Ashiana Housing Limited (ASHIANA) Q4 FY23 Earnings Concall Transcript

Ashiana Housing Limited (NSE: ASHIANA) Q4 FY23 Earnings Concall dated May. 31, 2023

Corporate Participants:

Binay Sarda — Assistant Vice President, Ernst & Young LLP

Vikash Dugar — Chief Financial Officer

Varun Gupta — Director

Analysts:

Vivek Joshi — VP Capital LLP — Analyst

Himanshu Upadhyay — O3 PMS — Analyst

Praveen Agarwal — — Analyst

Ankit Gupta — Bamboo Capital — Analyst

Anuj Sharma — Analyst — Analyst

V.P. Rajesh — Banyan Capital — Analyst

Shivam — — Analyst

Rahul Jain — — Analyst

Rishi Singhal — — Analyst

Darshan Shah — Multi-Act Equity Consultancy — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Ashiana Housing Limited Q4 FY ’23 Earnings Conference Call. [Operator Instructions]

I now hand the conference over to Mr. Binay Sarda from Ernst & Young LLP. Thank you, and over to you, sir.

Binay Sarda — Assistant Vice President, Ernst & Young LLP

Thanks, Aman. Welcome, everyone, and thanks for joining this Q4 FY ’23 earnings call for Ashiana Housing Limited. The results and the investor presentation have been mailed to you and is also available on the stock exchange. In case if you have not received the same, please write to us and we’ll be happy to send it over to you.

To take us through the results for the quarter and answer your questions, we have today with us Mr. Varun Gupta, Whole-Time Director; and Mr. Vikash Dugar, CFO. We’ll be starting the call with a brief overview of the Company’s performance in the quarter, and then we’ll follow it up with Q&A session.

I would like to remind you that everything said on this call that reflects any outlook for the future, which may be construed as a forward-looking statement, must be viewed in conjunction with uncertainties and risks that they face. These uncertainties and risks are included but not limited to what we have mentioned in the prospectus filed with SEBI and subsequent annual reports, which you will find on our website.

With that said, I will now hand over the call to Mr. Vikash Dugar. Over to you, sir.

Vikash Dugar — Chief Financial Officer

Thank you, Binay. Good afternoon, everyone. Hope all of you and your families are keeping healthy. I welcome you to discuss the performance of the fourth quarter and the year ended March ’23 for Ashiana Housing. Thank you for joining us today.

The year gone by was quite active in terms of new launches. We launched five greenfield projects, new phases of existing projects, totaling to the tune of 29.46 lakh square foot. Second kid centric project was launched in Gurugram by name Ashiana Amarah. The first phase was launched in October ’22, comprising 224 units and was fully booked at launch. Phase 2 was launched in April ’24 [Phonetic], consisting of 224 units, saleable area 3.77 lakhs square foot, having a sale value of around INR283 crores. All these 224 units were converted on 17th of April. Ashiana Prakriti got launched in Jamshedpur in March ’23 with 162 units and sales value of INR163 crores. Entire phase was sold at launch. Ashiana Advik, our general third senior living project in Bhiwadi, was launched in November ’22. Ashiana Malhar in Pune was launched in August ’22. And Ashiana Ekansh in Jaipur was also launched.

We achieved INR1313.43 [Phonetic] crores for financial year ’23, which was our highest-ever sales. Area booked increased by 75% from 14.76 lakhs square foot in FY ’22 to 25.86 lakhs in FY ’23. Sales price improved to INR5,080 for the current year versus INR3,883 per square foot in FY ’22, an increase of 31% year-on-year, driven by increasing prices across projects and changing mix towards higher-priced projects.

In the last quarter of FY ’23, 8.59 lakh square feet of area was booked as compared to 9.03 lakh square feet in the previous quarter. In Q4, bookings were driven by new launches in Ashiana Prakriti, Jamshedpur and Ashiana Ekansh, Jaipur, and sales in older projects like Ashiana Anmol Phase 3, Gurugram, and Shubham Phase 4B, Chennai.

We handed over 10.51 lakh square feet in FY ’23. This was against a delivery of 8.86 lakh square foot in FY ’22. Total revenue increased to INR425.19 crores in FY ’23 versus INR233.59 crores in FY ’22 due to higher deliveries. Total comprehensive income was positive at INR28.78 crores vis-a-vis negative INR6.56 crores in FY ’22.

Total revenue reported for Q4 FY ’23 was INR116.94 crores vis-a-vis INR135.31 crores in the previous quarter. TCI also improved to INR10.51 crores in Q4 FY ’23 versus INR9.29 crores in Q3 FY ’23.

Pre-tax operating cash flows were positive at INR84.84 crores for FY ’23 versus positive INR165.05 crores in FY ’22. Equivalent area constructed was 16.73 lakh in FY ’23 versus 16.20 lakh square feet in FY ’22. Further, two new land parcels had got acquired in Jaipur in FY ’23, Ashiana Nitara in Village Bhankrota with an approximate saleable area of 6.5 lakh square foot and Amaltas by Ashiana in Jagatpura with approximate saleable area of 4 lakh square foot. One new land was acquired in Manesar, Gurugram, with an approximate saleable area of 10.3 lakh square foot. Total potential saleable area in these new land parcels will be around 21 lakh square foot.

