Arvind SmartSpaces hits new high in a weak market, rises 105% in 6 months

Shares of Arvind SmartSpaces (ASSL) gained 4.5 per cent to hit a new high of Rs 331.70 in Thursday’s intra-day trade, in an otherwise weak market. The S&P BSE Sensex was down 0.52 per cent at 60,594 at 12:444 PM.

In the past one week, the stock of Lalbhai group real estate company surged 22 per cent, as against 0.36 per cent decline in the Sensex. In the past six months, it zoomed 105 per cent, as against 14 per cent rise in the benchmark index.

The company is headquartered in Ahmedabad and primarily focused on development of residential projects. The residential projects comprises of villas, apartments, and plots are targeted towards middle income and high-income customers. Its existing integrated townships comprise executive golf course with villas, apartments, retail, commercial and recreational areas. It also undertakes commercial and industrial projects on a selective basis.

ASSL has completed 3.8 million sf of projects, while 14.9 million sf projects are under construction and around 6.6 million sf projects are under pipeline.

On December 27, India Ratings and Research (Ind-Ra) has affirmed ASSL’s long-term rating at ‘IND A’ with a 'positive' outlook. The affirmation reflects ASSL’s strong credit metrics, due to continued robust operating performance (pre-sales and collection) with limited reliance on debt to fund its projects since FY21.

"The 'positive' outlook continues to reflect Ind-Ra’s expectation of ASSL, which maintains healthy presales growth, successful launch of new projects, and strong traction in the same while maintaining comfortable credit metrics. It also reflects Ind-Ra’s expectation of ASSL’s ramp-up in the project pipeline such that there is more diversification of revenues over the next two years," the rating agency said.

The steady growth in the scale of operations along with geographical diversification led to healthy cash flows and strong sales momentum, while maintaining strong credit metrics on a sustained basis. The project cost overrun and subdued sales resulted in lower collections and increased reliance on debt, leading to presales-to-net debt declining below 1.5x and net debt-to-working capital exceeding 0.5x, on a sustained basis, driving negative rating action.