Good day, ladies and gentlemen, and welcome to the Q2 FY22 results conference call of Ashiana Housing, hosted by Emkay Global Financial Services. With us today, we have Mr. Varun Gupta, Whole-time Director. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions at the end of today's presentation. Should you need assistance during the conference, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Viral Jain, of Emkay Global Financial Services. Thank you, and over to you, sir.
Good evening, everyone. I would like to welcome the management and thank them for this opportunity. I shall now hand over the call to the management for the opening remarks. Over to you, sir.
Good afternoon, everyone. Hope you all are safe and in good health. Thank you for joining us to discuss performance of the second quarter of financial year 2022 of Ashiana Housing. I extend a warm welcome to all of you. Area booked recorded in the second quarter was 4.51 lakh sq ft, as compared to 2.21 lakh sq ft in Q2 of FY 2021, and 1.51 lakh sq ft in Q1 of FY 2022. The second quarter area bookings were higher due to launches of phases in Ashiana Nirmay, Bhiwadi and Ashiana Dwarka, Jodhpur. But I would also like to add that there is a general positive trend in the market, and bookings were higher in general across projects, and outlook remains bright in terms of quarterly bookings.
We also handed over 145,000 sq ft in Q2 FY 2022, out of which only 8,000 sq ft was delivered in partnership firms. This was against a delivery of 110,000 sq ft in the Q2 of FY 2021, out of which only 3,000 sq ft was delivered in partnership firms. Revenue recognized from completed projects in the second quarter was INR 45.6 crores, as compared to INR 36.23 crores of second quarter of FY 2021. Total comprehensive income in Q2 FY 2022 was negative at INR 6.36 crores, versus negative INR 1.74 crores in Q2 of FY 2021. Total comprehensive income was negative INR 6.14 crores in the first quarter of financial year 2022.
However, pre-tax operating cash flows, and modified the way we report it, before any land payments, was positive at INR 28.18 crore for the second quarter, versus positive INR 29.60 crore as per the first quarter of this financial year. However, the half yearly reported operating cash flows as per Ind AS 7 stood at negative INR 121.64 crore. This was primarily due to land payments made as we picked up two outright projects, one in Gurgaon and one in Chennai, in the half year. Equivalent area constructed was at 4.5 lakh sq ft in the second quarter of financial year 2022, as compared to 2.89 lakh sq ft in the previous quarter, and the same was 3.01 lakh sq ft in Q2 FY 2021.
Execution momentum has picked up with this quarter, and we expect to further pick up pace in construction in the quarters coming up. Our construction commitments are in line with the delivery schedule, and we hope to deliver our projects on schedule. On this note, I would like to conclude my remarks. We'll now be happy to discuss any questions or suggestions that you may have. We are open for questions.
Ladies and gentlemen, we will now begin the Q&A session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you might press star and two. Participants are requested to use hand raise while asking a question. We will wait a minute for questions. Our first question is from Himanshu Upadhyay of Kotak Capital. Please go ahead.
Yeah, hi. Good afternoon, Varun.
Good-
Yeah, so first question was, we said in our Q4 FY21 call that we have reached a stage in Gurgaon where we can pull a product beyond senior living also. If we look at Chennai market, how far are we away from that state or situation where we can go beyond senior living? And, what gives us a confidence that this is the right time that we want to look at beyond senior living? Means, just some of your thoughts, and how do you come to that conclusion? It would be helpful, yes.
I don't remember making the first comment in Gurgaon. Can we do something other than senior living in the context that, because we have never done senior living in Gurgaon in the first place. And in NCR, whatever senior living we've done as compared to regular housing, is a far smaller proportion in Bhiwadi. We have done a lot more regular housing there in the first place. So the confidence of regular housing in NCR comes from doing a lot of regular housing work there, probably north of 5,000 flats, all put together, if not more, in NCR, in terms of senior living. So in terms of regular housing. So that's the context there. And in Gurgaon, we want to do regular housing. We see brand, we see, positioning and capability.
In Chennai, given the success and the pricing and the margins we are enjoying in senior living, we want to continue to focus on senior living. We have picked up one land already for one more senior living project at the end of the second quarter. We are hopeful to close one more land transaction within the third quarter for another senior living project in Chennai. In Chennai, our view on the depth of the senior living market and the competitive advantage we are enjoying, we would like to focus on senior living in Chennai at this point.
Okay. And even in Pune, would it be both means-
In Pune market, we are doing both. One project is for senior living and one project is for regular housing.
Okay. And we have completions of nearly 3 million sq ft in next six quarters, okay? And this is, I am taking the slide number, I think, 15, okay, where the timeline—expected customer handover date, I am taking, okay.
Yes. Okay.