On this note, I would like to conclude my remarks. We’ll now be happy to discuss any questions or suggestions that you may have.

Questions and Answers:

Operator

[Operator Instructions] The first question is from the line of Vivek Joshi from VP Capital LLP [Phonetic]. Please go ahead.

Vivek Joshi — VP Capital LLP — Analyst

Yeah. Congratulations, sir, for a very good set of numbers, especially on the booking front and all. So, I need — I had a couple of questions. One is that could you explain me how the expenses are booked? [Indecipherable] accounting question, like, is it related to the deliveries made? Or is it like an ongoing thing on the complete cost that has been incurred during the year? And for deliveries, in your slide, you have given that in FY ’24, you are going to be delivering around 26 lakhs square feet. So, is it reasonable to assume that given the realization rate, our booked revenue will be around — over INR1,000 crores for FY ’24?

Vikash Dugar — Chief Financial Officer

Yeah. Thank you for your question. So, the year in which we give the deliveries, that year only we book the revenues. And following the matching principle, the book — the costs are also booked in the same year. So, both revenue and costs are booked at the time of deliveries, or in other words, at the time of possession being given on the project. As far as revenue for FY ’24 is concerned, again, the pricing for each of these projects will have to be seen as to what exactly is the price, and then we’ll be in a position to exactly see as to what revenue will be booked.

Vivek Joshi — VP Capital LLP — Analyst

I think the average [Speech Overlap] average is about 4,000 [Phonetic], so like…

Varun Gupta — Director

Yeah. So, for all these projects, we list our the value of area booked separately, which is provided in the sheet in this — in our operations snapshots as to what the value of area booked is of all these projects. If you take from there, you can total it and get a sense of where we’re going. It’s on Slide 12.

Vivek Joshi — VP Capital LLP — Analyst

Okay. I just wanted to know if I’m approximately in the right benchmark. I’ll do the exact math, but…

Varun Gupta — Director

Yeah. You can do the math. I think you’ll be a little — we also haven’t done the full math. We will also do a full math. Then we’ll give the sense. But the thing is, as it wouldn’t be right because the average is also getting skewed from what is getting booked at a higher rate in the last financial year. And the deliveries that are happening in FY ’24 have been bookings which have done much earlier than that. So, the average would not be the right context year-to-date. So I would rather do the math because with sales prices can really vary a lot now [Speech Overlap].

Vivek Joshi — VP Capital LLP — Analyst

Yea. got it. They would be [Speech Overlap]. Got it.

Varun Gupta — Director

And earlier, we used to operate in a tight range. So production ratio is better now. We have projects ranging at INR3,000 a square foot and going up to like Amarah Phase 2 I think close to INR17,700 [Phonetic] a square foot, which shows the variation in price points now has also become very large for us. I think we should just keep that in context.

Vivek Joshi — VP Capital LLP — Analyst

Okay. Thank you so much. And is it okay if I ask another question? Or I’ll wait in the queue, as you please.

Varun Gupta — Director

You can go ahead. I think this — you can go ahead, one more question.

Vivek Joshi — VP Capital LLP — Analyst

Yeah, okay. Another thing I wanted to know is that now that we have booked like 25 lakhs square foot and around INR1,300 crores value, is this a run rate we are looking to do because you would have your launches in all early planned in the coming financial year? Or this is going to vary a lot? Is this the new normal or it was an exceptional year?

Varun Gupta — Director

No. So, in this year, we are expecting INR1,500 crores sales value push. So, we are looking to grow this number. That said, I think quarterly variations, like last year, if you see, bulk of it came in two quarters, in the last two quarters. So I think we will continue to have quarterly variations as we go along. So we might — we’ll have a couple of great quarters and a couple of slow quarters, depending on how project and phase launches are planned in those quarters. But this year, we’re expecting INR1,500 crore.

Vivek Joshi — VP Capital LLP — Analyst

Thank you so much. I’ll get back in the queue for further questions. Thank you so much.

Operator

[Operator Instructions] The next question is from the line of Himanshu Upadhyay O3 PMS. Please go ahead.

Himanshu Upadhyay — O3 PMS — Analyst

Yeah. Hi, congrats, Varun and the whole team of Ashiana on good set of numbers and meeting the targets that you set for yourself in the beginning of the year. So, great to see the good times for the Company. And I also visited the Chennai project this year, this quarter, and it was impressive, the senior living project [Technical Issues]. My first question is, can you give an idea of this HSIIDC land deal? Has it been consummated? And what I understand from reading the document is, it seems that It will be — the final payment can happen in ’24. So, is it a long gestation deal? And what is the — I believe we can only launch project in FY ’25 or ’26? Some idea on what is happening there?

