Hi Vinay, thanks for filling us in on the beyond 5 project. I think the revenue forecasts of management seem to be pretty reasonable based on the discussions in this thread, there is a significant probability that they will meet their top line numbers, concerns mainly may be on the bottom line though, potential cost overruns, project delays due to regulatory delays etc.
I think the more important question is, can they at the least maintain this revenue trajectory, i.e. Do an average of 500 crores worth of sales/ year consistently (if not grow that further) ? So the key is can they find enough worthwhile projects in the coming years to sustain this 500cr/ year revenue, especially given the fact that so far they have chosen to restrict themselves to just 2 geographies, BLR & Ahemdabad. Clearly they may venture into other markets, but then, in those markets they don’t have any brand recognition, so would land owners be willing for JV’s in those other cities in the same way they are in Ahemdabad?
Let’s try and see how much of development work they need to do each year.
Clearly we can debate on the assumptions above in terms of avg size / villa or price/villa etc, and we may arrive at slightly different total development numbers. In any case the key questions are as following
- Will Arvind infra be able to get into JV’s to the tune of 68 – 70 acres / year, every year, consistently? (there will be big projects that will skew the averages, but they need to announce atleast 1 big (Uplands) type project every 2 years)
- Not too clear on the revenue recognition front on this, but if a % of project completed method is being used, they will need to construct 22 lakh sqfeet / year. That’s a lot! Can they deliver? Will they find this amount of worthwhile projects to undertake, each year, every year consistently? (I understand that prices inflate, so this # may come down a bit into the out years)
The key point is project pipeline (apart from those already announced) I haven’t seen them add any new projects for a while, do deals for more JV’s etc.
Does anyone happen to know about the “New Haven” upcoming project? how big, where etc? And not too sure what to think of their megapark project, would small businesses be willing to shell out so much money for a fancy workshop / industrial shed?
Disc: significantly invested at cmp
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