Buy Ajmera Realty & Infra India Ltd for the Target Rs 175 by Emkay Global Financial Services Ltd
We initiate coverage on Ajmera Realty & Infra India (AREAL) with BUY and TP of Rs175, based on 6x EV/embedded EBITDA, at 28% discount to the NAV (the stock is trading at 53% discount to the NAV). AREAL is a Mumbai Metropolitan Region (MMR)-based real estate developer with select presence in Bengaluru. The company saw a turnaround in operational performance post-Covid, with FY21-26 pre-sales CAGR of 24%, supported by an upcycle in the real-estate market and uptick in its project launches. We see meaningful value unlocking over the medium term, backed by significant development potential of its two key legacy land parcels—in Kanjurmarg and Wadala. Further, AREAL is expanding its portfolio via business development beyond the existing project pipeline and land bank. We expect FY27E/28E pre-sales at Rs22bn/27bn, respectively. Key monitorables include successful closure of strategic tie-ups and progress on regulatory approvals for the Kanjurmarg land parcel.
A five-year disciplined transformation
Post-Covid, AREAL witnessed uptick in pre-sales CAGR, of 24% over FY21-26 to Rs17bn, on the back of a favorable real-estate cycle. Reported revenue and EBITDA CAGR was also healthy, at 26% over FY21-26 to Rs10.9bn and Rs3.0bn, respectively, with D/E improving from 1.13x in FY21 to 0.53x in FY26. For FY27, AREAL has given strong presales growth guidance of Rs22bn (29% YoY growth).
66-acre land in Kanjurmarg presents a significant opportunity
AREAL’s 62-acre land parcel in Kanjurmarg offers total development potential of ~8.3msf with an estimated GDV of Rs256bn. Delay in regulatory approvals has, in turn, delayed the launch; however, we remain optimistic about the FY28 launch. Proven execution capability for large-scale development grants us confidence in the successful execution of the company’s Kanjurmarg project.
Wadala land continues to hold meaningful residual inventory
AREAL has already successfully monetized part of the Wadala land parcel, along with calibrated premiumization through a better product mix. Launches of ‘Manhattan’ (both phases) and ‘Greenfinity’ have received healthy response. The land parcel continues to hold significant development potential of 4.2msf, at GDV of ~Rs168bn
Portfolio expansion beyond the existing land bank
Beyond monetizing its existing land bank and project pipeline, the company has started expanding its portfolio through redevelopment projects and Joint Development Agreements (JDAs). Post-Covid, AREAL added new projects with total GDV of ~Rs50bn, of which Rs20bn worth of projects have already been launched. For FY27, AREAL had targeted adding projects worth Rs18bn GDV, highlighting its focus on portfolio expansion via business development.
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