Varun Gupta — Director

Himanshu, so we have paid 25% of the sums of money. We are waiting to now execute what they call a formal agreement to sell. Post execution of formal agreement to sell, we have up till 12 months to make the remaining payment. And thereafter, we can go for plan approvals and stuff like that. Now, we are also — there is a process for us to carry out our design. And unfortunately at Ashiana or fortunately at Ashiana, we take a lot of time to design because design is our winning edge. So time consumption in design is a little high, but it also leads to a good product. So we’re going to use a substantial part of this time to get a design ready. And some approvals like environmental approvals, we can move [Technical Issues] paying the full amount. So we’ll be using that time. Anyways, we would have expected a 12-month to-18 month timeframe of launch since we did the deal. So we are not expecting the launch of the project in FY ’24, no matter what the payment terms are. We would like to launch this project in FY ’25.

Himanshu Upadhyay — O3 PMS — Analyst

Okay. Thanks for the clarity. And one more thing, you gave a target of INR1,500 crores of sales for FY ’24. We did 2.6 million square feet of sales in FY ’23. And we have — so, do you think that we’ll be focusing more on the sales area-wise? Or do you think the realization itself will take us to our desired target of higher 20% sales growth for [Speech Overlap]?

Varun Gupta — Director

A combination of both, Himanshu. So, some places, we will push for higher sale prices like at Gurugram in Ashiana Amarah Phase 2. We launched the Phase 2 which, we disclosed, was also at a much higher sale value. I think 224 units at this time and INR7,700 average per square foot pricing as compared to INR6,100 in Phase 1 in Amarah. So in Amarah, we are looking at that. But in some other projects, in Jaipur, we expect volume push as well. So there would be different flavors in different locations. So it’ll be a combination of the two when we look at it.

Himanshu Upadhyay — O3 PMS — Analyst

And are we back to the peak margins what we used to do in terms of gross margins in the projects what we are selling? So we stated that 30% gross margin had come down to 24%, 25%. Are we — in the incremental sales, what we are doing, can we expect the gross margins to be back to the historical high what we were doing?

Varun Gupta — Director

Yes. So 30% is probably average, what we would like to be. And we would expect 30% gross margins on a blended basis across the projects. That said, the older projects like Ashiana Anmol, even at current price points will not make those kinds of margins. But all the new — any projects that we have signed off on after 2015, I think we’ll be able to maintain 30% gross margin or more. We launched five projects last year: Ashiana Advik, Ashiana Amarah, Ashiana Prakriti, Ashiana Ekansh and Ashiana Malhar. Malhar is an older deal that we had done in 2017, not sold, but 2017 as well there, and deal in Pune, where our margins are a little compromised. They are not in the 30% or close by. But rest of the projects are — in JV projects, we are also okay with 27%, 28%, 29%, and we’ll get those in the JV projects. In the owned projects, we will be north of 30%. And across these five projects, I think blended average will be more than 30% across all the five projects.

Himanshu Upadhyay — O3 PMS — Analyst

Okay. I’ll join back in queue for further queries. Yeah, thanks for the replies.

Varun Gupta — Director

Thank you, Himanshu.

Operator

[Operator Instructions] The next question is from the line of Praveen Agarwal as an individual investor. Please go ahead.

Praveen Agarwal — — Analyst

Yeah, hi. A quick question. So, I just wanted to understand when we underwrite the projects, so what is the internal IRR which we look at? And what is the time — so, essentially, if you take a parcel of land and we do three, four phases, how much time does it take from the first land was purchased — and I see that typically, we complete eight to 10 quarters, one phase. But typically, how much time does it take a parcel of land to completely consumed? And what is the internal IRR which we target on a land when we purchase that?

Varun Gupta — Director

So, Praveen, a couple of things. First, from a time cycle, I think the project takes about 12 months to 18 months to get off the ground before — after purchase, it takes time for approvals. It takes time to get the site ready from a salability perspective, get our sales office and all that going and our design ready. So, about 12 months to 18 months to launch the project, and sometimes even extending up to two years. And from thereon, a project takes about five to seven years to be fully consumed, depending on the size of the project and number of phases that we have. And now, coming back from an IRR perspective, we have — we don’t really do IRR calculations. We don’t run very complex Excel sheets to do IRR calculation. We have very thumb rule mathematics. And in our thumb rule mathematics, at the Company-level, we look for — we are now looking for a 15% return on equity at the portfolio Company-level, including uninvested capital at any point in time. So — and it becomes very difficult to calculate project-level IRRs by allocating overhead and stuff like that. So we have a threshold that we want to make a 30%. GP margin on the project, and we run our sort of absolute profits that what we get in the project and look at a multiple on our investments in that. So, that’s the kind of thumb rule, and we expect to make 15% ROEs — 15% plus ROEs in the Company.

Praveen Agarwal — — Analyst

That’s good to hear. So — and on the 15% ROE basis, we know that last few years were tough. But at one point, going forward, do we think that we’ll start doing those 15% ROE? Given what we have booked in 2023, these are — will that all yield to — as and when these gets executed and get booked into our financials, will they all yields 15% ROE on our equity capital?

