Ashiana Housing - Banking on Tier II and III towns!

Neeraj’s favourite stock is real estate player Ashiana Housing. He is very clear this is a Real Estate Player with a difference!

In this Ashiana Housing stock story, Neeraj has put up some good reasons why we should consider it seriously. Many analysts keep telling us not every Real Estate player is risky…there are very good bets to make in the Real Estate growth opportunity.

I want to dig deeper and know, is this as good a bet as it sounds? What exactly is the track record of the business? How strong is the balance sheet - the debt levels usually scare me away from looking at any real estate player:))

It is a very good company toresearchon. The promoters seem to be highly capable, honest and know what their core-competence is.

Look at the way they are scaling up.

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Does Bihar dy CM MR Sushil k Modi or his relatives own the Ashiana group?

Sushil modi BTW is one of the cleanest & doer politician in the India today.

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Started looking at this company today. Liked what I have seen so far. One quick question.

Lalit Chhawchharia is a director of the 100% subsidiary Vatika Marketing and the group auditors are M/s B. Chhawchharia & Co. Wondering if there are any relations and if so does it not compromise the integrity of the audit process?

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bOUGHT into ashiana today rather partly converted my SJVN HOLDING INTO ASHIANA .

Axis MF also made an entry into Ashiana recently.


I am coming into the discussion since it was on Ashiana. I handle the IR function at Ashiana as an outside consultant. I initially got to meet them as an investor, about 5 years back and since then really have been associated with them.

So rather than giving opinions on why i like the company, I would rather focus on answering the issues as they are raised based on facts. I hope that is the best way I can talk about the company.

No Sushil Modi does not own any shares in the company. There is another company called Ashiana Homes Pvt Ltd whose promoters (Modi’s) were erstwhile partners of Mr O P Gupta. They use the same brand Ashiana, but their projects are concentrated in UP (Ghaziabad, Indirapuram & Noida). Otherwise there is no common projects or any other relationships between the two groups.

Also we have been doing concalls on the company and have corprorate presentations, all of which are avialable on the company website at Link:

Let me know if there are any specific queries on the company.



this stock has gone to sleep ever since i enetred recently at 186.

whats happening

CRISIL Equities initiated coverage on Ashiana with a valuation grade of â5/5â, indicating that the market price of Rs 166 (as on November 03, 2010) has a âstrong upsideâ from the current levels.We have used the NAV method to value Ashiana and arrived at a one-year fair value of Rs 220 per share.

Delhi-based Ashiana Housing Ltd (Ashiana) is a mid-sized real estate player focused on affordable homes and retirement housing projects. It has developed ~9 mn sq.ft. of area and has a healthy pipeline of ~7 mn sq.ft. over the next four-five years. However, limited land bank inventory reduces future visibility. We assign Ashiana a fundamental grade of â3/5â, indicating that its fundamentals are âgoodâ relative to other listed securities in India.

Strong track record - known for quality construction and transparent business

Ashianaâs past track record and a robust pipeline of projects clearly support the fact that it is an established player in the industry. Its position is supported by superior quality of construction, timely delivery and transparent business structure. This enables Ashiana to sell properties at premium rates compared to its peersâ projects in the same location. We expect this trend to continue in the future.

Business model different from peers; well positioned to weather cyclical risks

Unlike other real estate players, Ashiana builds residential projects which are generally self-sufficient in terms of funding as against commercial projects. The company does not build a huge land bank reserve or engage in buying expensive land parcels. This results in comparatively lower capital requirement and consequently limited financial liabilities. Therefore, we believe that Ashiana is well positioned to withstand cyclical risks compared to peers; it was least affected during the economic downturn in FY09.

Cautious strategy on land bank inventory reduces future visibility

Although the companyâs strategy of holding limited land bank mitigates the downside risk, it reduces revenue visibility beyond five-six years. Therefore, future growth will be dependent on the companyâs ability to continuously acquire land bank at reasonable prices in an increasingly competitive market. The company is looking for land parcels, but we believe there will be challenges in a new market since real estate requires knowledge of local business environment and customer expectation.

