India’s senior-living market is growing. Here are the top 5 stocks to look at.

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

While housing is being solved for by large players with deep pockets, there is an entire ecosystem of companies in the senior-living market.

What is senior living, you ask? It refers toa wide range of housing and lifestyle options suitable for an ageing person’s needs. According to a report, the senior-living market in India is expected to be worth around $12 billion by 2030, from its current size of $2-3 billion, as India’s population ages and the median age rises.

The industry is gaining traction, with some startups also working in this space. What’s behind this boost, though?

When the pandemic hit more than four years ago, elderly people proved particularly vulnerable to covid. This spurred a quest for solutions to the problems of the elderly.

Growth in the space is being driven by an ageing population, higher life expectancy, the rise of nuclear families, financially independent and educated senior citizens, the increasing medical needs of seniors, and NRIs returning to India after retirement.

A study revealed that of the 2.1 billion people around the world aged 60 years and over, around 17% are in India.

It’s safe to say then that the senior-living theme could become mainstream in the coming years. Let's look at the top companies in this sector.

#1 Ashiana Housing

Ashiana Housingis involved in middle- toupper-middle-income residential housing projects in satellite cities and towns in India. Its core business is buying land, building residential buildings, and selling them.

The company operates in four residential segments – children-centric homes, active senior living, senior living homes, and premium homes.

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

In FY23, the company sold around 230 units spread across 316,000 sq ft under various senior-living projects, with a majority of 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 said there is 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 its overall business is increasing. In FY24, it had three new senior-living projects in the pipeline – two in Chennai and one in Pune.

In addition, it’s also scouting opportunities in Bengaluru and 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.

The company also enjoys higher margins due to a differentiated product, less competition, and the ability to work in far-flung locations with financially independent retirees.

Their senior living projects fetch anywhere from ₹4,700 to 7,000 per sq ft, depending on the micro market and unit type.

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

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

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

Ashiana Housing sold 26.4 lakh sq ft in FY24 versus 25.9 lakh sq ft in FY23. The value of the area sold was ₹17.9 billion in FY24 versus ₹13 billion in FY23. A total of 1,721 units were booked in FY24 versus 1,719 in FY23.

What’s more, the stock also saw insider-buying in March 2024.

#2 Max India

Max India is the holding company of Max Group’s senior care business Antara, a service provider for seniors.It operates two main businesses – homes for seniors and assisted-care services. Nearly 76% of its revenue comes from the senior-living spaces.

Financials

Recently, Max India managed to sell 100% of its Dehradun inventory, collecting around ₹6.8 billion or 7% more than last year.

Operational revenue for the Dehradun community increased to ₹220 million in FY24, a 32% increase over last year. With robust sales, the community continues to be cash-positive, with a surplus of ₹1.25 billion as of March 2024.

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

However, it could stage a turnaround if the senior-living theme picks up. The company is expanding in other regions such as Bengaluru and is expected to launch 544 units across 1.08 million sq ft in the fourth quarter of FY25.

Another project 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 million sq ft of senior living with 292 apartments. It is also in advanced stages of discussions in Hyderabad, Chandigarh and other places.

Antara plans to invest ₹3 billion across all business verticals in the next four to five years and has enough liquidity to finance this growth. Going forward, it will focus on increasing bed capacity and occupancy levels.

Other stocks to look at

These two companies cover the entire range of senior-living spaces, but other companies could benefit indirectly. Big realty players such as Prestige Estates are also looking to enter this space with new projects.

Brigade Hospitality, a wholly owned subsidiary of Brigade Enterprises, is also involved in the senior-living space in Karnataka under the name Brigade Orchards.

Morepen Labs, which provides medical devices that can be used at home, is set to be another direct beneficiary of the ageing population.

Conclusion

To meet the increasing demand for senior living, 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 expected to more than triple over the next four or five years. There are several reasons for this. These cities are more appealing as a result of more attractive financing options, availability of land, and plenty of space to build sprawling complexes. Although growth rates vary by region, trends indicate that a majority of seniors prefer to live in cities with low population-density.

This gives developers opportunities to build new projects in less competitive markets. Predictions for the medium to long term indicate that many more senior living communities will come up in these markets than in metros.

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.

This article is syndicated from Equitymaster.com