Eldeco Housing and Industries Limited (523329) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Eldeco Housing and Industries Limited Q1 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Bhatt from EY Investor Relations. Thank you, and over to you, Mr. Abhishek.

Good day, everyone, and thank you for joining us on the call. Before we proceed to the call, let me remind you that today's discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors. It must be viewed in conjunction with the business risk that could cause future results, performance or argument to differ significantly from what is expected and implied by such forward-looking statements. Please note the results and presentations are available on the exchanges and our company's website. Should you need any assistance to receive them, you can write to us, and we'll be happy to send it over. Today, on the call, we have the senior management of Eldeco Housing and Industries Limited, which is represented by Mr. Pankaj Bajaj, Chairman and Managing Director; Mr. Manish Jaiswal, Group CEO; Mr. Sanjay Aggarwal, Group Vice President, Accounts and Taxation. We will begin with the highlight of the quarter, followed by Q&A. Now I would like to hand over the call to Mr. Pankaj Bajaj for his opening remarks. Over to you, sir.

Thank you, Abhishek. Good afternoon, ladies and gentlemen. Welcome to our Q1 FY '25 earnings call. I'm delighted to have the opportunity to share with you the progress and performance of Eldeco Housing and Industries Limited this quarter. The highlight of the quarter was the launch of our luxury project and Eldeco Trinity. The total salable area of more than 5 lakh square feet Eldeco Trinity is our first truly luxury project in Lucknow. Apart from being a marquee project at our prominent location, the project will help elevate the company's brand positioning for its other projects as well. Though the bookings were off to a lukewarm start in the quarter they've subsequently picked-up significantly. As of today, the cumulative booking value is more than INR 100 crores. What has been encouraging is that the pricing has been much higher than our underwriting for the project. I'm happy to report that operationally, we have been consistent during the quarter. Our booking value has seen an increase of 89% year-on-year, reaching INR 59.1 crores in Q1 FY '25, up from INR 31.4 crores in Q1 FY '24. Our collections have been strong, showing 117% increase year-on-year with INR 55.3 crores collected in Q1 FY '25 compared to INR 25.5 crores in Q1 '24. During the quarter, we handed over 114 homes to our allottee. All these positions were offered before the contractual due date or within the RERA timelines. Our -- in the quarter also grew by 105% year-on-year, amounting to INR 35.6 crores compared to INR 17.5 crores in Q1 FY '24. This is expected to rise further in the coming quarters and we've picked-up speed for the construction of Eldeco Trinity. Our construction ecosystem in Lucknow is indeed the backbone of the company. On the business development or land acquisition from this quarter has been a mixed bag. I've discussed in our last presentation, we are in that active process of aggregating land in three locations in Lucknow. We saw minimal progress on this front at two locations. However, at the third parcel, we have been able to aggregate about 46 acres of contiguous land. This will be a township format like Eldeco Imperia, but with a significant area dedicated to group housing or multi-storied apartments. We have engaged some of the best architects in the country to design an upmarket township on this land parcel. We hope to submit our plans approvals in the current quarter itself. Apart from this, the companies have been submitting plans for approvals for two other apartment projects, including GH-04, aggregating about 5 lakh square feet in the current quarter. In conclusion, the trajectory of our company is one of consistent and profitable growth. Now moving on to our financial performance. The consolidated revenue from operations of INR 29.2 crores in Q1 FY '25 compared to INR 24.8 crores in Q1 '24, a growth of 17.5% year-on-year. The consolidated EBITDA for the quarter was at INR 9.4 crores, a growth of 20% year-on-year. The company's consolidated profit after tax stood at INR 28 crores in Q1 FY '25 as compared to INR 7.6 crores in Q1 '24. With this, we will open the floor to questions if there are any.

[Operator Instructions] The first question is from the line of Abhishek Agarwal from Prithvi Finmart Private Limited.

Sir, my first question is, as you have launched Eldeco Trinity, which is roughly around 5 lakh square feet, and you mentioned under 5 lakh square foot would be launched, what can we expect the top line and when can it be achieved?

Top line in real estate has...

I mean by the GMV actually?

You mean sales booking, I think, is that right?

Not sales booking. Total GMV of this project?

Of which project?

Eldeco Trinity.