Significant proportion of the product was sold in 2018 and 2019, okay? What impact is, are we going to see on margins? Because at the fag end, what we generally see is high value items like wires, switches, faucets, et cetera, get fitted, okay? And significant price rise are happening in these products. Are we able to increase the price for the remaining inventory significantly? Or you think, to a certain extent, the expected margins may get hit in these projects?
Okay. So wherever projects have already been sold completely, there is nothing we can do. Let's say in a project like Ashiana Aditya, where we sold everything at launch, there is no remaining inventory to cover up costs, so there will be some margin compressions. But I don't expect significant impact in, let's say, Aditya phase one as compared to Aditya phase two, where we sold, and then not only finishing costs, but also construction material costs for construction also went up. Some of that will happen. But on the regular, on the other stock where we, you know, we are part to sell, we sold some units and some units are yet to be sold. We've had price increases across the board, excluding Bhiwadi regular housing projects in Bhiwadi.
Senior living in Bhiwadi has also seen price increase and substantial price increases in that, which is seen in our average realization for this quarter. Again, going up substantially to 3, 6, 7, 8. And we expect to keep increasing prices right now. So I am more than hopeful that price increases will be higher than input cost increases going forward. But some of it will depend on project to project, the stage it was in and when it was sold, how much we can cover.
Okay. And, Varun, next question would be: So if we see the projects under construction or ongoing projects, the saleable area is near, it's 4.3 million sq ft, and we have already sold 3, okay? So if we want to reach another, let's say, regularly, 2-2.5 million sq ft, are we having the amount of new launches over the next 18-20 months, that we can start reaching that 2 million sq ft type of sales in the next financial year or around that period? Or how are you looking at it? And, yeah, related to that, one more question: The two land parcels which we have bought, Gurgaon and Mahindra World City, how much time will it take for launch in those sites? Or how long...
How lengthy the process of getting approvals? So, yeah, these two final questions. Thanks from my side.
Yes, so they are interlinked, Marshall, so that's what... So for the launches, the pipe is being built. We also put out an information today to the markets for one more JDA that we have signed off in Jaipur for about a little over 900,000 sq ft. We have signed up a lot of projects. Approvals for a lot of projects have been applied for. Some are in the application stage. So from an 18-24 month period that you're talking about, right now, the visibility seems good to have enough launches to maintain a run rate of 2 million sq ft. Jaipur is the only place where we need a little bit more work in Jamshedpur. Both places, so Jaipur, we announced a deal today.
In Jamshedpur, we are working on transactions, so we will be putting out some transactions where we'll get approvals. Approvals are typically about a 12-15-month window from the date of the transaction amount.
...And, one small question. In this Mahindra World City project, okay, we are doing a senior living project, okay? And it's a large project, nearly 1 million sq ft of saleable area. So does the agreement have that we can do only senior living, or it is an open agreement? But we have decided that the product is senior living, which we want to do.
So the agreement-
Or it is the agreement-
The agreement restricts the phase one to be senior living, and up to three years, I think, we will for two or three years from the date of agreement, will only be senior living. But we intend to do only senior living, so it's a little irrelevant according to us right now. The intent is to do senior living. Himanshu, with that, I would request that you get back in queue. If there are more questions, then please, and people can-
No, no. That, that's all. Yeah, thank you.
Thank you so much.
Thank you. The next question is from Rohit Balakrishnan of Kotak Mahindra. Please go ahead.
Hello?
Hi, Rohit.
Yeah, hi. Thanks for the opportunity. So, sir, my question is also similar in line to the previous participant. So if I look at your completely, like, completed stock and the inventory there, it's hardly anything, 300,000 sq ft. And also the ongoing inventory, we have pretty much, I mean, you sold two-third, only one-third is remaining. So, while we have, like, Gurgaon is there and, and, and couple of more that you recently launched. So just want to understand, given the approval cycle and given the long lead times, I mean, we, our previous peak was 2 million sq ft in terms of sales. Ideally, we would want to sort of grow beyond that in this cycle, right? So, so, I mean, just want to understand, how are you thinking about launches?
Do you think in the next six, six months, 12 months? I know it's a bit of a, there are no timelines around this, but just want to understand. We are coming to a point where existing inventories is getting finished. So, so just wanted your thoughts so that we can get to, beyond 2 million sq ft kind of sales in this upcycle, in the next few years.
Rohit, absolutely. We, we want to go beyond 2 million sq ft. So two things on that. One part of the pipe is also some of the projects have phases which are unlaunched, which are approved. Let's say Ashiana Anmol in Gurgaon.
Right.
