Arihant Superstructures Limited — Q3 FY25 earnings call

Call held 4 Feb 2025

Management summary

Arihant Superstructures delivered strong Q3 FY25 results, with significant revenue and profit growth driven by robust sales bookings and an expanded land bank. The company achieved a record EBITDA margin of 28% and successfully added 87 acres to its land portfolio. While average realization saw a temporary dip due to project mix, management remains optimistic about future pricing and growth, particularly with upcoming infrastructure developments in Navi Mumbai.

Highlights

  • Total consolidated revenue grew 26% YoY to INR151 crores in Q3 FY25.

  • Total EBITDA increased 66% YoY to INR43 crores, with EBITDA margin reaching a record 28% in Q3 FY25.

  • Profit after tax (PAT) saw a 63% YoY growth, reaching INR25.4 crores.

  • Achieved sales bookings of INR265.5 crores, representing 4.74 lakh square feet and 551 units in Q3 FY25.

  • Successfully expanded land bank from 220 acres to 307 acres by December 2024, meeting the FY25 guidance of 300+ acres.

Concerns

  • Average per square foot realization trended down to INR5,594 in Q3 FY25, attributed to the sales mix from Jodhpur projects.

  • Debt is expected to increase slightly in FY25, though repayment is largely deferred to FY27 due to moratoriums.

Key financials

  1. Total Consolidated Revenue ₹151 Cr +26%YoY
  2. Total EBITDA ₹43 Cr +66%YoY
  3. EBITDA Margin 28%
  4. Profit Before Tax ₹33.34 Cr +77%YoY
  5. Profit After Tax ₹25.4 Cr +63%YoY
  6. Total Collections ₹129.1 Cr

What they filed

Q1 FY27: revenue up 8.8%, net profit down 38.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue112 151 153 121 123 +10%126 −16%181 +18%132 +9%
EBITDA29 43 22 37 30 +4%29 −32%30 +37%28 −25%
Net profit16 25 11 16 10 −38%8 −68%12 +6%10 −39%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹12,500 Cr

as of 2024-12-31 quantified

Inflow this quarter

₹265.5 Cr

Execution

Entire GDV (INR12,500 crores) expected to be launched and sold in 4-6 years, and completed in 5-7 years.

Composition

Mix 3 segments
  • Premium Housing 6%
  • Mid-income Housing 63%
  • Affordable Housing 31%

Share of order book by segment

Pipeline

other

New project Town Villas with GDV potential of INR2,500 crores; 11-acre addition to World Villas land; total land bank of 307 acres.

The company successfully reduced ready possession inventory from INR55 crores in April 2024 to INR17 crores in December 2024.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹25 Cr
    • World Villas, Club 10, and 5-star hotel projects ₹25 Cr
    I think we will be doing a total expenditure of around INR25 crores, INR30 crores for these 3 projects in FY '25. But FY '26 onwards, it will gear up, and we have the credit facilities also available from SBI.
  • Debt Debt disclosed Cost 10%
    And I think with the new signings, with the new banks of HDFC and SBI, those debts are at around 10% to 10.5%. So, we have been able to bring it down substantially. And I think we should be able to bring it down more by another 50 basis points in the coming financial year because debt is of different types and different uses.
  • M&A Land at Chowk Acquisition · Closed · Consideration ₹[object Object] (undisclosed)

    For second horizontal project 'Town Villas' with GDV potential of INR2,500 crores.

    On the business development front, we have acquired 23 acres of additional land at Chowk for our second horizontal project, which will be named as Town Villas, which shall have a total GDV potential of INR2,500 crores.
  • M&A World Villas Land Acquisition · Closed · Consideration ₹[object Object] (undisclosed)

    Addition of 11 acres to existing World Villas project.

    With this acquisition and also the 11-acre addition to the World Villas land, we have been able to increase our land bank from 220 acres in April 2024 to 307 acres in December 2024.

Guidance & targets

Other

  • Overall Growth Other · FY25 · High confidence 20-25%
    Yes, I think we should be able to achieve around 20%, 25% growth guidance as we had mentioned out in the first quarter.

    — Parth Chhajer

  • GDV Launch and Sell Timeline Other · High confidence 4-6 years
    So, the entire GDV, we expect to launch and sell in the next 4 years to 6 years and complete it in 5 years to 7 years from now. That's the timeline.

    — Parth Chhajer

  • GDV Completion Timeline Other · High confidence 5-7 years

    — Parth Chhajer

  • Cost to Develop GDV Other · High confidence ~INR6,500 crores
    Total cost of the development will be around INR6,500 crores.

    — Parth Chhajer

  • Free Cash Flow from GDV Other · High confidence ~INR3,000 crores
    We should be able to generate a free cash flow of around INR3,000 crores from the total portfolio.

    — Parth Chhajer

  • Debt Repayment Start Other · FY27 · High confidence FY27
    So, debt repayment for our company will majorly begin in FY '27.