Revenues to grow at a two-year CAGR of 40%, EPS to increase to Rs 34.3 in FY12

Revenues are expected to grow at a two-year CAGR of 40% to Rs 2.2 bn in FY12 driven by revenue recognition in Bhiwadi, Lavasa and Jaipur projects. EBITDA margins are expected to increase to 36.8% in FY12 from 34.9% in FY10 due to increasing contribution from high-margin residential projects. PAT is expected to increase at a CAGR of 30.7% to Rs 0.6 bn in FY12. EPS is expected to increase to Rs 34.3 in FY12 from Rs 20.1 in FY10.

Valuation - the current market price has strong upside

We have used the NAV method to value Ashiana and arrived at a one-year fair value of Rs 220 per share. We initiate coverage on Ashiana with a valuation grade of â5/5â, indicating that the market price of Rs 166 (as on November 03, 2010) has a âstrong upsideâ from the current levels.

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CRISIL REPORTS somehow dont have much impact on share price.

They have been positive on modison metals,everest kanto,infinite computers n now ashiana housing but prices do not move up.

hope they trend is wrong with ashiana housing.ootlook profit alos came with abig positive report in last issue

1). What I like about the company is the the background of the three brothers. They exhibit core competence in their areas.

2). The company’s contention that they start a project only after they are sure of customer advances, does not make much sense. All developers have a pre launch and launch of a project. The launch brings in the money which is required for starting the project. Once 50% of the project is sold, construction can be started. The balance is sold over a periode of time. This helps in better price realisation per unit because as construction progresses prices of the dwelling unit increases.

3). It is important that the project is approved by the banks. This ensures the customer can get bank finance. Since the bank would do its due deligence before approving a project, bank approval implies that land titles, goverment requirements etc are clear.

3). Their partnership with land owners is a plus. This would minimise their own capital requirements.



I was checking some data on moneycontrol for Ashiana. It shows that the stock has appreciated by 22,821% vs 275% of the Sensex. That is really fantastic. The stock has gone up by 228 times in 10 years and that too excluding dividends!!!

I was wondering if it is a good time to enter Ashiana for the long term. Realty stocks have come down in this correction and market sentiment is not good, so was wondering if I can enter.

Anyone who tracks Ashiana closely could please advise.

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Hi Abhishek,

I am not aware of the 10 year price performance of Ashiana.

I honestly think that for a long term investor, Ashiana is a decent choice at CMP. Most of the points supporting this are already covered in the above discussion, so i will not go into it.
Some points on the negative side i can think of…

  1. Qrtly results are lumpy…hence not suitable for short term investors.

  2. The risk of increase in general interest rates is a big risk on real estate, Ashiana included…

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At CMP of Rs. 136, Ashiana Housing deserves a relook. Also, can somebody provide a transcript of the concall held on 2nd August, 2011

Link of Ashiana Housing concall held on 2nd August, 2011

Thanks Sachin,

The major takeaway from this concall was the change in accounting policy. The change to possession based accounting system reflects the transparent nature of the management.

Views invited

teh scrip has zoomed to 175 after the latest results n concall held on 2 nd nov 20111.

anyone having any updates?

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Link to the concall transcripts.

Without getting into too much details regarding numbers, I would like to mention that management gets 10/10 from me on grounds of transparency, to the point answers,etc which is so unlike a real estate company.

A friend is in prelim discussions for his land parcel with ashiana. A broker friend happens to know the owners of ashiana and he spoke highly of them.

is this still part of


It is a great company. Great management. Ethical. Takes no risk/debt averse.

The best part is that they command a premium in pricing. It may be a good time to pick the stock for a long term. They are likely to retain high ROE due to premium pricing and no interest burden.