Stock Analysis on Arvind SmartSpaces

Arvind SmartSpaces: CMP – Rs. 197

Company Profile:

Built on 80 years old legacy of the Lalbhai Group and established in year 2009, Arvind Infrastructure has set its sights on unlocking the massive land banks owned by the company in Gujarat.

Monetizing these land banks and engaging in real estate development will enable Arvind to harvest greater value out of its real estate assets and will also create yet another avenue for Arvind to deliver a high quality experience to its customers. We’re focused on creating real estate solutions that add value to lives. This reflects in the precision of our processes, the simplicity of our transactions and the thoughtfulness in everything we build. We’re artisans who take great pride in the process of creation, for the joy it delivers.

While there are many respectable names in the Gujarat real estate market, the thing that will help Arvind Infrastructure stand apart from the rest is its focus on customer service and value additions to the real estate product and service portfolio.

The company has the vision to create value for all the stake holders by redefining the standards of excellence and trust in the real estate industry. It is focused on creating real estate solutions that add value to life styles across categories.

The company has since evolved as a major player in Ahmedabad’s real estate market with various big projects under construction / set to launch. The company has established its presence in residential , commercial and land development space in a short period of time.

Following the spectacular success of its projects and significant unmet demand, Arvind Infrastructure has ambitious plans of coming up with other innovative offerings and mega projects in Ahmedabad and Bangalore catering to residential and commercial space.

Awards and Recognition:

  1. 19th August 2017 – Excellence in upgrading lifestyle standards
  2. 6th July 2017 – Arvind Expansia – Luxury Project of the year
  3. 30th June 2017 – 9th Realty Plus Conclave & Excellence Awards 2017
  4. 24th January 2017 – Arvind Smartspaces Ltd. part of Asia’s Greatest Brands 2016
  5. 8th December 2016 – Arvind Expansia – Residential Property of the year
  6. 6th December 2016 – Certificate of Excellence in ASSOCHAM Top 50 SME Index
  7. 25th Nov 2016 – Uplands – Integrated Township of the Year
  8. 1st July 2016 – Arvind Citadel – Residential Property of the Year
  9. 11th April 2016 – Uplands – Integrated Township of the Year
  10. 11th April 2016 – Mr. Kamal Singal – Real Estate Most Enterprising CEO of the Year
  11. 20th Feb 2016 – Arvind SmartSpaces – Emerging Developer of the Year – India
  12. 20th Feb 2016 – Uplands – Integrated Township of the Year – India
  13. 8th May 2015 – Realty plus excellence Awards

SWOT Analysis:

Opportunities:

1. To set industry benchmarks in:

  • Design & Architecture
  • Customer Relationship Management

2. Low industry standards

3. New geographies – B+ tier cities such as Pune, Jaipur etc.

4. Overall regulatory framework expected to bring more transparency

5. Expected pickup in economy – GDP expected growth 7-8%, interest rates coming down

6. REITS and other relaxations will help bring foreign equity

Strengths:

1. Brand Image

2. Strong Management team

3. Satisfied Customers

4. Long term value creating projects

5. Robust internal systems

6. Strong Government / Local networking

7. Credibility in the industry

  • Deal Flows
  • Customer Confidence

8. Product Innovation – Golf, Disney, Smaaash

9. Technology leverage – Touchscreens, ERP, customer portal

Threats and Weakness:

Threats:

1. Time to Market

2. Slowdown in real estate market

3. Unsold stocks in the market

Weaknesses:

1. Limited geographies

2. Limited product segments

The company is primarily in residential segment of Ahmedabad and Bengaluru region. ASL has total of 12 projects in its name through own land, Joint Ventures and Joint Development model, of which 6 have been successfully completed.

During the FY 2016-17, the performance of ASL has been improved marginally due to various positive factors. The total sale in terms of value is Rs. 92 Crores during the current financial year against Rs. 74 Crores during the previous financial year, an increase of 24% over the previous year.

Financial Ratios:

  1. Market Cap.: ₹ 626.71 Cr.
  2. Face Value: ₹ 10.00
  3. Listed on BSE and NSE
  4. Price to book value: 3.25
  5. Sales growth 5 Years: 66.67%
  6. Promoter holding: 56.93%
  7. Profit growth 5Years: 51.15%
  8. Return on equity: 12.86%
  9. Sales growth 3 Years: 27.33%
  10. Profit growth 3 Years: 31.91%
  11. PEG Ratio: 0.58

Other Important factors:

Debt Equity: The debt equity ratio of the Company as on 31st March, 2017, is at 0.48:1.

Revenue: The total revenue of the Company has increased from Rs. 159.84 Crore in the FY 2016-17 against Rs. 114.74 Crore in FY 2015-16, an increase by 39%.

EBITDA: EBITDA margin during the financial year 2016-17 stood at 29% as compared to 32% for the previous financial year.

Finance Costs: Interest & Financial Charges for the financial year 2016-17 is Rs. 11.58 Crore as compared to Rs. 8.43 Crore in the previous year, an increase by 37%, which is predominantly on account of company has availed Line of Credit facility from HDFC Limited and Unsecured loan from KMIL.

Net Profit: Net profit available for appropriation for the year 2016-17 stood at Rs. 20.97 Crore as compared to Rs. 17.21 Crore in the previous year, an increase of 22%.

Dividend: The Company has not proposed a dividend on its equity share as it want to reinvest the net profit on its upcoming projects.

Earnings Per Share (EPS): The Company’s Basic Earnings Per Share (EPS) during the current year is Rs. 7.91 as compared to Rs. 6.66 in the previous year and Diluted EPS is Rs. 7.74 as compared to Rs. 6.66 in the previous year. [EPS of provious year has been recalculated]

Technical Analysis:

Decision:

Now it is trading at CMP of Rs. 197 and try to average at Rs 185.

Target 1 = Rs. 258 i.e. Return is 40%

Holding period = One year.

Target 2 = Rs. 370 i.e. Return is 100%

Holding period = Two to Three years.

Disclaimer: All stock recommendations and comments are the opinion of writer. All investors are advised to conduct their own independent research into individual stocks before making decision.

Sources:

Official website: http://www.arvindsmartspaces.com/other_information.php

Fundamental Analysis: https://www.screener.in/company/ARVSMART/

Technical Analysis: https://kite3.zerodha.com/ext/chart/NSE/ARVSMART/2676993

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