Arihant Superstructures Limited (506194) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Arihant Superstructures Limited Q2 FY '26 Earnings Conference Call hosted by Arihant Capital Markets Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Yomika Agarwal from Arihant Capital Markets Limited. Thank you, and over to you, ma'am.

Hello and good afternoon to everyone. On behalf of Arihant Capital Markets, I thank you all for joining the quarter 2 FY '26 Earnings Conference Call of Arihant Superstructures Limited. Today from the management, we have Mr. Parth Chhajer, Whole-Time Director; Mr. Udit Kasera, Chief Financial Officer. So without any further delay, I hand over the call to the management for the opening remarks. Over to you, sir.

Thank you. Good afternoon, everyone, and thank you for taking time to join Arihant Superstructures Limited conference call to discuss Q2 FY '26 results and business updates. I believe you've had the opportunity to review our financials and investor presentation, which has been filed with the exchanges. Our CFO, Mr. Udit Kasera, shall now brief you all about the financial highlights for the quarter.

Thank you, Parth. Good afternoon, everyone. Let me first start by briefing you on the financial highlights. The consolidated operating revenue for Q2 FY '26 stood at INR 123 crores against INR 112 crores in Q2 FY '25. This is an year-on increase of around 9.7%. The EBITDA for Q2 FY '26 stands at INR 30 crores against INR 29 crores in Q2 FY '25, which is an increase of 3.5% on a year-on-year basis. The EBITDA margin for Q2 FY '26 stands at 24.4% versus 25.8% for the previous year. For the first half year, the operating revenue stood at INR 244 crores, which is an increase of 25% on a year-on-year basis. And the EBITDA for the half year stands at INR 67 crores, which is an increase of 70% year-on-year. The profit after tax stands at INR 26 crores, which is an increase of 44% year-on-year with a PAT margin of 10.6%. The net worth of the company as on 30th September 2025 stands at INR 430 crores. During the quarter, we had paid dividend for the financial year '24, '25, which was approved during the AGM. The promoter group has waived off their dividend, which amounted to INR 4.6 crores for last year. This was similar online as last financial year. With this, I will hand over the call to Mr. Parth Chhajer to talk about the operational highlights.

Thank you, Mr. Udit, and thanks, everyone, again. Now talking about the key operational highlights for the quarter. This quarter was a very extended monsoon started from mid of May and has continued till the first week of November, as we all have witnessed in the city of Mumbai, which has impacted the construction activity across the entire region, resulting into a softer Q2 performance. However, the company has achieved sales bookings of 280 units, which is equivalent to 2.89 lakh square feet of area amounting to INR 236 crores in terms of value. The average price per square foot was around INR 8,100 for the quarter versus INR 7,493 in the prior quarter, which is a growth of 9% on a quarter-on-quarter basis. The average price per unit sold stood at INR 84 lakhs. The total collections for the quarter stood at INR 111 crores. The unsold inventory at the end of the quarter stood at 84 units valued at INR 17.7 crores. During the quarter, we received OC for Arihant Amisha Phase 2, wherein we delivered 134 units amounting to 75,394 square feet of area. The company in the last 2, 3 years have taken several new projects, namely World Villas, Town Villas, Arihant 7 Anaika, and Arihant Avanti Palace. Environmental clearances across the industry was stuck until August 2025. During the last couple of months, we have received clearances for 3 of the projects, which is World Villas, Arihant 7 Anaika at Taloja and Arihant Avanti Palace at Shilphata. The approval work is still under process for town Villas, which is expected to be launched in the next financial year. With this, we have also started the construction progress for the projects which were held with respect to the EC clearances. And I think we'll be able to gain the momentum now that the season has dried up and the challenges of the monsoon are away. We continue to remain strong -- to maintain a strong development pipeline supported by our existing land bank, and we expect a gradual value creation as our ongoing and upcoming projects progress through various stages of development shall take shape over the next few years. During the quarter, the company also continued to strengthen its business development. We acquired additional 5 acres of land at Chouk Manivali for the Town Villas' project. So it has taken the total project size to 93 acres today. Now talking about the industry in this October month, we witnessed the grand opening and the inauguration of the airport, which has really created a super buzz in this area, and it's brought a lot of excitement from homebuyers and attracted a lot of people from various parts of the country to come and explore opportunities that lie in Navi Mumbai. With this also, we are witnessing great job growth over the next decade with industrialization with infra projects taking shape and as well as blue-collar and white-collar jobs being spread across the entire airport area. So we expect around 1 million jobs to be created over the next 6 to 7 years with the airport being inaugurated just this last month. As we know that the markets have been flat over the last 6 months with respect to the total consolidated performance across Mumbai MMR as well as NCR, Bangalore, Pune. However, Navi Mumbai has seen great sales and is seeing steady growth as well compared to what the sales was happening over the last year. So I think we are at the right position and at the right location, and it's still a good healthy pipeline that we have in front of us to execute and capture. So with this, I'll just open the floor for question and answers, and we'll be happy to take as many questions as possible.

