Hello everyone, relatively new to this forum been investing for a few years now (not sure why I did not stumble on this forum earlier) Anyways, on the Uplands project, let’s do some quick math.
Based Vinay (sammy’s) post, what I understand is that the land owner gets compensated 25% of the sales on the project, while Arvind incurs all costs and gets compensated 75% of sales. While Vinay addressed the sales portion of the equation, let’s take a closer look on the cost side of the equation.
Conversion factors:
1 Acre = 43,560 Sqft.
1 sq yard = 9sqft. (Source – Google)
Cost of Villas (Built up area)
Built up area = 135 acres * 0.25 (FSI) = 33.75 acres = 14,70,150 sqft.
In the attachment, the construction cost = 2,500/sq ft.
Cost of constructing 800 villas = 2,500 * 14,70,150 = 367.5 cr.
For the remaining 101.25 acres assuming a cost of 900/ sq ft (This number is subject to debate) for the golf course, land scaping, entertainment centers / club house, equipment etc. etc. that works out to another 396 Cr.
So Total cost (material + labor) = 763 cr.
Let’s add another 10 % of sales (randomly) for marketing, SG&A, cost overruns etc. that brings the total cost to 763 + 120 = 883cr (rounding to 900 cr)
Based management guidance of 1,200 cr revenue, are we looking at an EBITDA of 1200 – 900 = 300 cr just for this one project?
Let’s spot check my numbers – This works out to a 25% EBITDA margin which I think kinda seems reasonable for this project given that Ashiana has an ebitda margin of approx. 26 – 30% , and godrej on a standalone basis of 20%.
Am I missing something out? This is clearly oversimplified math, but on the basis of this, Arvind Infra looks pretty interesting!
I guess in order to definitively answer the question raised previously as to whether all this is baked into the current market price, we should try and do the same analysis (EBITDA projection) for all outstanding projects, and based on expected completion dates, present value EBITDA to today and see what it looks like. (Just a suggestion) Any thoughts?
P.S. I do not have any positions in Arvind infra.
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