Trinity would be about INR 400 crores to INR 500 crores. And there -- because as far as I mentioned, the per square-foot price elevation is higher. The other 5 lakh square feet is spread over two projects. There's more than 5 lakh square feet. In fact, we've given the details in our investor presentation, which we've uploaded. One is a product called Hanging Garden, which is about 2 lakhs square feet, a little over 2 lakhs square feet. We expect our first square foot price realization to the INR 5,500 to INR 6,000 here. And there's another one called GH-04. So that also will be moving for approval. That's more than 3 lakh square feet. Another that we should also similar in pricing range. So that's another INR 300 crores total. Between Trinity and these two projects it should be about INR 700 crores to INR 800 crores.

And the new project, which will come in the future. So it will be -- it is going to be a range of the type of Eldeco Trinity? Or we will see a bigger project or somewhere in kind of...

I already mentioned in my opening remarks that we're aggregating lands at three other locations. In two, we are seeing slow progress. The third one I already disclosed, that's 46 acre land has been successfully aggregated, in fact, bigger than Eldeco Imperia because the total sellable area will be higher because it has a group housing also. So that would be a significant top line.

Okay. And are we seeing any increase in realization in the market we are capturing right now?

Again, it's part of our investor presentation. I think I'll just -- So last quarter -- last year, our average utilization was in the range of INR 4,500 per square foot. The last quarter, last year, it increased to INR 5,500 square foot. And this quarter, we are at least peaked INR 6,350 square foot. That was largely because of Eldeco Trinity skewed in that direction. But you can see that how remarkable increase in per square foot realization I think. It's all there. It's on Page #10 of Investor presentation. The top right, the whole data is there.

Secondly, I wanted to understand is we are seeing the increase in land across the project or across only for the premium one.

So it is across the projects. It's -- of course, the project category also matters. Eldeco Trinity is a much higher one in any case. But like-to-like also, it is increasing for the last 2, 3 years.

The next question is from the line of [ Gunit ] from Countercyclical PMS.

I want to understand the timeline project completion and handover for Imperia Phase 1 Twin Tower, Shaurya Arcade and Saksham?

All of them are completed. We've applied for completion certificate. So I think 1 or 2 of them, maybe, one of my colleagues can answer that question. We have already received the completion certificate, and others we have applied for completion certificate. So suffice to say, in a couple of months, all of them would be -- would have received completion certificate.

All right. Sir. So I mean, should we expect majority of these revenues to flow in, in Q2?

I see the revenue recognition has not got to do with completion it's part to do with the handing over of unit. But most of these units will get handed over in Q2, if not in Q3.

Can you share the maximum revenue potential from these four projects?

That data, I would not have already. Can anybody -- or my colleague has it? They can share but I don't think we have it at that level.

All right. And sir, how -- what percentage of units in these four projects on an aggregate basis would have been sold?

90%.

90% Have been sold.

Yes, yes. That data -- also there in the investor presentation. I'll tell you the -- maybe I can...

It's Slide #14.

Slide #14 will get all the data [ Gunit ]. Just look at Slide #14. There is a total sellable area, the area which has been booked. What is the booking value, what has it been collected, what is balance to be received? What is unsold, it is little all there in granular detail.

Perfect. So basically, the revenue explanation from all 4 should happen in FY '25.

Yes. So just can you repeat the Twin Tower, Saksham, Imperia Phase 1 and which was the 4th one?

So Imperia Phase 1, Twin Tower, Shaurya Arcade and Saksham.

Yes, all of them should happen there.

I believe for Imperia Phase 1, revenue product was about INR 150 crores, INR 64 crores for Twin Tower and about INR 10 crores for Shaurya construction.

I don't remember offline, but the data is there in Slide #14.

[Operator Instructions] The next question is from the line of [ Anjali ], an Individual Investor.

So I have two kind of questions. One is about the sales strategy. So do you have an in-house team for the sales? Or do you collaborate with external agencies for the marketing and sales of our projects?

It's a combination of both -- We have now seen also will depend on partner we call channel partners, basically they are agents, these are RERA registered and are registered for the project and they sell on our behalf and we get a commission for the sale. So it's a combination of both.

Okay. And the second question is regarding the cash flow front. How much cash do we have currently that will help us to acquire more land parcel?

Sanjay Sir is on the call. Please answer the question.

Yes. You mean to say what is the cash as in hand as of now?

Yes, apparently.

