ICICI Direct has reiterated its BUY recommendation on Arvind SmartSpaces, setting a revised 12-month target price of Rs 750, implying a 29% upside from the current market price of Rs 584. ICICI Direct has reiterated its BUY recommendation on Arvind SmartSpaces Ltd., setting a revised 12-month target price of Rs 750, implying a 29% upside from the current market price of Rs 584.

In a quarter defined by robust business development and accelerating operating cash flows, the real estate arm of the Lalbhai Group delivered a mixed earnings performance but strengthened its strategic foundation. Pre-sales momentum, strong collections, and a substantial project pipeline underpin the brokerage’s conviction that Arvind SmartSpaces is entering a multi-year expansion phase. While headline revenues softened year-on-year due to project mix, operational cash generation and future launch visibility remain compelling.

A Quarter of Contrasts: Strong Sales Momentum, Muted Profitability

Pre-sales surged 48% YoY to Rs 331 crore in Q3FY26, driven primarily by sustained traction in ongoing projects across Ahmedabad and Bengaluru. However, on a sequential basis, bookings declined due to a high base in Q2FY26, which included the Everland launch.

Collections remained equally impressive, rising 38% YoY to Rs 317 crore, signaling healthy customer conversion and execution capabilities. More importantly, operating cash flows expanded 128% YoY to Rs 169 crore, reinforcing the company’s internal accrual strength.

Yet, earnings told a more restrained story. Consolidated revenue declined 21% YoY to Rs 166 crore, largely reflecting revenue recognition timing. EBITDA margins contracted 328 basis points to 25%, and net profit fell 40% YoY to Rs 29 crore. Despite margin compression, sequential recovery remains visible.

Launch Pipeline: Rs 1,500+ Crore GDV in Q4FY26

The management has retained its FY26 pre-sales guidance of Rs 1,600–1,700 crore, implying 30–35% YoY growth. To achieve this, the company plans four launches in Q4FY26:

Baroda Phase I: Rs 400–450 crore

Ahmedabad Industrial Project Phase I: Rs 600–700 crore

Orchards Phase II (Bengaluru): ~Rs 100 crore

Additional Bengaluru Project (Bannerghatta Rs 400 crore or ITPL Rs 600 crore)

Approvals for Baroda and Orchards are secured, while industrial land clearance is at an advanced stage. Sustenance sales are expected to contribute an additional Rs 200 crore.

This launch cadence significantly strengthens revenue visibility heading into FY27.

Business Development: Rs 2,510 Crore Added, Balance Sheet Remains Underleveraged

In the first nine months of FY26, Arvind SmartSpaces secured cumulative business development (BD) of Rs 2,510 crore, representing 62.5% of its annual guidance.

Three of the four newly added projects are premium residential high-rise developments acquired outright. January 2026 alone witnessed Rs 860 crore of BD in Bengaluru.

The balance sheet remains comfortable:

Net Debt/Equity: 0.13x

Strong 9MFY26 OCF: Rs 321 crore

Access to HDFC Capital Platform Fund

Management is targeting Rs 3,500–4,000 crore BD additions in FY26.

Financial Trajectory: Growth Resumes Beyond FY26

The brokerage estimates a recovery trajectory over FY26–FY28:

Sales bookings are projected to grow at ~31% CAGR over FY25–FY27E.

EBITDA margins are expected to gradually expand to 25.6% by FY28E, while ROCE improves toward 17.5%.

Valuation Framework: Project NAV with Premium Justification

ICICI Direct values the company using a project-level NAV methodology, incorporating ongoing, completed, and upcoming developments.

The brokerage applies a 20% premium to NAV, citing sustained business additions and superior execution visibility.

Technical and Risk Considerations

The stock has traded between Rs 505 and Rs 775 over the past 52 weeks.

Key risks include:

Geographic concentration in Gujarat and Bengaluru

Execution delays in new projects

Regulatory and macroeconomic volatility

That said, improving operating cash flows and launch visibility mitigate near-term balance sheet concerns.

Investment View: Structured Growth at Reasonable Valuation

At current levels, Arvind SmartSpaces trades at:

FY27E P/E: ~19.7x

FY28E P/E: ~15.1x

With an underleveraged balance sheet, accelerating business development, and visible launch pipeline exceeding Rs 1,500 crore GDV in Q4FY26, the risk-reward appears favorable.

ICICI Direct maintains BUY with a 12-month target of Rs 750. Investors with a medium-term horizon may consider accumulating on declines, targeting Rs 700–750 over the next year, while maintaining discipline below Rs 500 in case of macro-driven volatility.

Disclaimer: Investors should conduct their own due diligence. Real estate development businesses are sensitive to regulatory approvals, interest rate cycles, and regional demand fluctuations.