The Indian Senior Living Market is Strong. Top 5 Stocks to Watch Out

Earlier this week while browsing the internet, I came across an interesting headline titled -

"In Indian Real Estate, Senior Living is Still in the Junior League"

I read this article and quickly formed my opinion on this untouched segment of the real estate industry.

While housing is being solved for by larger and well capitalized players, there is an entire ecosystem with companies specifically involved in the senior living market.

What is senior living you ask?

Senior living refers to a wide range of housing and lifestyle options suitable for an aging population's needs.

According to a report, the senior living market in India is expected to reach around US$

12 billion by 2030, up from its current size of US$2-3 billion with rising median age and aging

population.

The industry is already gaining traction with some startups also working in this space.

What is causing a spur in this space though?

When covid struck the world, it took a toll on vulnerable older adults spurring the quest for innovative models that prove to be safe and acceptable for this rapidly rising cohort.

It's driven by the rising aged population, growth in life expectancy, rise in nuclear families, financially independent and educated senior citizens, increasing medical needs of the senior citizens, and NRIs coming back to India after retirement.

A study also reveals that from the total 2.1 billion people aged 60 years and above across the globe, around 17% are from India.

Safe to say that the senior living theme could become mainstream in the coming years.

In today's article, let's look at the top companies involved in this sector.

#1 Ashiana Housing

Ashiana Housing is involved in middle to upper-middle-income residential housing projects in satellite cities and towns in India.

Ashiana's core business model is to buy land turn it into a residential buildings and sell it.

The company operates in 4 residential segments namely - kid centric homes, active senior living, senior living homes, and premium homes.

Ashiana Housing has expanded its senior living projects across many regions in India namely Ashiana Nirmay -Bhiwadi, Ashiana Shubham-Chennai, Ashiana Advik-Bhiwadi, Ashiana Vatsalya-Chenna, Ashiana Utsav-Pune, Ashiana Amodh-Pune.

In FY23, the company sold around 316,000 sq. ft. (230 units) under various senior living projects, with major sales in Ashiana Shubham, Chennai (110 units) and Ashiana Advik, Bhiwadi (92 units).

In FY24, the focus has been on a new project in Talegaon, Pune, and two new projects in Chennai.

In its annual report, the company observes potential in this space in India, as the acceptance of active senior living has increased over the years.

The contribution of senior living projects to their overall business is expanding. In FY24, it has 3 new senior living projects in the pipeline, 2 in Chennai and 1 in Pune.

In addition, it's also scouting for opportunities in Bengaluru and also around Mumbai. In the near term, the objective is to increase senior living's annual sales from 250,000-300,000 sq. ft. to 600,000 sq. ft.

To counter cyclicality, Ashiana Housing is enhancing the contribution of senior living in its overall business as it's less susceptible to business cycles.

Moreover, the company enjoys higher margins due to a differentiated product, less competition, and the ability to work in further out locations with financially independent retirees.

From a price point perspective, their senior living projects range anywhere between Rs 4,700 -7,000 per sq. ft. depending on the micro market and the unit type.

Senior living is a growing business. As a strategy, it endeavours to grow the overall pie of our senior living business.

Future projects put together would be about 2.4-2.5 million (m) sq. ft. Of this, the company is expected to launch about 500,000-600,000 sq. ft. soon.

Here's a table showing Ashiana's detailed financial snapshot -

Ashiana Housing Financial History (2020-2023)

Rs m, consolidated	FY19	FY20	FY21	FY22	FY23
Net Sales	3,375	3,036	2,420	2,217	4,074
Growth (%)	5%	-10%	-20%	-8%	84%
Operating Profit	490	42	228	150	704
OPM (%)	15%	1%	9%	7%	17%
Net Profit	138	-302	17	-71	279
Net Margin (%)	4%	-10%	1%	-3%	7%
ROE (%)	0.3	0.3	0.4	0.9	0.5
ROCE (%)	1.8	-4	0.2	-1	3.7
Dividend (Rs)	4.4	-2.5	1.7	0.3	6.7
Debt to Equity (x)	0.2	0.2	0.1	0.2	0.2

Data Source: Ace Equity

In FY23, it posted stellar numbers due to its project expansions in various regions across India.

