Buy Ajmera Realty & Infra India Ltd for the Target Rs 175 by Emkay Global Financial Services Ltd
We maintain BUY on Ajmera Realty & Infra India (AREAL), with an unchanged TP of Rs175, based on 6x EV/embedded EBITDA, at 30% discount to NAV (the stock is trading at 51% discount to NAV). In 1QFY27, with no new launches, AREAL delivered muted operational performance, with pre-sales of Rs1.5bn (+35% yoy). Sustenance sales from Manhattan 1 and Manhattan 2 (Wadala, Mumbai) contributed >79% to total pre-sales in 1QFY27. Looking ahead, the company has a total launch pipeline of Rs65.1bn, of which Boutique Office (strata sales) in Wadala constitutes Rs36.5bn of GDV. The launches are mostly bunched up in 2HFY27. Pre-sales guidance for FY27 is Rs22.0bn (29% yoy), and we expect the successful launch of Boutique Office in Wadala to ensure AREAL surpasses its guidance. Key monitorables include the successful closure of strategic tie-ups and progress on regulatory approvals for the Kanjurmarg land parcel
1QFY27 snapshot
Operational: AREAL reported pre-sales of Rs 1.5bn (35% YoY) in 1QFY27 vs our estimate of Rs1.5bn. FY27 pre-sales guidance is Rs22bn. Collections stood at Rs1.7bn (-26% yoy) and realizations stood at Rs33,278psf (95% yoy; mainly due to the large share of Manhattan, Wadala, in the quarter). Business development: Ajmera added a project with a GDV of Rs3.9bn in Bengaluru. FY27 GDV addition is guided at Rs18bn. Financial: Revenue stood at Rs3.2bn (+23% yoy). EBITDA rose 17% yoy to Rs0.9bn, with EBITDA margin at 29%. PAT grew 12% yoy to Rs0.4bn. Net debt and D/E: Debt reduced by Rs0.57bn qoq to Rs6.8bn. D/E stands at 0.47x.
Strong launch pipeline The company has unsold inventory of Rs21.9bn and launch pipeline of Rs65.1bn for the remainder of the year. 2QFY27 will have three new project launches, with GDV of Rs3.5bn. However, most of the launches are bunched up in 2HFY27, with Boutique Office (strata sales) constituting 56% of total launch GDV. We expect Boutique Office to receive a healthy response on launch, due to its proximity to BKC.
Kanjurmarg land parcels
7-acre: Land conversion (leasehold to freehold) is expected before Dec-26. Discussions with strategic investors are ongoing, but tie-up is likely only post-conversion. 55-acre: Master planning is done technical evaluation ongoing. Launch likely in FY28.
Debt reduced on asset monetization
In 1QFY27, asset monetization of Rs890mn led to overall debt reduction of Rs570mn to Rs6.8bn and D/E of 0.47x. However, debt is expected to rise due to a strong launch pipeline over the next few quarters, which requires significant upfront cash outflow. Postlaunch and after monetization of remaining assets (of Rs2.4bn), debt should decline.
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