Varun Gupta — Director

Yes, that’s the expectation that we should be able to do that. So, we also track what we call economic ROE in the Company as to see deliveries can be very delayed, how the company is looking and how that is translating in our — we have a metric for economic ROE calculations, and our expectations are that the economic ROE should start crossing 15% threshold from FY ’23-’24. ’22-’23, we have hit double-digits in our economic ROE calculation. In ’23-’24, that should start doing better. So the margins — and an earlier question, I think, was around margins by Himanshu, and as margins have improved and the sale volume has improved, the value has improved, I think we are looking at good times ahead right now.

Praveen Agarwal — — Analyst

That’s great to hear. So my last question is on the new land parcel, which will — or the cities which you are looking to acquire or do projects. And any color on the land which you are looking to buy?

Varun Gupta — Director

So, one, we did the HSIIDC transaction in Gurgaon in March. Gurgaon is something we were looking for more work, and I think that seems to be fitting in. And other than that, there are two active negotiations going on, and then we’ll start looking for more in — so two active negotiations, one in Jaipur and one elsewhere. But that’s about it at this point in time. But that’s enough to keep refilling the pipe, right? Last year, we ended up effectively doing 20 lakh square foot of deals between HSIIDC and two in Jaipur. And right now, we are also in active discussions for two projects, which together will be another 20 lakh square foot. So it seems to be okay as a replacement stock. I think on aggression to get more and more stock, we are just waiting for prices to be a little bit more conducive. [Speech Overlap]

Praveen Agarwal — — Analyst

One last question before I hand it over. So, is now Gurgaon an integral part of our strategy? We are — historically, we’re very strong in Jaipur, Bhiwadi kind of areas. So, is it — would it be fair to assume that going forward, for the next foreseeable future, Gurgaon will play more and more important role in the overall scheme of things?

Varun Gupta — Director

Absolutely, Gurgaon is going to play a very key role for the Company going forward. It drove I think 40% of the value of area booked for the Company last year. Volumes were not as much. Pricing was higher. It is going to be an integral part of our strategy. I think that and senior living are going to be the integral aspects of Gurgaon [Phonetic].

Praveen Agarwal — — Analyst

That’s good to hear. Nothing else from my side. Thank you.

Varun Gupta — Director

Thank you, Praveen.

Operator

Thank you. The next question is from the line of Ankit Gupta from Bamboo Capital. Please go ahead.

Ankit Gupta — Bamboo Capital — Analyst

Yeah. Thanks for the opportunity, and congratulations for the great performance during FY ’23. In our Amarah project, you talked about the new bookings being done at a rate of INR7,700 per square foot compared to — in Phase 2 compared to Phase 1 pricing of around INR6,100 per square foot. So if you can talk about what is driving this increase in realization? Is it the demand in that specific market? Now, so if you can talk about the pricing across the rest of our key geographies like Jaipur and Bhiwadi and others, Jamshedpur?

Varun Gupta — Director

Okay. So, yeah, most of our projects are now getting priced in the INR4,000 to INR6,000 bracket. There are some less than that as well, like Jodhpur would be less than INR4,000. Bhiwadi general housing would be less than INR4,000. But now, Bhiwadi senior living is INR4,500 odd, and Pune would be INR5,000 plus, and INR6,000 plus also in senior living expectations there. So, different markets have different price points. I think even in Jamshedpur, we crossed the INR5,000 benchmark in the last launch that we had. So,I think we are operating in the INR4,000 to INR6,000 bracket across most of the projects. In Gurgaon, I think one — in Phase 1, our brand was not as well established as I would say. So, as when we sold, got some things going, our brand got better established, we got more traction, and then Phase 2 prices improved for us. But the market also has gone up really high in Gurgaon. And I think more than the demand, it’s a lack of supply in Gurgaon. Very few group housing projects have been launched in Gurgaon. Most launches in Gurgaon have been around floors. And that lack of supply is helping prices go up.

Ankit Gupta — Bamboo Capital — Analyst

And what about — how are you seeing traction in pricing across other geographies, key geographies like Jaipur and Bhiwadi?

Varun Gupta — Director

As I said, prices are ranging between INR4,000 to INR6,000 there. Prices across the board have gone up. And prices and margins — we are comfortable with prices and margins at a portfolio level. There will be a few projects which are still concerning, but that I think probably will always be the case.

Ankit Gupta — Bamboo Capital — Analyst

Sure. And my second question was on our bidding [Phonetic] pipeline, and you say that the land prices have become a bit — have gone up quite a bit. So, is it that the demand across the sector has gone up significantly that developers are bidding the prices up? So, what is the reason for such a [Speech Overlap]?

Varun Gupta — Director

I have alluded to this before. The price increase in land has been driven mostly by plotted developments. And as plotted developments like in Gurgaon, they have — prices have come — all plotted developments are not getting licenses anymore. We see demand for land has reduced. We were able to get a good deal, I believe, in HSIIDC land price because it was the only approved housing plot on auction. And therefore, there were not that many bidders for group housing for that plot, and we were able to get value. I don’t see a lot of demand for group housing land yet still in the system, but land has alternative uses like plotting, and that had bidden [Phonetic] up. I think they started correcting now. I think plot prices are either plateaued or started falling a little bit in a few markets. I think they were fundamentally off the charts.