    — Parth Chhajer

  • Navi Mumbai Airport Area Realization Jump Other · next 1 year · High confidence INR500
    And I think we can expect a INR500 jump over the next 1 year easily.

    — Parth Chhajer

Volume

  • World Villas Sales Volume · FY25 · Medium confidence 25-35 units
    I think we should be able to do another, say, sales of 25 to 35 units till the year-end.

    — Parth Chhajer

Margin

  • EBITDA Margin (Project Level) Margin · High confidence 30-33%
    Yes. I mean, overall, at a project level, we target 30%, 33% EBITDA margin.

    — Parth Chhajer

Profitability

  • EBITDA on GDV Profitability · High confidence ~INR3,700 crores
    We should do an EBITDA of around 30% average, so around INR3,700 crores.

    — Parth Chhajer

Sales

  • Pre-sales Sales · FY25 · High confidence ~INR1,200 crores
    FY '25, we should do around INR1,200 crores in terms of pre-sales.

    — Parth Chhajer

  • Pre-sales Sales · FY26 · High confidence ~INR1,550-1,600 crores
    FY '26 will be around INR1,550 crores to INR1,600 crores of pre-sales.

    — Parth Chhajer

Revenue

  • Revenue Growth Revenue · FY25 · High confidence 20%
    I think we should be able to do 20% growth on that.

    — Parth Chhajer

  • Revenue CAGR Revenue · FY26 · High confidence 26%
    And for FY '26 also, we look to grow at a CAGR of 26%.

    — Parth Chhajer

What to watch in Q4 FY25

World Villas Sales Performance

FY25 end
Current ~5 units sold in Q3 FY25
Target 25-35 units sold by FY25 end

Why it matters

To assess the sales momentum and performance of a key premium project.

I think we should be able to do another, say, sales of 25 to 35 units till the year-end.

Risks & concerns

  • Realization Volatility due to Project Mix

    medium

    Average realization per square foot trended down in Q3 FY25 due to a higher proportion of sales from Jodhpur projects, though management expects recovery in Q4.

    Analyst acknowledged

  • Increase in Debt

    low

    Debt is expected to increase slightly in the current financial year, although the majority is secured and repayment is deferred to FY27.

    Management acknowledged

  • Lumpy Revenue Recognition

    low

    Revenue and expenses for projects are recognized only after reaching a 10% completion threshold, which can lead to variability in quarterly reported financials.

    Management acknowledged

Q&A highlights

6 direct
World Villas Bookings and FY25 Target Direct
Yes, the World Villas launch began in August. This quarter, we have sold approximately five units, as the initial launch phase saw strong absorption in the first two months. With construction progressing, Q4 has also started well for the project. ... I think we should be able to do another, say, sales of 25 to 35 units till the year-end.

Clarified the sales performance of a key premium project and provided a specific sales target for the fiscal year.

Asked by Suyash Bhave

Average Realization per Square Foot Trend Partial
So, this quarter is a downtrend in Q3 in terms of per square foot realization because we have sold a good amount of inventory in our Jodhpur projects in this quarter. So, that's why the realization has come down at an overall company level. But in terms of per square feet pricing, we have been able to increase it across the entire MMR region, which will obviously be reflected in the P&L also going ahead. So, it's always a mix of what sells when in the quarter, which derives the average realization. But I think Q4 will go back, say, upwards of INR6,000.

Addressed concerns about declining realization, attributing it to project mix and projecting a recovery in Q4, indicating underlying strength in MMR pricing.

Asked by Suyash Bhave

Debt Structure and Cost of Debt Direct
All majority of the funds are from promoters of ASL and then promoters of ASL and their subsidiaries. ... And the average rates are at 13% per annum, which are accrued on a yearly basis. ... So latest exercise we have done. We have been able to achieve a BBB- credit rating, which is a stable outlook. ... Earlier, the cost was around 14% 2 years ago. And I think with the new signings, with the new banks of HDFC and SBI, those debts are at around 10% to 10.5%.

Provided clarity on the nature and cost of unsecured debt, disclosed the new credit rating for secured debt, and highlighted significant reduction in borrowing costs.

Asked by Suyash Bhave

Hotel Subsidiary Equity Infusion Direct
So, that INR25 crores is an infusion of preference share capital, which would be converted, say, after 13 or 14 years. So, at that time, we can decide whether we want to convert the preference share into equity. As on Q3, we have not done any transaction. In Q4, company will be taking up a tranche of INR25 crores. So, say, INR5 crores would be converted into equity in the Q4 in this quarter.

Clarified the nature and timing of the equity infusion into the hotel subsidiary, explaining why it wasn't reflected in Q3 net worth.

Asked by Suyash Bhave

Capex and Timelines for Luxury Projects Direct
So, World Villas, we have started work. Club 10 also, we have started the works. And for the hotel, we have started excavation work. So, works have started. ... I think we will be doing a total expenditure of around INR25 crores, INR30 crores for these 3 projects in FY '25. ... Villas is 2 years. So, December '26, we should be starting with the first deliveries. And for FY '27, we should be able to complete the Gymkhana also in calendar year '27, sorry. And hotel will be taking more time. That will get ready, say, by March '28.

