Ashiana Housing

Background

Ashiana Housing Ltd is  a leading real estate developer.


Main Products/Segments

Ashiana Housing Ltd is basically a real estate developer. The main ‘products’ of the company are:

  • Residential housing and Group housing schemes
  • Retirement resorts
  • Hotels (a very small part)

The company concentrates on Tier II and III towns.


Main Markets/Customers

Retail customers


Bullish Viewpoints

  • Unlike most other real estate players, Ashiana does not go bonkers over land bank. It keeps on maintaining land bank which would give it project visibility for the next 5-6 years, at any point of time. Further, it enters into agreements with existing land owners, thereby reducing initial capital requirement. As a result, the company is debt-free and yet has excellent revenue visibility.
  • Ashiana commences a project only after detailed study and after getting visibility of customer advances. The management states that “we won’t start a project where we feel we won’t get customer advances”. This reduces the working capital requirement too.
  • Ashiana concentrates on Tier 2 and 3 towns. It enters any area only after proper study and also by establishing partnerships with local developers. As a result, it has built up excellent reputation and goodwill in towns like Bhiwadi, Jaipur and Jamshedpur, where it mainly operates. Better to be a biggish fish in a small pond huh?
  • Ashiana has created a niche in the form of developing ‘old age retirement homes’ under the brand name ‘Utsav’. It currently has two such schemes, one at Jaipur and the other one at Lavasa, Pune.
  • Ashiana also maintains the projects that it develops, through its subsidiary Vatika Marketing. This ensures that the quality of its projects stays high even after completion/handing over.
  • Ashiana’s accounting policy also appears to be very conservative. The company accounts for sales on a percentage of completion method. (For more details, please refer to the annual report.)
  • The company has ongoing projects involving saleable area of about 68 lakh sq ft. The company has about 50 lakh sq ft additional land bank.

Bearish Viewpoints

  • The risks are more macro in nature, particularly rise in interest rates.
  • No proper dividend policy.
  • Management may seem too conservative and lacking aggression to some.

Barriers to entry

  • Ashiana’s expertise in the towns it operates in, is a big moat it has.
  • Since the company has no presence in metros, it has no competition from the larger players, hence, is high on reputation and goodwill.

Interesting Viewpoints

Medium to near term triggers
Bonus factors (not considered in main investment hypothesis
Industry data – showing the Size of Opportunity, etc


Disclosure(s)

Neeraj Marathe: No Holdings in the Company;