Ankit Gupta — Bamboo Capital — Analyst

Got it. And with increasing focus on Gurgaon, which is a relatively…

Varun Gupta — Director

Ankit, can I request you for a last question, please? Because we have a little bit of a long queue after this show. Just last question.

Ankit Gupta — Bamboo Capital — Analyst

[Speech Overlap] so how do you see our realizations over the next two, three years from — we ended this year with around INR5,000 [Phonetic], INR5,080 per square feet with our increasing focus on Gurgaon as well as other cities. So, how do you think our realization can be over the next two, three years?

Varun Gupta — Director

So, we will have I think a wider price bracket, and a lot of the portfolio will define that. I think Jaipur will continue to operate in INR4,000 to INR5,500, INR4,000 to INR6,000 kind of a price range. Gurgaon will now I think be closer to INR7,500 to INR8,500 square foot price range, depending on the new projects we take up, where we take up. Senior living, I think we are crossing the INR5,000 threshold across the board, getting closer to INR6,000. So there are different things. Bhiwadi and Jodhpur general housing continue to feel pressure. So, a lot of our price points will also now depend on the mix of projects that are sold in a particular period.

Ankit Gupta — Bamboo Capital — Analyst

Okay. Thank you. Thank you so much, sir.

Varun Gupta — Director

Thank you.

Operator

Thank you. The next question is from the line of Anuj Sharma from M3 Investment. Please go ahead.

Anuj Sharma — Analyst — Analyst

Yeah. Thank you, and congratulations. Varun, I don’t know if this was discussed but at the stake of repeating it, if we exclude the project mix, then what was the pricing improvement on a like-for-like basis in FY ’23?

Varun Gupta — Director

It’s very hard to say on a like-to-like basis, I think, because as a project has got completed and you’ve launched a new project, in that, it becomes very difficult. So, we don’t do like-to-like tracking because they’re different across different projects, and they have different weights in different years. So, taking out weighted average becomes a problem. If a project is selling a few unit this year because it has less stock, its weight might be less in this particular year, higher in the — so it becomes very problematic to look at that. So, we look at a portfolio basis. But I think, as I said, INR4,000 — our new normal — our normal earlier was I think INR3,300, INR3,400 a square foot to operate on like a base case scenario. I think that base case scenario has shifted to INR4,000 a square foot. So maybe that’s the way to look at it, like maybe a 15%, 20% shift over a 24-month period is probably an ideal way to say where our base has shifted.

Anuj Sharma — Analyst — Analyst

Okay. Got that. And just an extension. So going forward, even if I take a 20% from INR3,300 to INR4,000, 10% to 15% is something which we could look on like-on-like basis across portfolio? And which are the markets wherein you think you can push through pricing literally easily in your whole portfolio? Thank you.

Varun Gupta — Director

So, I would not comment on how much price increase we will look at year-on-year. If you had asked me this at the beginning of the year last year, I wouldn’t have said the kind of increase we saw over the last two years. Unfortunately, I’m not able to give a call on that. That said, confidence on pricing in Gurgaon, Jaipur and senior living is — and Jamshedpur are generally the highest as of now. And I see that to continue.

Anuj Sharma — Analyst — Analyst

Thank you.

Operator

Thank you. The next question is from the line of V.P. Rajesh from Banyan Capital. Please go ahead.

V.P. Rajesh — Banyan Capital — Analyst

Hi, congratulations, Varun. Just two quick questions. One, on the realization that we were just talking about, our increase in realization has been much lower than the general inflation over the last 10 years. So, are you consciously trying to push realization up by getting into the [Technical Issues] or not really, and you’re just going to see how it should [Technical Issues]?

Varun Gupta — Director

I think — V.P., I think 10 years of inflation has been captured or seven years of inflation has been captured right now. If I really inflate prices from let’s say a 2010 perspective in markets we are in, we would be hardly at inflation [Indecipherable]. So I think there is — on that basis, there is room, but you never know if 2010 is a good baseline number to take. But there was a lot of catching up to do in real estate prices in general because there were no increases for a few years. And there is still some catching up to do in the market.

V.P. Rajesh — Banyan Capital — Analyst

Got you. And my second question is on the ROE side. The slides assume [Phonetic] that you are moving up the guidance to 15%. But just curious to know what has been the ROE for this year, if you have already the numbers on the — not on the reported P&L but the economic value that you track?

Vikash Dugar — Chief Financial Officer

Hi, Rajesh, Vikash here. So we have been improving our ROE year-on-year. And so, this year, in FY ’23, we have crossed the double-digit number, although directionally, the target is to achieve a 15% kind of a number about which Varunji spoke a while back. But this year, we have certainly improved and we are in double-digits now.

V.P. Rajesh — Banyan Capital — Analyst

Okay, great. Congratulations. And that’s all I had.

Operator

Thank you. Next question is from the line of Shivam [Phonetic] as an additional investor. Please go ahead.

Shivam — — Analyst

So, I just heard your guidance. Will it be INR1,500 crores for FY ’24?

Vikash Dugar — Chief Financial Officer

Yes.

Shivam — — Analyst

Okay. And what kind of — can you give us an estimate of what kind of PAT percentage can we expect?