We have launched, we have launched phase two, about 2.8 lakh sq ft during this quarter, okay? So some projects, Ashiana Nirmay, phase five, it's a very small piece, but that might get launched soon. We'll have Ashiana Umang, phase six. These are launched that, you know, approvals are in, we will launch them, so they, they will not have any concerns in getting launches, going up, which are sort of on the anvil that we are thinking now that with, with stock. And so as and when in a particular project, certain phases are nearing completion, of selling of stock, we'll go ahead and launch, newer phases to add to supply. The other bit is getting approvals for fresh projects and getting them in the pipe, as well.
And that lot of active work is going on at this point of time to get more and more projects in the pipe. Gurgaon, Pune, Chennai, where we have closed transactions. Jaipur, we have closed another transaction. And approvals are in process for a couple of other projects. So there is a sort of intense focus right now to build a pipe to take maximum advantage of the upcycle that is coming in at this point in time. So you will have probably in the next 24 months, we will have announcements continuously on deals for new projects and announcements for launches of fresh projects as well, as and when we get approvals. Though, I think the completely new project launches will happen next financial year onwards.
I don't see the approvals coming in for completely new projects within this financial year.
Understood. Understood. Got it. And just as a... So in this, in this financial year, 2022, can we sort of get back to pre-COVID in terms of, sales, in terms of square feet levels? Or that seems difficult because we had a tough quarter, the previous quarter, Q1.
In this financial year?
Yeah, in this financial year, FY 2022.
In this financial year, getting to pre-COVID levels would be a little difficult. Next financial year would definitely be around there.
Got it. Thank you so much. I'll get back in the queue if I have more questions. Thanks.
Thank you, Rohit.
Thank you. Ladies and gentlemen, a reminder, if you wish to ask a question, please press star and then one on your touchtone phone. If you wish to ask a question, please press star and then one. The next question is from Vipin Rakesh of Titan Capital. Please go ahead.
Hi, Varun. Good to speak with you again, and congratulations on all the landings. I just wanted to understand how many more term sheets you have out there, in your various markets, and if you can talk about that a bit.
Hi, Vipin. We have two active term sheets right now. So we closed four transactions during the year, and we have two active term sheets at this point of time, one in Chennai and one in Jaipur.
Okay.
We are actively looking for more projects in Jaipur.
... Great. And are you seeing the land prices getting out of whack, or are you still finding them to be reasonable? Just I wanted to hear your commentary on that.
We've been fortunate, the four transactions we have closed, the land prices haven't been out of whack. The only place where I see land prices going out of whack is Jaipur. So therefore, it's been a little bit challenging to find transactions there. But we are looking there also to look for land parcels. But outside of Jaipur, I don't see land prices going out of whack anywhere else at this moment in time.
Okay. In Bhiwadi, you said the pricing has not gone up, so any comment as to when do you think you will be able to increase the pricing there or that market is still soft, if you will?
So, according to us, I think we are on the edge of increasing prices in Bhiwadi, but because as prices continue to increase in Gurgaon, that will flow in. So Gurgaon, what is happening, as land prices have gone up significantly, particularly plot prices, apartment prices have not gone up yet. We expect apartment prices to follow land prices, and once apartment prices go up in Gurgaon, I think Bhiwadi will follow next, according to us, as per our perspectives. But in Bhiwadi, senior living, which is becoming a bigger and bigger part of the portfolio there, we moved a large part of the land bank towards senior living in Ashiana Town. The Gamma project is one of the senior living projects.
We have increased prices in senior living, and we continue to see possibility to increase prices in senior living in Bhiwadi.
Right. And you said that, next year the launches will be, higher compared, or you will see 20 lakh kind of number next year. Do you think that will start to happen in the first quarter itself, or do you think it'll be more back ended next year?
We expect things to happen in the first quarter itself. But, you know, with approvals, it's difficult to say where they are, but the way things are moving right now, I would expect that we start launching a quarter, a project per quarter, hopefully.
Right. And my last question, if I may, just on the Pune market, how are you seeing that developing for us? Do you think it will be a senior living or it will always be both, or, I'm just curious, you know, how you see that market for us.
This is for Pune?
Yeah, Pune.
Pune is too early to say. We'll place—let's do both projects there and see what the response is, to see what happens. But my first gut says that's a market where we can do both quite well.
Thank you. Got it. Thanks, all the best.
Thank you.
Thank you. Ladies and gentlemen, just a reminder, if you wish to ask a question, please press star and then one on your touchtone phone. Ladies and gentlemen, as there are no further questions from the participants, I will now hand the conference over to management for closing remarks.
We would like to thank all of you for being on this call. Thank you for taking out the time and asking the questions that you do. If you were unable to take any questions, please feel free to write to us directly or reach out to us directly. With that, we would like to conclude this call. A lot of the material we have spoken about is posted on our website, and you can also email your queries for any further clarification. Thank you once again for taking the time to join us on this webinar. Thank you.
Thank you, sir. Ladies and gentlemen, on behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect.