Arvind SmartSpaces Limited — Q3 FY25 earnings call

Call held 30 Jan 2025

Management summary

Arvind SmartSpaces reported strong financial performance for Q3 and 9M FY25, with significant YoY growth in revenue, EBITDA, and PAT, alongside healthy collections and a net cash position. Despite a dip in Q3 bookings due to project approval delays in Bengaluru and Surat, the company maintains robust business development and a strong launch pipeline, targeting 25-30% fresh sales growth. New large-scale projects in MMR and Ahmedabad underscore strategic expansion and asset-light growth.

Highlights

  • 9M FY25 Bookings reached ₹890 crore, marking a 14% year-on-year growth.

  • 9M FY25 Collections stood at ₹725 crore, a 10% year-on-year increase, reflecting strong execution and customer trust.

  • Q3 FY25 Revenue grew 149% YoY to ₹210 crore, with 9M FY25 Revenue at ₹550 crore (up 146% YoY).

  • Q3 FY25 EBITDA increased 188% YoY to ₹60 crore, and 9M FY25 EBITDA grew 166% YoY to ₹152 crore.

  • Q3 FY25 PAT soared 331% YoY to ₹50 crore, contributing to a 9M FY25 PAT of ₹97 crore (up 208% YoY).

  • The company maintains a net cash position with net debt remaining negative at ₹196 crore.

  • Secured projects with a cumulative top-line potential of approximately ₹3,850 crore year-to-date, including entry into MMR with a ~₹1,500 crore project and a mega industrial park in Ahmedabad with ~₹1,350 crore potential.

Concerns

  • Q3 FY25 Bookings declined to ₹224 crore from ₹280 crore in Q3 FY24, primarily due to lengthening approval cycles in Bengaluru impacting a planned plotted launch.

  • The delay of a Bengaluru plotted launch (Devanhalli) to Q4 FY25/Q1 FY26 is expected to impact current year sales growth by approximately 10% (₹150-200 crore).

  • The Surat project launch has been delayed by a couple of quarters due to technical, regulatory, and legal issues.

  • Sales for the Sarjapur row house project have been slower than expected in specific micro-markets, though management notes it still 'ticks the box' on investment and cash flow parameters.

Key financials

2 periods

Q3 FY25

  • Revenue
    ₹210 Cr
    YoY +149%
  • EBITDA
    ₹60 Cr
    YoY +188%
  • PAT
    ₹50 Cr
    YoY +331%
  • Operating Cash Flow
    ₹74 Cr

9M FY25

  • Revenue
    ₹550 Cr
    YoY +146%
  • EBITDA
    ₹152 Cr
    YoY +166%
  • PAT
    ₹97 Cr
    YoY +208%
  • Operating Cash Flow
    ₹277 Cr

What they filed

Q1 FY27: revenue up 211.8%, net profit up 708.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue266 210 163 102 141 −47%166 −21%155 −5%318 +212%
EBITDA66 59 34 21 30 −55%42 −29%59 +74%156 +643%
Net profit43 50 22 12 18 −58%29 −42%44 +100%97 +708%
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

₹890 Cr

as of 2024-12-31 quantified

14% YoY

Inflow this quarter

₹224 Cr

Execution

Unrealized operating cash flow expected to realize within 3-4 years

Pipeline

other

Cumulative top-line potential of secured projects, including MMR multi-asset township and Ahmedabad industrial park. Q4 FY25 launches include Devanahalli, Orchards (new phase), and Greatlands (new phase).

Cancellations & deferrals

  • deferred: One plotted launch in Devanhalli (Bengaluru) impacted by lengthening approval cycle, pushed to Q4 FY25.
  • deferred: Vertical project launch in Bannerghatta (Bengaluru) has a likelihood of slipping into Q1 FY26 due to approval cycle.
  • deferred: Surat project delayed by a couple of quarters due to technical, regulatory, and legal issues.
Despite some project delays due to approval cycles, the overall business development pipeline remains robust, and the company is confident in achieving its sales targets, driven by strong demand in horizontal developments.

Source: Prepared remarks

Capital allocation

high confidence
  • Debt Net cash ₹196 Cr
    Our balance sheet position remains very strong despite expanding operations, where net debt remained negative at Rs. 196 crore.
  • M&A Mumbai Metropolitan Region (MMR) Project Joint venture · Announced

    Entry into MMR plotted, villa market with a horizontal multi-asset township project.