Varun Gupta — Director

This INR1,500 crores is not a revenue number. This is the pre-sales number, value of area booked.

Shivam — — Analyst

Yeah, that I understand. How much of the PAT percentage usually we target like if you’re doing pre-sales of INR1,500 crore?

Varun Gupta — Director

So, we are targeting a 30% GP. We target about, let’s say, 4% to 4.5% of sales and marketing expenses. And the overheads are our fixed overhead number. It’s not a percentage number. There is operating leverage. Those are reported. So let’s say, if I exclude depreciation and finance from that — or in that, last year, that cost overall was about INR65 crores, INR70 crores according to [Technical Issues].

Operator

Sir, we’re unable to hear you clearly. Again, the voice was cracking.

Varun Gupta — Director

Can you here me now?

Operator

No, just give me a minute. I will quickly reconnect you. Ladies and gentlemen, we request you all to please remain connected while we reconnect the management. Thank you.

Ladies and gentlemen, thank you for patiently waiting. We have the management line reconnected. Sir, over to you.

Varun Gupta — Director

Yeah, hi. So we had a question on margin.

Shivam — — Analyst

Yeah, any estimate PAT margin percentage, any estimate. I don’t want the exact…

Varun Gupta — Director

I’ll let you walk through this. So we expect a 30% GP margin. Currently, sales and marketing expenses on new projects are running at about 4% to 4.5%, which were earlier much larger number and they’ve started trending downwards on sales and marketing. And administrative and corporate overheads, we’re running about 7% odd. And you take off your tax from that, then you will get to a PAT margin. So hopefully, we can operate at a PAT margin of about 13% to 15%, depending on what our blended GP margin or sales and marketing costs are there in a particular year.

Shivam — — Analyst

Okay. And sir, any guidance that you can give that how much is the current land bank potential in terms of sales? Any target, if possible? If any internal target you have?

Varun Gupta — Director

Yeah, sure. So in terms of — we have already booked about — nearly about INR2,100 crores of stock, which is booked but not recognized from revenue perspective. And we have another 1 crore and some square foot to sell. I would say that blended — you can take that value at about INR5,500 rupees to about INR5,500 crores of sales value from that.

Shivam — — Analyst

Okay, thank you.

Varun Gupta — Director

Thank you.

Operator

Thank you. The next question is from the line of Rahul Jain as an individual investor. Please go ahead.

Rahul Jain — — Analyst

Yeah. I heard you mention about this economic ROE. So can you explain a little bit how you’re calculating this economic ROE?

Varun Gupta — Director

So, we are just basically taking — we do some math on equivalent area constructed. We do a math on the area booked. We apply what we have as the per square foot margins to those numbers and then take out where we are looking to go. So it just gives a sense of the direction of where reported numbers will get because we get this — basically, our job is to sell and to produce, and we take that number of units we’re selling, number of units we’re producing, apply our blended average per squared foot margin that we calculate through our costs and our sales and then calculate that margin number. We will give a little bit more detailed explanation in the Annual Report this time, and you can have a sense of it.

Rahul Jain — — Analyst

Okay. And any color on buyback or something — I think you had mentioned in the previous quarter about discussing with the Board about the buyback.

Varun Gupta — Director

So we haven’t yet firmed up anything or anything like that. As some analysts had suggested on the call, we have been contemplating it, been understanding it and trying to wrap our heads around it. We don’t have any specific color on this.

Rahul Jain — — Analyst

Got you. Nothing more from me.

Varun Gupta — Director

Thank you, Rahul.

Operator

Thank you. The next question is from the line of Rishi Singhal [Phonetic] as an individual investor. Please go ahead.

Rishi Singhal — — Analyst

[Foreign Speech]

Varun Gupta — Director

[Foreign Speech] particularly, they have different implication. And the hotel makes — on our invested capital, makes about 15% returns right now. So we are okay with that kind of returns, a little bit here or there on the detail, but the hotel is not something that is concerning us too much. It does not have significant amount of capital deployed. But there are other items that they’re slowly and slowly trying to dispose of and move those out. And school is an asset that we do intend to transact on.

Rishi Singhal — — Analyst

Okay. [Foreign Speech]

Varun Gupta — Director

[Foreign Speech] The pre-launch process has got activated there. And for Bhiwadi, I would take [Foreign Speech] that is is in the middle of the industrial area of Bhiwadi, and where our projects are far away from it. So once you come into the city, into the project, you will not see that. [Foreign Speech]. And Bhiwadi is less polluted than where I live in Delhi — or not Bhiwadi, our Ashiana Nirmay, Ashiana Advik and Ashiana Town are less polluted than where I live in peak winters. [Foreign Speech] so we can open new things in there [Foreign Speech].

Rishi Singhal — — Analyst

[Foreign Speech]

Varun Gupta — Director

[Foreign Speech] Senior living in Bhiwadi continues to do well. [Foreign Speech] a large part of growth will also come Chennai and Pune. [Foreign Speech]

Rishi Singhal — — Analyst

Okay. That’s good to hear. [Foreign Speech]

Varun Gupta — Director

[Foreign Speech]

Rishi Singhal — — Analyst

[Foreign Speech]

Varun Gupta — Director

Sir, last two questions, please.