As of now, under INR 140 crores of balance is in our company, out of which close to INR 60 crore is stuck in RERA bank accounts and that is for future projects as well as for ongoing projects.

So we would be using this entire cash in hand to acquire our land into [indiscernible]

It will be comparably used for ongoing projects as well as for future aggregation of project plans.

And other purposes. These are not the only 2 purposes of cash, but it could be the call be dividend as per the dividend policy of the company. There is a little debt also on the company. So it is fungible, it can be used for anything.

[Operator Instructions] The next question is from the line of [ Reshma Jain ], an individual investor.

Congratulations on the launch of Trinity project. My question is what are the other projects, new projects that we are planning to launch this year?

I think, [ Reshma ] I've already touched upon that. We are submitting at least three projects for approvals. GH-04, Hanging Garden and a new project of over 46 acres, which we've not named yet. So depending on how quickly we get the approvals, and we should be able to launch them.. My estimate of the estimate time is 4, 5 months from now.

[Operator Instructions] The next question is from the line of [ Mannan Patel ], an individual investor.

And congratulations for a good launch. Sir, first question is regarding Latitude 27. So it looks like the area that is launched or sellable area of around 5 lakh, only around 2.2 lakh square feet has been booked and it's still 2.4 lakh or 2.5 lakh square feet is remaining. So are we facing some challenges in selling this project? Or how do we think about this?

On the contrary, we are very happy with the pace of sales. Please note that out of 1.6 lakh square feet of the total salable area, 44,000 square feet is allotted to our partner. That's again there in Slide #14. Of the balance, we have not yet launched the -- open for booking about one tower south one I think, about the lack of square feet. So practically, we had only about 3.75 or 3.6 lakh square feet to tell. And this product got launched only 3 or 4 quarters ago, and we've already sold, I think, more than 60% of it. The pace of sales is -- we are very happy with it and the pace of sale much ahead of the pace of construction. So we are barely out of -- we are on the second or third floor as far as the structure goes, and they are already 60% sold. And we still have one tower yet to open because for technical reasons, we will open that maybe 6 months from now once we check the sale value to under construction tower and that the area for that last tower depends available. So I don't think on the velocity of sale is anything to worry in Latitude 27.

Understood. So sir, one suggestion, if you -- on the same slide, if you can add the area that is launched, then it will make it fairly clear.

Yes, we can do that. I think that's quite doable.

Okay. And sir, so you mentioned about the three projects that we are planning to launch. So -- and in terms of square feet, would you have any idea of number of phases from the existing projects that we may launch during this year, like Latitude you mention, we will launch a tower...

So if you look at the slide, Slide #14, the total available area is -- of the phase -- ongoing phase total sellable as 31 lakh square feet. Out of which 18 lakh square feet or 19 lakh square feet roughly has been booked and about 12 lakh square feet is available. So all this is either available or about to get shortly available. So this is all there. So even in Trinity, 4.8 lakh per square feet is unsold, but one tower, we are holding that improves one tower. As soon as the earlier tower, they come to us when they are reasonably 60% booked, we'll open that tower. So this 12 lakh is available for -- to the company to sell over the next year, 1.5 years. The new projects at 5 lakh, 5.5 lakh square feet is over GH-04 and Hanging Gardens. Last, Manish, can you help me with the sellable area and the new project -- now, the [ 46 ] project?

So I don't have offline numbers, but I think we broadly did some math, thatt's around 15 lakh square feet was the combination that is coming.

So please mind [ Mannan ] that the project is still under planning, not approved. So that number can change, but as a ballpark, if you take 15 lakh square feet there, 12 lakh, which is existing inventory, another 5 is coming. So we're looking at 32 lakh square feet of inventory, which is nearly available to the company, and you know what our average realization is per square feet.

Absolutely, sir. That's very helpful. And sir, in terms of getting approvals and all has that pace improved over last 2 quarters because I understand it was a bit slow going in last couple of years. So has that improved or changed out?

As a very broad comment, is it varies from project to project, there are project specific issues, but as a very broad comment. This approval process has become more predictable, generally. And not only U.K., all over the country, the approval processes are predictable. We can put timelines with more confidence now. I've already spelt it out that I expect the new approvals to take about 4 to 5 months, 6 months maybe even next year. So that's what we are working for.

[Operator Instructions] The next question is from the line of [ Raj Singh ], an individual investor.

