-year the last several years, and that is where we want to land in terms of sales. We had Rs.600 odd Crore last year, and of course, we want to grow from there onwards this year and thereafter. So, we are hopeful and we are working towards an object
Q
So, what is the kind of land bank that the Arvind Group has, which this company can also utilize going forward just like a large industrial conglomerate like Godrej and Mahindra have advantage to their real estate companies, and do we plan to further get into any kind of warehousing or industrial plotting projects also? Answering the second one first. Our focus will remain on residential space. But within residential, we will do all the projects or products, which is mid-price, luxury, high-rises, villa, townships, plotting, etc. So, within residential, it will be very, very widespread, but th
Kamal Singal
balance sheet and who are not overleveraged. That is something which we have. There is a very high degree of appreciation and preference in the consumer’s mind for a player which is branded, which has a legacy, which has a trust factor attached to it and which also has a track record. I think we check all these boxes on that front as well. Arvind as a brand is close to so many people in their daily life through the brands we do. I mean, Tommy is a household name. CK is a household name. Arrow is a household name, and we have got a very large presence out there. I will disagree a little bit on
Q
Congratulations for good numbers. I am sorry, I joined a bit late, if my question is repeated. But just I am bifurcating my question into 2 parts. One is the growth that you are building on, let us say, the Rs.600 Crore number that we did last time without any platform sale of HDFC, and the second is that the HDFC platform that we have embarked upon, and I think we have guided almost Rs.4500 Crore to Rs.5000 Crore kind of revenue potential from this Rs.900 Crore investment that we are doing. So, what that Rs.600 Crore number that probably we can think of growing over the next 3, 4, 5 years? Th
Bajrang Bafna
And this Rs.900 Crore number is without any leverage, right? Yes. With leverage, we can go up to maybe Rs.4000 Crore to Rs.5000 Crore, right, by leveraging this Rs.900 Crore. Yes. This is without leverage, for sure. Yes. Because your equity contribution may not be 20%, 25% in each and every project and rest could come through other sources also. So, this Rs.4000 Crore or Rs.5000 Crore kind of ultimate sales value that we will build up by investing Rs.900 Crore. So, I am just asking what timeframe that you are keeping in your mind that I have to adjust that entire kitty of Rs.900 Crore, 3 years
Q
Sir, how are we really leveraging technology to seal the deals faster or to meet the construction faster, and are we deploying some kind of prospects for faster deployment of home loans to people? Is HDFC helping us with that, too?
Kamal Singal
Your question was not fully audible, but I broadly got the gist of the question. It is essentially a question around how well or to what extent technology is being used or can be used to open various kind of aspects of business, which includes BD or construction or getting funding, etc., faster. But I think we are one of those players, and I am very proud to say that we are early adapters of technology in this business space. We had the portals, customer portals up and running almost a decade back even before the biggies had done it. So customers could have a look at project sitting at their h
Q
Great. On behalf of all of us, thank you, everybody, for participating in this earnings call of Arvind SmartSpaces and for your continued support. I hope we have been able to address most of your queries. However, if there is anything missed out or if you need any further details and questions you have, kindly reach out to Vikram, who is here in this call with all of us and you can connect with him offline. Look forward to interacting with everyone in the next quarter. Thanks a lot.
Management
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Speaking time
Kamal Singal
28
Moderator
10
Ankit Jain
4
Bajrang Bafna
4
Chaitanya Shah
3
Ritwik Sheth
3
Parikshit Kandpal
3
Shreyans Mehta
2
Dhananjay Mishra
2
Faisal Hawa
2
Opening remarks
Kamal Singal
Ladies and gentlemen, good day, and welcome to Arvind SmartSpaces Limited Q2 & H1 FY ‘23 Earnings Conference Call. We have with us today on the call. Mr. Kamal Singal, Managing Director and CEO; Mr. Ankit Jain, the Chief Financial Officer; Mr. Avinash Suresh, Chief Operating Officer; Mr. Prakash Makwana, CS, and Mr. Vikram Rajput, Head - Investor Relations. Please note that a copy of disclosure is available on the Investors section of the website of Arvind SmartSpaces Limited as well as on stock exchanges. Please do note that anything said on this call, which reflects the outlook towards the future which could be construed as a forward- looking statement must be reviewed in conjunction with the risk that the company faces. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal Thank you, Rutuja. Good afternoon. A
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