    Asset light JD project, moderate recoverable deposit, ASL handles construction and revenue share.

    Recently, we have announced share a significant milestone in our growth journey as we marked our entry into the Mumbai Metropolitan Region (MMR) with a ~Rs. 1,500 crore horizontal multi-asset township project. ...MMR is a JD project. We are not investing anything significant. It's going to be one more asset light kind of a project as usual. So, we will just pay some very moderate amount as a deposit which will be recoverable. Then the construction has to be done by us and we will share the revenue.
  • M&A Ahmedabad Industrial Park Project Joint venture · Announced

    Catering to growing demand for high-quality industrial and logistics infrastructure in Gujarat.

    LLP structure, ASL partners in entity, broadly 70% revenue to ASL, 30% to land partners.

    Additionally, we have further strengthened our presence in the horizontal development market in Ahmedabad with the signing of a mega industrial park project with a top-line potential of ~Rs. 1,350 crore. This joint development project, located on NH47, Bavla-Bagodara road, is envisioned as one of Gujarat's largest industrial parks... Ahmedabad Industrial will have a LLP kind of a structure where we partner in the entity itself and we broadly share revenues the way the revenues are predicted to happen etc. will be broadly 70-30. 70% of the revenues will come to us and 30% will go to the land partners.
  • Liquidity Liquidity disclosed Company has surplus cash and a healthy line of bank credit. Plans to deploy ₹500-600 crore from internal accruals and bank debt for investments in the next six months, prioritizing these over the HDFC platform.
    As of now there is a healthy line of bank credit also made available to the company. And that is why we say that unless we consume these two first sources, we don't really catch on to HDFC. ...we still have surplus money. The idea is to consume everything that we have apart from HDFC in the next six months that means an investment of more in the region of Rs. 500 to Rs. 600 crore to happen which is a sum total of bank debt and the surplus cash we have at this point in time to be consumed in next six months.

Guidance & targets

Sales

  • Annual Sales Growth Sales · Annual · Medium confidence 25-30%
    We have always been targeting a growth of around 25% thereabouts over previous years and this year has been a similar year and this is what we are trying to do.

    — Kamal Singal

  • Impact of Bengaluru project delay on current year sales growth Sales · Current Year · High confidence 10% reduction (₹150-200 crore)
    this one project slipping into maybe the first month or second month of the next quarter will mean a loss of around maybe Rs. 150 to 200 crore which will impact the growth by maybe 10% odd for the current year.

    — Kamal Singal

  • Fresh Sales CAGR Sales · 2-year block (FY25-FY26) · High confidence 25-30%
    if we are targeting 25%-30% this year, even if there is a delay, within a block of 2 years in this year and next year put together, we will have a CAGR of 25% to 30% is what we are trying to achieve here

    — Kamal Singal

  • Fresh Sales Growth Sales · FY26, FY27 · High confidence 25-30%
    So, FY26 FY27, all these financial years should see 25% to 30% growth in fresh sales.

    — Kamal Singal

  • NRI Sales Contribution Sales · Ongoing · Medium confidence 8-10%
    Generally, our NRI sales should be in the region of 8% to 10% but you could just connect with the team offline to get the specific number. But it's in high single digits to around 10% thereabouts in my understanding.

    — Kamal Singal

New Business Development

  • New Project Acquisitions New Business Development · FY25 · Medium confidence ₹5,000 crore
    we still are left with couple of months and we are quite on track on that and we should hit something like Rs. 5,000 crore thereabouts for the year as a whole.

    — Kamal Singal

Launches

  • FY26 Fresh Launches Launches · FY26 · Medium confidence Exceed ₹3,000 crore
    Put together, we should be able to exceed Rs. 3,000 crore next year, fresh launches.

    — Kamal Singal

Profitability

  • EBITDA Margin Profitability · Long-term · High confidence 25%
    we are working on a margin threshold of around 25% at EBITDA level. That has been pretty consistent.

    — Kamal Singal

Cash Flow

  • Unrealized Operating Cash Flow Realization Cash Flow · Within 3-4 years · High confidence ₹3,818 crore
    We estimate an unrealized operating cash flow exceeding Rs. 3,818 crore coming from the current pipeline of projects. This is expected to realise within 3-4 years.