Sir, can you please tell how much expenditure are you planning to incur for the upcoming launches?

Can you just explain the -- expound on the question, what is meant expenditure to be incurred on the launch? You need the launch expenditure or the cost of the project? So what are you asking?

Sir launch, CapEx, CapEx.

CapEx, how would you define CapEx in our business? Would you increase the cost of land and cost of construction? Or what would you include in it?

Yes, exactly. The cost of land and the cost of construction.

I don't have that number. But generally, those numbers are there in -- We have disclosed that total square footage that we're going to build and those numbers can be derived from our balance sheet, I think. It varies from project to project in terms of cost of land and cost -- cost of construction is more or less similar, but cost of land really varies from project to project. If you're really keen, we can get back to you on this. I don't have this number off hand.

Sure, sure, sir. Sir, the other question. So what is the competitive landscape in Lucknow? And how are you able to pitch forward your projects against others?

That's a general kind of question. As you know, the real estate industry or market is quite fragmented everywhere in the country. No single player tends to dominate the market in any micro market, same is the case in Lucknow. Having said that, last 3, 4 years, there has been a trend of consolidation in the industry where the bigger players are getting better market share. And because we have been around Lucknow for a long time and done a lot of work. We are one of the leaders in the Lucknow market, and we are a beneficiary of this trend. The reason for these trends are mainly because people want to buy from the bigger and more trusted brand, they want to see track record. They are more assured of quality and timely delivery. So that competitive edge is there with the larger player. At the top, Lucknow is not very crowded. There are about 3 or 4 players. I would not like to name my competitors in here, but there are 3 or 4 players who between them are becoming bigger in Lucknow. At the same time, the market itself is growing quite well, the Lucknow market as I keep saying because I think it's at an inflection point. And for -- not only the top 3, 4 players, but even for the smaller players, there's enough space. So it's not really very competitive in that sense because the market itself is growing at a rapid pace. So everybody is doing well as long as we are delivering quality, delivering on time, the pricing is reasonably and the project design is something which the market likes. So I'm not worried about the market side. As I've mentioned in many of the last call, the main constraint right now for last 2, 3 years has been supply side. So how do you get the developable land, which is compliant in all forms within the approval, which doesn't have title risk and at a reasonable price and offer it to the market. As long as we do that, there is enough and more demand. So I don't know if that answers your question.

The next question is from the line of [ Varun Gupta ], an individual investor.

Sir, my question is on the revenue visibility for the financial year '26. So most of our projects are either supposed to be completed in '24 or in '26, '26 and '27. So for which all projects, the revenue will be accounted for in financial year '26?

We usually do not give that kind of guidance because of completion certificate is not in our hands.

But based on the expected completion because that is there in the Slide 14, but I can see that either the completion dates of financial at '26, '27 and '24. Nothing is there for '25.

You are right about that. Real estate is indeed a lumpy business.

Okay. Are we planning something like a new project for a shorter division?

No, we don't -- our management strategy is not geared towards showing some completion on every quarter. I mean, if it is a case that there are less completions in next year then so be it, we'll live with that I mean, we will not do projects because we have to show some completion. I don't think that's how it works.

Because you need to meet the working capital also like the running expenses for the company. So I think some kind of...

So these are long gestation projects, these projects takes 4, 5 years. And the working capital is supported during the period that the policy is getting built, you have 70% accounts moving -- account in trade and 30% account. That 30% account is more than enough to take care of working capital needs.

Okay. And my second question is on the Eldeco Trinity. So by when we are targeting to sell this project because there is a pipeline of 6 lakh square feet also coming in and you are also aggregating a huge land, like 62 acres? So is there any target?

No -- these are not very big targets. It's not a need land. It's not less, it's not more. It's a reasonable amount of land. It's not something that we have to worry about that we have so much supply coming that we need to -- we have now under new sales pressure. It is a very reasonable kind of inventory pipeline that we have. There is no pressure to sell it out cost, and there is no need to hold it -- on to it either a container process given the life cycle of the project, the project we are seeing I'm certain one of the other questions. By the time it is finished, mainly 90% to 100% is sold out, and that is what I expect in Trinity as well.

Okay. And on this Bareilly project, so currently, we have like 260-odd square feet still left. And I think the sales share is low. So is there any reason for that? Or we are getting a good...