[Operator Instructions] First question is from the line of Shlok, an investor.

So my question is, since the supply in Mumbai and the MMR region is increasing a lot recently because of the redevelopments that are going on. Do you think from a consumer point of view, the demand will be flattish in upcoming 2 to 3 years?

We don't see that in areas which are seeing good development, good infrastructure projects being executed. We are not in the Mumbai zone. So I don't want to comment on the supply that is coming over there or with respect to the redevelopment. But in Navi Mumbai, there is great new landscapes being opened with beautiful infra corridors being executed by the government. The entire infrastructure push from the government of Maharashtra is happening in this belt in and around the airport area. And I think this is going to be a very good market to be in over the next 5 to 7 years.

And sir, do we face any restrictions on building a project near the airport area, like any regulations or something?

Yes, of course, there are height restrictions with respect to how close or far you are from the airport. So we have to always follow those and plan accordingly.

And sir, one last question from my side on the company's debt outlook. So in the upcoming years or in the next quarter or 2, how do we plan to reduce the debt?

So see, we are in a growing phase of the company, and we are also developing annuity assets right now over the next 3 years. So debt will increase from here on, but the asset part will also increase. And I think some debt will get repaid as well simultaneously for projects which have already reached the certain thresholds like Arihant Aspire, the debt from Tata Capital will be repaid. So it's an influx and outflux model today, wherein projects which are maturing are being repaid and the new projects are where we are developing assets, we are taking on more debt. So blended average debt will say, be somewhere around INR 125 crores more from where we are today.

[Operator Instructions] Next question is from Aman Singh, an investor.

Sir, my question is, is the company on track to achieve its annual presale target of INR 1,100 crores?

Yes, we should be on track because we have the right launch pipeline lined up for Q3 and Q4 and the approvals are almost in place. So I think we should -- the new launches in the Navi Mumbai areas will help us increase our presales volumes as well as values.

Okay, sir. And sir, one more question. So like what's going to be the operating entity for the 5-star hotel that is a part of World Villas' project?

We're in the discussion phase right now. So once we have signed up, we'll be happy to get back to you and let you know. But as of now, it is in the discussion phase.

Next question is from Aman from [AUL] Capital.

Sir, I want to ask since the Navi Mumbai Airport is expected to start operations in like this year, December. So how is the company planning to capitalize on this structural demand shift, right, especially in [indiscernible]?