There has been a slight increase in the debt-to-equity ratio as can be seen in the table above. The company raised Rs 264 m of project funding as unsecured non-convertible debentures from the International Finance Corporation (IFC) for a senior living project in Chennai in 2023.

Ashiana Housing sold an area of 26.4 lakhs sq.ft in FY24 versus 25.9 lakhs sq.ft, in FY23. The value of the area sold stood at Rs 17.9 bn vs Rs 13 bn in FY23.

The total units booked were 1,721 in FY24 versus 1,719 units booked in FY23.

What's more, the stock has also witnessed insider buying in March 2024.

To know more, check out Ashiana's latest shareholding pattern here.

#2 Max India

Next on the list is Max India.

Max India is the holding company of Max Group's senior care business Antara, an integrated service provider for all senior care needs.

It's an integrated service provider for all senior care needs. It operates two main lines of business, residences for seniors and assisted care services.

Nearly 76% of the total revenue of the company comes from the senior living spaces.

Financials of the Company

Recently, Max India managed to sell 100% of its Dehradun inventory collecting around Rs 6.8 billion (bn), 7% more than last year.

The operational revenue for the Dehradun community increased to Rs 220 m in FY24, a growth of 32% over last year. And due to robust sales, the community continues to be cash positive with a cash surplus of Rs 1.25 bn as of March 2024.

Nevertheless, the company has posted a loss for financial year 2024.

Financial Snapshot

Rs m, consolidated	FY20	FY21	FY22	FY23	FY24
Net Sales	2,110	1,209	2,299	2,010	1,760
Growth (%)	-	-43%	90%	-13%	-12%
Operating Profit	-19	-200	63	129	-540
OPM (%)	-1%	-17%	3%	6%	-31%
Net Profit	-926	-516	-161	-104	-560
Net Margin (%)	-44%	-43%	-7%	-5%	-32%
ROE (%)	-13.1	-7.7	-2.5	-1.8	-
ROCE (%)	-6.9	-4.7	-1.1	0.5	-
Dividend (Rs)	0	0	0	0	-
Debt to Equity (x)	0.2	0.2	0.1	0	-

Data Source: Ace Equity, Equitymaster

The company could stage a big turnaround though as the senior living theme picks up...

Max India is expanding in other regions like Bengaluru. It's expected to launch in the fourth quarter of FY25 with 1.08 m sq. ft. development with 544 units.

Another project in the pipeline, developed by Max Estates in Gurgaon is expected to launch in the second quarter of FY25. This will be North India's first intergenerational project in which the company will develop about 0.72 m sq. ft. of senior living with 292 apartments.

The company is also in advanced stages of discussion in Hyderabad, Chandigarh, and other geographies.

Antara plans to invest Rs 3 bn in the next four to five years across all business verticals and has sufficient liquidity to finance this growth.

Going forward, one of its key focuses is also on scaling up bed capacity and occupancy levels.

Some Other Stocks to Watch Out in the Senior Living Space

Apart from the above two players that are extensively covering the entire range of senior living space, there are some more players in the industry that could be indirect beneficiaries.

And there are big realty players as well who are looking to enter this space with their new projects.

Prestige Estates is one such company.

Then there's Brigade Hospitality, a wholly owned subsidiary of Brigade Enterprises, which is also involved in the senior living space under the name Brigade Orchards in Karnataka.

Apart from that, Morepen Labs provides medical devices that can be used at home and is a direct beneficiary of aging population.

In Conclusion

To meet the increasing demand for senior living in the country, the Indian government announced a scheme called Atal Vayo Abhyuday Yojana (AVYAY) for 2021-22.

Demand for senior living projects in non-metro cities is anticipated to more than triple over the next 4-5 years.

There are several reasons for this. These cities have become more appealing as a result of attractive financing options, the availability of land, and plenty of space to build sprawling complexes. Seniors also appreciate the open spaces.

Although growth rates vary by region, a growing trend indicates that a majority of seniors prefer to live in cities with low population densities.

It provides opportunities for developers to create new projects in less competitive markets. Predictions for the medium to long-term market indicate that, compared to metros, many more senior living communities would come up in these markets.

Watch this space for more!

Happy investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...