Stock To Buy: Axis securities has recommended buy call on Arvind SmartSpaces Ltd, a real estate company with a market cap of more than Rs 2,500 crore.
Recommendation Rationale
Bookings Guidance Remain Intact: The company has clocked pre-sales of Rs 331 Cr, which is in line with our expectations for the quarter, with no launches. The pre-sales were mainly driven by Uplands 2.0 and 3.0, the Everland project and The Edge, showing strong sustenance sales recovery. The company has guided towards a ~Rs 1,500 Cr launch and a minimum of 40% sales at launch. With recurring sustenance sales run rate of Rs 200 Cr and major launches bunched in Q4, we believe the company can reach it’s pre sales guidance of ~Rs 1,700 Cr for FY26.
Launches Pipeline & BD: Arvind has guided towards a launch topline potential of Rs 2,000 Cr for the year, with 9M launch at Rs 500 Cr showing 90% sales at launch. Most of the launches will be majorly bunched up towards the last quarter of the year. It expects ~4 launches this quarter, mainly the Baroda launch, phase 2 for Orchards, Industrial project, and 1 project in Bangalore. These will sum up to ~Rs 1,500 Cr in GDV.
The company reiterates an overall 25%-30% growth CAGR for its bookings. Arvind expects to maintain its BD at a healthy rate of Rs 4,000-5,000 Cr per annum with additions in Ahmedabad, Bangalore, and the MMR regions. Its BD going forward will be largely driven by JD/JV, with increasing outright buying share as well. The company is aiming at a 40-40-20 kind of distribution among Blr-Ahd-MMR.
Recovery in Velocity: Arvind has seen a recovery in its collections and construction velocity over the past 2 quarters. It has achieved the highest ever collections of Rs 1,545 Cr. The company’s gross debt now stands at Rs 262 Cr vs the previous year's 55 Cr. This shows Arvind has recovered its BD momentum and is utilising available capital more efficiently. The net debt stands at 79 Cr with a comfortable net-debt to equity ratio of 0.13. The company aims to maintain this below 1, and it is unlikely to approach that threshold in the near term. This, in turn, will result in the company achieving its long-term growth CAGR of ~30%.
Sector Outlook: Positive
Company Outlook & Guidance: Arvind’s outlook remains strong, supported by Rs 331 Cr pre-sales in a no-launch quarter and a sustained run rate of ~Rs 200 Cr per quarter. With ~Rs 1,500 Cr of launches planned and a minimum 40% sales at launch, FY26 pre-sales guidance of ~Rs 1,700 Cr appears achievable. The company reiterates 25–30% bookings CAGR, backed by launch pipeline and Rs 4,000–5,000 Cr annual BD additions. Healthy collections, low net debt of Rs 79 Cr and 0.13 net D/E support disciplined growth momentum.
Current Valuation: 5.5X FY28E EBITDA; Earlier Valuation: 5.5X FY28E EBITDA
Current Target Price: Rs 750/share; (Earlier TP: Rs 740/share).
Recommendation: With a 29% upside from the CMP, we maintain our long-term BUY rating on the stock.
Arvind SmartSpaces Ltd shares closed 2.5 per cent lower at Rs 556.05 on Friday (Feb 13).