Well, we have already taken our land parcels in this area way before the airport got inaugurated. And today, just to let you know, the land prices that we acquired, say, the World Villas project, the lands we acquired was somewhere around INR 1 crore, INR 70 lakh per acre average. Today, the neighboring lands are quoting somewhere between INR 6 crores to INR 8 crores. We've already got the early benefit, the first-mover advantage with respect to acquisition of land, and that is going to help us have healthier and higher EBITDA margins for this project. With respect to the other sites where we were already positioned very well in Panvel, Kharghar, Taloja, there we have seen volumes increase post the inauguration of the airport and with the locations that we are located at for our projects and the inventory mix that we have, I think we should be able to capitalize on it to the maximum potential possible. New launches are also lined up in this area of Panvel in this coming Q3, Q4. So we see great action coming from there as well.

Okay. Got it. Yes. And okay, the next thing, like with the launch of World Villa Hotels in [indiscernible] diversification. So like how do you balance capital heavy luxury with core affordable housing?

Sorry, I didn't get your last line.

So like how are you planning to balance capital heavy luxury with core affordable housing?

No, we have diversified our portfolio equally. So we do almost 37% in affordable, 38% in mid-income and around 25% in luxury. So we have diversified our portfolio in a healthier manner in this way. So that -- this is with respect to the area that we are developing. So we continue to follow this model going ahead as well.

Okay. Fair enough. Got it. And sir, one more question, like see in the report, like the presales were around [indiscernible] sold in Q2. So do you believe that this is temporary or a sign of demand moderation?

No, no. I think this was only because of the monsoon, the sales were a little slower in Q2 and Q3, Q4, we have already started seeing better response.

So like what is the expected target for FY '26 and '27?

FY '26, we have already said we are targeting around INR 1,100 crores and '27 will be a growth of 25% over that.

[Operator Instructions] Next question is from Deepali, an investor.

I have a couple of questions. Like question on EBITDA margin dropped from 30% to 24% Q-on-Q. What was the precise reason? Was it mix pricing or cost [indiscernible]?

This is with respect to a mix of revenues that accumulate from various projects and blend together. So this is a behavior because you can't guess the same margin for every quarter. We would advise that if you look at the company from a yearly perspective, that will give you a better understanding of how the company is performing and which products are being recognized more in terms of revenues.

And sir, cash flow from operations has been negative for multiple years. When does the company expect it can be positive?

Yes. Like we have invested heavily in the last 2 years for our developments at Vashi and also started investing from the developments at Chowk as well. So however, cash flows from customers are yet to come, but the assets are being readied and are being constructed. So like at the Vashi project, Arihant Advika, we're almost 75% through the project with respect to the cost. And physically, if you see around 80%, 85% is already complete. And now that the market behavior is that once the product is ready and it's visible from outside, and we have also started the external paint work now, the demand is going to pull in because this is a very much a ready market. So I think in the next 1.5, 2 years, we should be able to get in the surplus and also repay back the debt that we have taken.

Okay. And sir, like for [indiscernible] project completed 30%. So what are the top 3 execution risk that management [indiscernible].

What is that 3? Execution risk.

Yes. Like execution risk for [indiscernible].

No. There is no execution risk. I mean once the project has started, we try to complete it as soon as possible. We don't see any risks in work getting halted at any of our sites.

Okay. And sir, like after announcement of Navi Mumbai International Airport, like what is the incremental change you have observed in inquiries and site visits?

It's a very positive change. I'll not be able to tell the numbers for Q3 now. We have to wait till next con call, but it's very positive post the airport inauguration. The sales have picked up, walk-ins have increased, and we are doing better numbers October onwards.

Next question is from Mohit Upadhyay, an investor.

Hope I'm audible?

Yes.

So just I had 2 questions. First on the World Villas -- if we see in the current quarter, we have sold till 51 units in World Villas, which is a very marginal 5 units extra increment over the next quarter -- previous quarter, if we see. So is it because of just the environment clearance that we have not yet received? And how many projects have not yet received the environment clearance, if I may know?

So this quarter, we received the environmental clearance for World Villas, which was in the month of September and work has started already for that project. So I think the sales will pick up. We are not so worried on it. And we're also increasing our margin as well by taking up a good decent price rise too in the project so that we are able to increase the margin.