So if you look at the total sellable area, it's about 8 lakh square feet, out of -- so we have nearly sold out 50%. It's not really a worrisome situation.

[Operator Instructions] The next question is from the line of [ Priyam Poddar ] from Value Equity.

Basically, I'd like to ask two questions. So we are seeing that your average realization, that have slowly inched up from INR 4,500 mark to now close to INR 6,300 plus. So like would be able to -- could -- does the management see that the realizations are sustainable? That is number one.

No. So the major increase has been because of SKU in the project mix. It is largely because of Trinity. It's not a -- can you hear me?

Yes, sir. Yes, sir, definitely I can hear you.

Yes. So the major increase -- so there is an organic increase, which happens quarter-on-quarter, which has happened in the last many quarters because prices have gone up for many reasons, increased demand, increase costs, et cetera. That is one part, and that is an organic number. The major share has happened because the project mix has changed this quarter, largely it is Eldeco Trinity. Now if you ask me, is it sustainable on every quarter, no. The product has skewed once it will not skew every quarter. Our bread and business does remain the township format on the outskirts. So it is not going to increase at this pace because of the product mix is getting a circular a huge jump in this quarter. I mean I think it's nearly 30% this quarter. So real estate prices have not jumped 30% in the last quarter. [indiscernible].

So if you can just highlight what range are you -- that we should see in the coming quarters?

It should be in the range of INR 5,000 plus. It depends on what gets launched last quarter. I've already indicated that for GH-04 and Hanging Garden, it will be INR 550. The large township project it will be more INR 4,000 plus. But it's too early to say these things, it is closer to the launch date that the pricing gets defined.

Sure, sure. And sir, last question from my side. So how do you see the growth trajectory for the next 3 to 4 years? And your strategy is for the same terms?

No change in strategy. It's the same strategy. It's the same consistent strategy, we do not try many new things. We are not going to make malls in Lucknow. We're not going to do like that 1 million square feet IT Park or something like that. If you look at the company, it has been doing the same thing over and over again, [indiscernible] and the profitability has only been increasing. That's what we want to continue to do. So that's on the strategy part. And the next 3, 4 years are already -- it's our BD pipeline and square footage under development has been transferring disposed in the presentation. You can just add that and see how it looks over the next 3 years. And we have enough inventory for the next 2 years.

Next question is from the line of [ Gunit ] from Counter Cyclical PMS.

I would just like to understand the margin profile of Imperia Phase 1, Twin Tower. So are these luxury high-end projects? And -- I mean, since we did not have any big launches, say, FY '24 or FY '23, are these expected to give us higher margins year-on-year? Can you be share some thoughts on that?

So again, go back to Slide #14, you have the sellable area in -- and you are almost -- the total -- the price for realization also can be derived from the numbers there. So it's hardly -- it cannot be -- the luxury project. It's a premium product in the Lucknow context. You can see that the realization has been INR 4,500 a square foot. So it can't be called luxury. Now is in Imperia luxury we look at the total area of value of area booked and you see the sellable area. It's not lever being better business with the INR 4,000, INR 4,500 square foot kind of product historically. Now obviously, that number has gone, I forgotten what your second question was.

So I mean if we look at the margin profile of these projects, should they be in line with the 35% margin that we're making? Or should we expect them to be -- like bigger projects in terms of sales?

So even though the per square foot price realization is not very high is not very high, but the profit margins are good historically for all the Eldeco projects. The reason is that we are very efficient in land performance. In both these projects for the land to secure at a very reasonable price for cash to the profit margin. So profit margins are good, even though price realizations are not over the top.

Right. Sir, I agree to that. But since these are large-scale projects, I mean, do we have some more leverage in terms of margins? So I mean, we have been doing like 35% margin. So what I'm asking is should we expect margins to be better than those levels directionally from these two?

In these two projects?

Yes.

No, I don't think you should be expecting more profit than that.

35% is reasonable but?

I can't answer specifically for a project. But in general, I would be very happy if I can continue to make 35% of profit margin, that is a fantastic business. Early in new business in India is 35%.

[Operator Instructions] As there are no further questions, I would now like to hand the conference over to the management for closing comments.

No further comments from me. Thank you, everybody, for joining us today. I look forward to sharing our progress in the quarters to come. Bye-bye.

On behalf of Eldeco Housing and Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.