Rishi Singhal — — Analyst

[Foreign Speech]

Varun Gupta — Director

[Foreign Speech]

Rishi Singhal — — Analyst

[Foreign Speech] the cycle is going up and mutual funds are selling continuously, Ashiana shares. So, do they have some special information with these guys which we don’t have?

Varun Gupta — Director

You should ask them. I have no clue. [Foreign Speech]

Rishi Singhal — — Analyst

Thank you very much. It was very informative. Thank you very much.

Operator

Thank you. The next question is from Vivek Joshi from VP Capital LLP. Please go ahead.

Vivek Joshi — VP Capital LLP — Analyst

Yeah, hi. I’m just coming back to the queue again. So EBITDA margins have been lower, if I understand from what you’ve told in the call, because of the [Technical Issues]

Varun Gupta — Director

Vivek, your voice is breaking. We couldn’t understand you.

Vivek Joshi — VP Capital LLP — Analyst

Yeah. Is that clear now? Is it better?

Varun Gupta — Director

Yeah.

Vivek Joshi — VP Capital LLP — Analyst

So what I wanted to understand was, the EBITDA in the last [Technical Issues] have been like low. Is it because of cost overruns of projects, which were [Technical Issues]?

Varun Gupta — Director

No. So EBITDA means, over the last few years or going forward, you mean?

Vivek Joshi — VP Capital LLP — Analyst

Over the last few years. Just to understand like if cost were always on project-to-project basis, why was EBITDA margin so low.

Varun Gupta — Director

Because of depressed volumes. So what has happened, our overhead was structured for a much larger set of operations, and then our operations declined. So a decline in operations because volume of square footage declined. So, our margins started getting worse. So, that movement is where we really-really got hurt was basically that. And second, yes, we got stuck in the higher operations costs as compared to sales price because sales price compressed or remained stagnant over five, six years in terms of per square foot, but your construction costs increased. You were locked into high land costs thinking sale prices will actually increase, where they actually decreased. So, our assumption on some of the projects we took at the peak of the cycle went out of that, and we had lower volume, so our fixed cost started hurting. So, we got crushed from two, three places here.

Vivek Joshi — VP Capital LLP — Analyst

Yeah. And thanks, and all the best. It’s wonderful to see you optimistic — so optimistic. I’ve been looking to your calls for many years. This is the most optimistic I’ve heard you. All the best.

Varun Gupta — Director

Thank you.

Operator

Thank you. The next question is from the line of Darshan Shah from Multi-Act Equity Consultancy. Please go ahead.

Darshan Shah — Multi-Act Equity Consultancy — Analyst

Yeah. Thanks for the opportunity. Sorry, I joined the call a bit late. Can you just give us — so what kind of area booking that you are looking for in FY ’24?

Varun Gupta — Director

We are looking at a INR1,500 crores worth of value of area booked in FY ’24.

Darshan Shah — Multi-Act Equity Consultancy — Analyst

And with realization of INR5,00 crores, INR5,500 crores?

Varun Gupta — Director

Yeah, somewhere in between that, yeah.

Darshan Shah — Multi-Act Equity Consultancy — Analyst

Okay. And another question is, how is the response in Prakriti Phase 2? I think it started to registration from May 18 onwards.

Varun Gupta — Director

I’m actually not aware exactly how the response in that particular project is, but we were expecting a good response. I’ll have to check back and get back to you.

Darshan Shah — Multi-Act Equity Consultancy — Analyst

Okay, thanks. That’s it.

Varun Gupta — Director

Thank you.

Operator

Thank you. The next question is a follow-up from Himanshu Upadhyay from O3 PMS. Please go ahead.

Himanshu Upadhyay — O3 PMS — Analyst

Yeah. Hi, Varun. This is just — what did you state about business development and how are you looking at the geographies where you want to focus in terms of business development for next two years, or FY ’24-’25?

Varun Gupta — Director

So we want to concentrate on existing geographies only, Himanshu, where we are, outside of senior living. For senior living, we are looking at a couple of more cities. And right now, I think we are doing a replacement stock addition mostly. So, we added about 20 lakh square foot last year, two deals in Jaipur, one in Gurgaon. We are in active discussions for another 20 lakh square foot total across two transactions that we spoke about. Till markets become a little bit more conducive for more transactions, we will look to add replacements stock in a little bit more. And I think, as I said, now I see land prices becoming a lot more viable and sale prices have gone up, land prices have been flat, the plotting market is not doing as well as it was doing earlier, so the demand for land from the plotted developers has reduced, which is lending to prices being — on the land beeing plateauing and capping off. So I would see hopefully, we’ll start seeing more aggression maybe in six to eight months’ time, or maybe 12 months’ time for any deals. But till then, it’s mostly replacement stock kind of deals we’re focusing on.

Himanshu Upadhyay — O3 PMS — Analyst

And you stated about this plotted development. Is it just an NCR phenomenon? Or you are seeing this across the board, even Chennai and basically Pune market?