Detailed the current status, planned expenditure, and specific completion timelines for key luxury projects, providing visibility on future revenue streams.

Asked by Anisha

Impact of Navi Mumbai Infrastructure on Pricing Direct
So, those good infra projects are going to lead to good demand for residential and commercial housing. ... So, sir, what is your expected price hike because of this development? ... It will vary from location-to-location, but on an average minimum price rise we can expect is INR500 per square foot on salable area.

Quantified the expected price appreciation due to infrastructure development, highlighting a significant tailwind for the company's projects in the region.

Asked by Anisha

GDV Launch and Completion Strategy Direct
So, the entire GDV, we expect to launch and sell in the next 4 years to 6 years and complete it in 5 years to 7 years from now. That's the timeline. And business development, we've added good amount of land already in this financial year. Maybe some more parcels are being evaluated. And if the opportunities are good, we will grab them as well.

Provided a clear roadmap for monetizing the substantial GDV, outlining timelines for launch, sales, and completion, and indicating ongoing land acquisition efforts.

Asked by Parikshit Kandpal

Reported EBITDA Margins vs. Project Level and Q4 Revenue Recognition Partial
So last financial year, our revenue was INR511 crores. I think we should be able to do 20% growth on that. And for FY '26 also, we look to grow at a CAGR of 26%. ... Yes, you can predict that because multiple projects will reach the threshold of revenue recognition. If you see our Page number 10, so you can identify that multiple projects are still not reaching the 10% project completion threshold. So once those are at 10%, then obviously, the revenues will trigger in the P&L.

Clarified the company's revenue growth targets for FY25 and FY26, and explained the mechanism of revenue recognition tied to project completion thresholds, which can impact quarterly reported figures.

Asked by Rishikesh

3 min read 6 chapters

Detailed narrative

Strong Q3 FY25 Financial Performance

Arihant Superstructures reported robust Q3 FY25 results, with consolidated revenue growing 26% year-on-year to INR151 crores. EBITDA saw a significant 66% increase to INR43 crores, leading to a record-high EBITDA margin of 28%, up from 22% in the prior year. Profit after tax also surged by 63% to INR25.4 crores, demonstrating strong operational efficiency and profitability. This performance was driven by effective project execution and sales.

Robust Sales Bookings and Collections

The company achieved sales bookings of INR265.5 crores in Q3 FY25, representing 4.74 lakh square feet and 551 units. The average realization for the quarter stood at INR5,594 per square foot, with an average unit price of INR48 lakh. Total collections for the quarter were INR129.1 crores. The sales mix was diversified, with 6% from premium, 63% from mid-income, and 31% from affordable housing segments, indicating broad market appeal.

Strategic Land Bank Expansion and New Project Launches

Arihant Superstructures successfully expanded its land bank from 220 acres in April 2024 to 307 acres by December 2024, surpassing its FY25 guidance of 300+ acres. This includes the acquisition of 23 additional acres at Chowk for the new 'Town Villas' project, which has a Gross Development Value (GDV) potential of INR2,500 crores, and an 11-acre addition to the 'World Villas' land. The current overall GDV stands at INR12,500 crores, with 75% located in the Navi Mumbai area.

Navi Mumbai Infrastructure and Market Outlook

Management highlighted the positive impact of upcoming infrastructure projects, particularly the Navi Mumbai Airport (expected in 3-4 months) and Atal Setu, on the real estate market. These developments are anticipated to drive significant job creation and population growth, leading to increased demand for both residential and commercial properties. The company expects an average minimum price rise of INR500 per square foot across its salable area, with a potential INR500 jump in realization in the airport-influenced areas within the next year, from the current INR7,000 per square foot at Arihant Aspire.

Project Development and Debt Management

The company has commenced work on key luxury projects, including World Villas, Club 10, and a 5-star hotel, with an estimated FY25 capital expenditure of INR25-30 crores for these projects. Deliveries for World Villas are expected by December 2026, Gymkhana by calendar year 2027, and the hotel by March 2028. The cost of debt has been reduced to 10-10.5% from ~14% two years ago, with a BBB- credit rating achieved, and further 50 basis points reduction is anticipated in the coming financial year. Debt repayment for most projects is slated to begin in FY27 due to moratoriums.

Guidance for Future Growth and Profitability

Arihant Superstructures reiterated its FY25 overall growth guidance of 20-25% and provided pre-sales targets of approximately INR1,200 crores for FY25 and INR1,550-1,600 crores for FY26. The company aims for a project-level EBITDA margin of 30-33% and expects to launch and sell its entire INR12,500 crores GDV within 4-6 years, with completion targeted in 5-7 years. Free cash flow from this GDV is projected to be around INR3,000 crores.

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