Ashiana Housing - Q1FY14 Result Update - Sushil Finance

Ashiana Housing has come out with good operational metrics in terms of area booked and EAC, on the number front it looks frail because of the change in accounting policy. Key points pertaining to results are summarized below:

Key Highlights of Q1FY14

- For the quarter ended Q1FY14, Ashiana Housing's Total Revenue is down by 39.1% YoY to Rs.186.8 Mn due to change in accounting policy from POCM to Contract Completion method. Its revenue from own project is down by 57% YoY to Rs.118.8 Mn while that from partnership projects is up by 120.8% YoY to Rs.68 Mn.

- Its Area booked has increased by 29% YoY to 3.84 LSF. Higher booking was mainly contributed by the new launch of Gulmohar Gardens which accounts for 44% of the total booking at 1.7 LSF.

- Equivalent Area Constructed during the quarter has increased by 11% YoY to 3.1 LSF. The company's Realization for the quarter has increased by 5% YoY to Rs.2576/SF.

- Ashiana's Operating Profit is down by 42.9% YoY to Rs.52.8 Mn on account of lower sales. Its Operating Profit Margin is down by 180 bps YoY to 28.3%.

- Its net profit has decreased by 17.1% YoY to Rs.73.8 Mn in Q1FY14 with NPM at 39.5% due to higher income from partnership firms.

- Pre-tax operating cash flows from ongoing projects of the company remained buoyant at Rs.268.4 Mn for Q1FY14 (up by 13% from Q4FY13).

- The company's total saleable area of ongoing projects stands at 97.3 LSF, with area launched at 49 LSF and total area booked at 35 LSF (71% of launched area). Group housing accounts for ~89% of the total saleable area followed by Retirement resorts accounting for 10%.

- Apart from this the company also has an estimated saleable area of 69.6 LSF for future projects, thus having a total developable area of 166 LSF.

- Launch of Projects - The Company launched phase 1 of Gulmohar Gardens of 4.1 LSF in May'13 and saw a bookings of 1.7 LSF in almost a month's time. Total saleable area of this project is 11.34 LSF. It has also launched Ashiana Town at Thada, Bhiwadi having a total saleable area of 39 LSF, largest project of the company so far.

- Management Guidance: With a huge project pipeline and launch of two big projects in Q1FY14 its bookings are expected to attain the mark of 23 LSF in FY14 from current 18.7 LSF (FY13). While the EAC is likely to increase to 19 LSF in FY14 from current 12.1 LSF (FY13).

OUTLOOK & VALUATION

Ashiana Housing's revenue and profit for this quarter looks frail as the company is undergoing a change in accounting policy from POCM to contract completion method. As mentioned in our earlier report, Area Booked, EAC and operating cashflow are better parameters to guage the performance of the company as earnings are likely to be lumpy in short term. Keeping in mind the ongoing projects saleable area of 97.3 LSF, EAC target of 19 LSF and area booking target of 23 LSF for FY14 we believe that the company is likely to grow at a CAGR of 58% for the next two years. Being a net debt free company with relatively stable cashflows the stock is attractively trading at 3.8x times its FY15E EPS of Rs.51.8. We maintain our positive stance on the company and recommend BUY with a price target of Rs.322.

Source : Equity Bulls

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