Varun Gupta — Director

Plotted development has been a Gurgaon — NCR, Gurgaon and Jaipur phenomena, and that’s where we were looking to do more BD because we needed more stock there and we see volumes going up. Chennai and Pune, we have I think good stock right now to sell and senior living projects to actually launch. Chennai get close to about 18.5 lakh square foot across three projects in senior living that have to be launched. Pune, we had just in the pre-launch zone of a project in Talegaon for senior living. So there we had already stock. We were not aggressively looking. So I am — hard to comment what’s going on there in land prices. My plotted development, please keep to Gurgaon and Jaipur as the context.

Himanshu Upadhyay — O3 PMS — Analyst

Okay. And can you give an idea of, let’s say, from FY ’20 — let’s take FY ’20 base figure, how much would land prices have increased and the realizations would have increased in the NCR, Jaipur and the Chennai market where major sales are happening for us?

Varun Gupta — Director

So, NCR and Jaipur, land prices would have gone up close to double since FY ’20 and sale prices would have gone up 20% on the base, but 40%, 50% also in some places.

Himanshu Upadhyay — O3 PMS — Analyst

Okay. Coming to the next thing, we see a lot of optimism across the real estate. And we are seeing — all listed companies are thinking about business development or doing business development. Everybody’s business development in FY ’23 is higher than what they did in FY ’20. All real estate companies, I’m talking about. As an outsider, how do I understand that people are not going overboard in this sector now? Because of what we had long issues in the cycle in last 10 years, how do I understand that? Are we…

Varun Gupta — Director

[Technical Issues] therefore is to look at joint venture transaction. And in joint venture transactions like revenue share, do you see increasing revenue share that people are providing? Are they able to control it? So, that will give a good sense. Start asking for how the math — look on those — do you think people are pushing the sale prices to make the math work? Those are couple of things that you’d like to look at. So we have made a basic idea that we will not cross this kind of a revenue share threshold whatsoever. And if you do it as a revenue share threshold, at least you are protected from the margin front a little bit. So we’re doing those kind of thought processes ourselves. But you’ll have to run the numbers on that math. Running the land price numbers are not a very hard thing to do. It’s a very simple thing to do to see whether they make sense [Technical Issues].

Himanshu Upadhyay — O3 PMS — Analyst

Thank you.

Varun Gupta — Director

Thank you.

Operator

The next question is from Sri [Phonetic] as an individual investor. Please go ahead. Sir, my question is, a couple of calls back, you had spoken about you would have to increase the base of your company as you grow. Could you give me a sense of what base are you targeting as — I mean, across cycles, something that you would want to increase to?

Varun Gupta — Director

Yeah. We are targeting a 15% ROE. So in case you don’t raise capital [Speech Overlap] somewhere around that. Maybe a couple of percentage points lower for dividend or something like that. That low-teens kind of growth rate is what we are looking at.

Operator

I wasn’t referring to ROE. I was referring to the scale of the Company. So, you spoke about the base scale of the Company. Are you targeting a certain scale of the Company for — I mean, are you planning increase that scale?

Varun Gupta — Director

Ideally, we would like to change the base scale of the Company to twice of what it is in a five-year kind of a threshold.

Operator

Okay. And how would we take the base to be as in — what would be now — if you could give some color on that, what base would you consider as of now?

Varun Gupta — Director

So, right now, I think the base scale of the Company would be around — in a downcycle, we would have upped the base of the Company to about 14 lakh, 15 lakh square foot now. [Indecipherable] of sale as a base. This scenario in poor cycles is probably where I would estimate that to be. But let’s be careful that’s an estimate. It’s not somewhere where I can say this is what the reality looks like. It’s an estimate that I have on basis of my understanding of where we are operating. So, I believe that’s what we would like to shift — the Company to shift the base scale of the Company to maybe about 25 lakh, 30 lakh square foot, and in the cycle times, we’ll be doing better than that as well. And I expect the cycle — I expect the real estate cycle to last a few good years right now. It’s still at the beginning of the cycle.

Operator

Thank you. That’s the only question I had.

Varun Gupta — Director

Thank you, Sri.

Operator

Thank you. The last question is from the line of Rishi Singhal as an industrial investor. Please go ahead.

Rishi Singhal — — Analyst

[Foreign Speech]

Varun Gupta — Director

[Foreign Speech]

Rishi Singhal — — Analyst

[Foreign Speech]

Varun Gupta — Director

[Foreign Speech] Builders will respond to affordability concern by reducing flat sizes. [Foreign Speech]

Rishi Singhal — — Analyst

[Foreign Speech] Thank you.

Varun Gupta — Director

Thank you.

Operator

Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference back to the management for their closing comments. Thank you, and over to you.

Binay Sarda — Assistant Vice President, Ernst & Young LLP

We would like to thank all of you for being on this call and being so patient with all the questions and answers. If we were unable to take any questions, please feel free to write to us directly or reach out to us directly. And with that, we would like to conclude the call. A lot of the material we have spoken about is posted on our website, and you can also email your queries for any further clarification. Thank you once again for taking the time to join us on this call.

Operator

[Operator Closing Remarks]