| Expereinced Management and long track record of operation
Adarsh group (AG) is a Bangalore based residential and commercial real estate developer established in 1988, promoted by Mr.BM Jayeshankar and Mr. BM Karunesh. Adarsh group is well established brand name in Bangalore and has experience of executing 12 mn.sq ft of residential and commercial projects over the past three decades. Adarsh group also has presence in hospitality industry through Adarsh Reality and Hotels Private limited (ARHPL). The Adarsh Group has a long-standing operational track record in the real estate sectors, with highly experienced promoters who are actively involved in operations. The group is currently executing projects like Welkin park under Akarshak Reality private limited, Adarsh Savana and Adarsh sanctuary under Shrestha Infra projects private limited and Adarsh Lakefront under Alekhya Properties private limited. These projects are located at prime location in Bangalore city such as Yelahanka, Choodasandra, sarjapur road and Bellandur. The locations are well developed both residential and commercially with further scope of development.
Acuité believes that the promoters have demonstrated execution capabilities with a reputation for timely completion. Promoters' industry experience is expected to support in a successful sale of the units in the on-going project.
Moderate Project risk
The ongoing projects has total saleable area of 54.01 lakh Sq fts, with total project cost of Rs.1621 Cr. The project cost is funded through customer advances and bank loan. The funding risk remains moderate as the group has already completed debt tie up with lenders for amount of Rs.495 Cr. The group has incurred about 49 percent of project cost until september'2024 against which it has already received the bookings of 90 percent of total units and received customer advances of around 64 percent of the sales consideration as on September 30th 2024. Acuite believes that timely receipt of customer advances and timely completion of the projects will remain as key rating monitorable.
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| Geographical concentration risk and intense competition in the industry
The group, through its promoter companies, has mostly executed its past projects in and around Bangalore. Moreover, the group is executing all the current projects in Bangalore. The group would remain geographically concentrated until any further diversification to a different state. Furthermore, the group would continue to remain exposed to intense competition from larger players in Karnataka like Prestige Group, Brigade group, Shobha Group, Godrej properties, Puravankara Group, and Lodha Group, amongst others.?
Susceptibility to Real Estate Cyclicality, Regulatory Risks and intense competition in the industry
The real estate industry in India is highly fragmented with most of the real estate developers, having a city specific or region-specific presence. The risks associated with real estate industry are cyclical in nature and directly linked to drop in property prices and interest rate risks, which could affect the operations. Given the high level of financial leverage, the high cost of borrowing prevents the real estate's developers' from significantly reducing prices to boost sales growth. Moreover, the industry is also exposed to certain regulatory risks linked to stamp duty and registration tax directly impacting the demand and thus the operating growth of real estate players.
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