    — Kamal Singal

What to watch in Q4 FY25

Devanhalli plotted launch status

next quarter
Current Pushed to Q4 FY25
Target Launch completed in Q4 FY25

Why it matters

Successful launch is crucial to mitigate the ₹150-200 crore sales impact on current year targets.

This launch is now pushed to Q4 FY25.

Risks & concerns

  • Project approval delays in Bengaluru

    medium

    Lengthening approval cycles in Bengaluru impacted a Q3 plotted launch and may delay a Q4 vertical launch into Q1 FY26, affecting current year sales targets.

    Management acknowledged

  • Technical, regulatory, and legal issues delaying Surat project

    medium

    A large horizontal project in Surat is delayed by a couple of quarters due to complex land aggregation and conversion processes.

    Management acknowledged

  • Underperformance of specific product types in micro-markets

    low

    The Sarjapur row house project has seen slower sales in its micro-market compared to other horizontal developments.

    Management acknowledged

  • Market volatility for fundraise timing

    low

    While a fundraise resolution is enabled, the company plans to time the actual capital raise strategically due to market volatility.

    Management acknowledged

Q&A highlights

7 direct
Surat project delay and potential demand slowdown in plotted business Direct
Surat when we say that the launch should happen in a couple of quarters from now is mainly due to technical, regulatory and legal issues. Nothing to do with demand side of the market at all. In fact, there is a very robust demand on ground that we are getting on the horizontal side.

Clarifies that Surat project delay is due to regulatory/technical issues, not a slowdown in demand for plotted developments, which is a key segment for the company.

Asked by Amit Srivastava

Slower sales for Sarjapur row house project compared to other horizontal projects Partial
Sarjapur micro market in villa specifically has not done that great in general. The high-density horizontal which is row houses actually compete with apartments only from the segmentation point of view... In fact, we have observed that in specific micro markets that kind of product has not been doing that great as we have been expecting.

Highlights a specific project/product type (row houses in Sarjapur) that is underperforming expectations, indicating potential micro-market or product-fit challenges, despite overall strong horizontal demand.

Asked by Amit Srivastava

Equity investment requirements for new MMR and Ahmedabad industrial park projects Direct
MMR is a JD project. We are not investing anything significant. It's going to be one more asset light kind of a project as usual... Ahmedabad Industrial will have a LLP kind of a structure where we partner in the entity itself and we broadly share revenues the way the revenues are predicted to happen etc. will be broadly 70-30.

Confirms the asset-light nature of new large projects, which is crucial for managing capital and leverage in the real estate sector, especially given the company's net cash position.

Asked by Amit Srivastava

Utilization of existing cash and HDFC platform funds for future investments Direct
The idea is to consume everything that we have apart from HDFC in the next six months that means an investment of more in the region of Rs. 500 to Rs. 600 crore to happen which is a sum total of bank debt and the surplus cash we have at this point in time to be consumed in next six months.

Provides clarity on capital deployment strategy, prioritizing internal accruals and bank debt for ₹500-600 crore investments before tapping the more expensive HDFC platform, indicating prudent financial management.

Asked by Eesha

Scalability and margins of the new industrial park vertical Direct
It will be as good as a plotted residential project. For us it is also broadly contoured and structured the same way and the revenue shares are very similar in terms of shares, etc. So, these will be pretty healthy in terms of margin. ...the idea is to replicate the same thing in various other cities of Gujarat and even outside.

Indicates the industrial park is not a one-off, has replication potential, and is expected to deliver healthy margins comparable to plotted residential projects, suggesting a promising new growth avenue.

Asked by Shreyansh Mehta

Change in landowner behavior regarding pricing and negotiation in Bangalore vs. Ahmedabad Direct
Bangalore has seen prices going up to a certain extent in almost every micro market. But having seen so last 3-4 months have been slightly different. I think they have now come very close to what the market can absorb and hence expectations are not that high now. ...Ahmedabad is the other way round. I mean prices were always decent and reasonable.

Offers insights into land acquisition dynamics in key markets, suggesting a potential moderation of landowner expectations in Bangalore, which could be favorable for future land deals, while Ahmedabad remains stable.

