Axis Securities keeps 'Buy' on Arvind Smartspaces post management overhaul

Domestic brokerage firm Axis Securities has reaffirmed its positive outlook on Arvind Smartspaces, maintaining a 'Buy' rating following the company's optimistic outlook on its organisational transformation and tri-city model, which it believes will boost the scale of its projects.  According to Axis Securities, Arvind Smartspaces' strategic transformation and its targeted approach across key markets in Ahmedabad, Bengaluru, and Mumbai are expected to accelerate growth and project scale-up in the coming years. 

The brokerage emphasised Arvind’s robust balance sheet and disciplined capital allocation, assigning a valuation of 5.5x FY28E Pre-sales/Ebitda. Axis Securities has set a target price of ₹740 per share, reflecting a potential upside of 21 per cent from the current market price.

 

New management focuses on efficiency

Arvind Smartspaces recently underwent a leadership overhaul, with Priyansh Kapoor assuming the role of CEO, while Kulin Lalbhai continues as Vice Chairman. The company has stressed the importance of structural and process-oriented changes under the new management.

 

Axis Securities pointed out that the management has reiterated its FY26 growth guidance, forecasting pre-sales to increase by 30-35 per cent. This growth is supported by a strong pipeline, with 4-5 project launches expected in the second half of FY26, bringing an estimated Gross Development Value (GDV) of ₹3,000 crore.

 

The brokerage noted that the new management is keen on improving operational efficiencies and minimising the lag time between project announcements and their subsequent launches. With over a decade of experience in Mumbai's real estate sector, CEO Priyansh Kapoor is expected to replicate his prior successes at Arvind, which include managing multiple ongoing projects.

 

The company has adopted a city-led model, which now spans Ahmedabad, Bengaluru, and Mumbai. Since the management change, Arvind has increased its workforce by over 16 per cent, focusing on business development, sales, and related functions. The goal is to transition the company from a people-driven structure to one that is more process-oriented.

Tri-city strategy and Mumbai focus

Axis Securities highlighted Arvind’s continued commitment to its tri-city strategy, which targets Ahmedabad, Bengaluru, and Mumbai. In Mumbai, the company intends to focus on joint development (JD) and vertical projects, partnering with established players to maintain a low cash outlay while benefiting from local expertise.

 

Arvind’s Mumbai strategy targets a price range of ₹30,000-60,000 per square foot, aiming for a mid-income ticket size of ₹3-5 crore. The company plans to shift away from suburban horizontal projects in the Mumbai Metropolitan Region (MMR), such as those in Navi Mumbai and Karjat, and instead focus on vertical projects in collaboration with JV partners or redevelopment opportunities.

 

"Since the company’s ticket size is in the mid-range, among the top players who consider only higher ticket size projects, Arvind is expected to be a preferred choice due to its brand legacy. Arvind is also planning on positioning itself in areas that are more demographically strategic. It will emphasise building 1st home projects, which is a shift from its ‘second home - villas’ focus in Ahmedabad horizontal projects. Apart from this, it will continue its horizontal as well as vertical projects in Ahmedabad and Bangalore while maintaining its current BD trajectory," said the brokerage in its report.

Operational guidance and growth outlook

Axis Securities reiterated Arvind's pre-sales growth forecast of 30-35 per cent, which translates to approximately ₹1,700 crore. The company’s business development (BD) guidance for the coming years stands at ₹4,000-5,000 crore. Arvind aims for an annual capital expenditure (capex) of ₹1,000 crore, with a total setup value of ₹10,000 crore, driven by an increased pace of project launches and business development.

 

The company expects each city to generate ₹1,500-2,000 crore in revenue, with an internal rate of return (IRR) of over 25 per cent. Arvind has already launched three outright purchase projects and anticipates a value-accretive second half of FY26. Axis Securities also noted that the slowdown in Bengaluru has eased, and the sales momentum in the city is expected to pick up. 

(Disclaimer: The views and investment tips expressed by the brokerage in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)