Asked by Ritwik Sheth

Discrepancy between long-term EBITDA margin target (25%) and FY24 reported margin (33%) Direct
You can just presume that some fluctuations within the numbers and the long-term trend of around 25% that happens. That may possibly reflecting some project-to-project variations and which project comes at what point in time is something which is of more importance. And for example, in this set of numbers very high proportion of Greatlands came in. Greatlands was a little disproportionate in terms of profitability and hence it jacked up the numbers on an average basis.

Clarifies that higher reported margins in some periods are due to specific project mix (e.g., Greatlands) and that the long-term sustainable EBITDA margin target remains around 25%, providing a realistic expectation for investors.

Asked by Rahil Shah

Fundraise enabling resolution and actual plans for raising funds Direct
QIP is an enabled resolution. We have got all the processes done. And as I understand, we got a year to finally hit the market and get this money in as a further investment source. Of course, today the target and the challenge is to deploy what we already have.

Indicates that while a fundraise resolution is in place, the company is not in immediate need of funds and will strategically time any capital raise, prioritizing deployment of existing cash and bank lines first.

Asked by Ritwik Sheth

3 min read 6 chapters

Detailed narrative

Strong Financial Performance and Collections Growth

Arvind SmartSpaces reported robust financial results for Q3 and 9M FY25. Revenue for Q3 FY25 stood at ₹210 crore, a significant 149% increase year-on-year, contributing to a 9M FY25 revenue of ₹550 crore, up 146% YoY. Profitability also saw substantial gains, with Q3 EBITDA growing 188% to ₹60 crore and PAT soaring 331% to ₹50 crore. For the nine-month period, EBITDA reached ₹152 crore (up 166% YoY) and PAT was ₹97 crore (up 208% YoY). Collections remained strong, growing 18% YoY to ₹229 crore in Q3 FY25 and 10% YoY to ₹725 crore for 9M FY25, reflecting customer confidence and execution focus.

Bookings Impacted by Bengaluru Approval Delays

Despite strong overall performance, Q3 FY25 bookings saw a decline to ₹224 crore from ₹280 crore in the same period last year. This was primarily attributed to lengthening approval cycles in the Bengaluru real estate market, which delayed a planned plotted launch in Devanhalli. This specific delay is expected to impact the company's current year sales growth by approximately 10%, translating to a loss of ₹150-200 crore. Additionally, a vertical project launch in Bannerghatta faces a likelihood of slipping from Q4 FY25 into Q1 FY26 due to similar approval challenges.

Robust Business Development and Strategic Market Entries

The company's business development pipeline remains robust, having secured projects with a cumulative top-line potential of approximately ₹3,850 crore year-to-date. A significant milestone includes entry into the Mumbai Metropolitan Region (MMR) with a ~₹1,500 crore horizontal multi-asset township project. Furthermore, Arvind SmartSpaces strengthened its presence in Ahmedabad by signing a mega industrial park project with a top-line potential of ~₹1,350 crore. Both new projects are structured on asset-light joint development models, minimizing significant upfront equity investment.

Capital Allocation and Liquidity Management

Arvind SmartSpaces maintains a strong balance sheet with a net cash position of ₹196 crore. The company has access to a healthy line of bank credit and the HDFC platform as a quasi-equity funding source. Management plans to deploy ₹500-600 crore for investments within the next six months, prioritizing internal accruals and bank debt over the HDFC platform due to its higher cost. This strategy aims to optimize capital deployment while maintaining financial prudence.

Long-term Growth and Margin Outlook

The company targets an annual sales growth of 25-30% and expects a similar CAGR over a two-year block (FY25-FY26) for fresh sales. For FY26, fresh launches are projected to exceed ₹3,000 crore. Long-term, Arvind SmartSpaces aims to maintain an EBITDA margin threshold of around 25%. While FY24 saw higher margins due to a favorable project mix (e.g., Greatlands), the 25% figure represents a consistent, sustainable target. The current pipeline is expected to generate over ₹3,818 crore in unrealized operating cash flow, realizing within 3-4 years.

Industrial Park Vertical and Market Dynamics

The new industrial park project in Ahmedabad is envisioned as a significant growth driver, structured to yield healthy margins comparable to plotted residential projects. Management sees potential for replicating this model in other cities. In terms of market dynamics, Bangalore has seen land prices rise, but expectations from landowners have tapered in the last 3-4 months, nearing a peak. Ahmedabad, conversely, has maintained decent and reasonable land prices, with the brand's trust being a key factor in attracting large land parcels.

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