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

Ladies and gentlemen, good day, and welcome to the Eldeco Housing Industries Limited Q1 FY '26 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, sir.

Thank you. Thank you, everyone, 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 and 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 expressed and implied by such forward-looking statements. Please note the results and presentations are available on the exchanges. Should you need any assistance to receive them, you can write to us, and we'll be happy to share them with you. Today, we have on the call 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. Rajiv Khurana, Group Vice President, Accounts and Taxation. We'll begin with the highlights 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, and welcome, ladies and gentlemen, to this earnings call. So, we have commenced FY '26 with strong sales performance, underscoring positive market response to our new launches and continued execution strength across projects. This quarter was marked by a sharp increase in bookings and healthy collections. So, I'll just run through the key operational highlights. So, the booking value in Q1 FY '26 stood at INR 221 crores, a 274% year-on-year increase, driven by successful new project launches. In terms of collections, we collected INR 78 crores in the quarter, marking a 41% growth year-on-year. Deliveries were around 85,000 square feet, comprising 101 homes handed over in the quarter. These were mostly EWS homes and other smaller homes. So, in terms of value, it wasn't much, but volume was high. Construction expenditure stood at INR 39.3 crores, up 10% year-on-year, reflecting the continued progress across ongoing projects. We expect this number to rise significantly in the coming quarters as we ramp up the execution in the recently launched projects. We achieved key project milestones in Q1 FY '26. RERA registration of Eldeco Hanging Gardens was secured and the project launched on 15th April 2025. Nearly 84% of the inventory was sold within a week. Similarly, Eldeco Skywalk received RERA registration and was launched in the second week of April. That also received strong market response and sales are still continuing. Looking ahead, we plan to launch our flagship integrated township Eldeco Solano Gardens, on New Jail Road during FY '26, which is the current year. Spread over 50 acres, it will offer plots, villas and multistorey apartments, and it has a gross development value of over INR 1,000 crores. We expect it to be our flagship project for the coming few years. We remain optimistic about the rest of the year, backed by strong launch pipeline, robust customer demand and healthy execution progress. With the successful launch of Eldeco Hanging Gardens and Skywalk and the upcoming launch of Eldeco Solano Gardens, we are well positioned for accelerated growth and improved financial performance. So, we expect the numbers to be much better in the coming quarters as we ramp these projects. So those are my opening remarks. I will hand it back to you, Abhishek.

Sir, can we start with the Q&A session?

Yes, we can proceed with the Q&A.

[Operator Instructions] We take the first question from the line of Aryan Singh from AlfAccurate Advisors.

So, with reference to the presentation, as I can see, like in the last 1 year, our average realizations have been around INR 6,500 per square feet. So, is this pricing sustainable? Or with the launch of premium projects, should we expect an increase this year? If so, can you please share approximately in what range it would be?

No, I think this is a sustainable stable rate kind of realization. You would have seen in the presentation that this is a sharp rise from what it used to be 2 or 3 years ago. I think we had some place in the presentation -- yes, I have it in front of me. The realizations have gone up quite sharply. Yes. So, it used to be INR 3,500 in FY '20, by FY '23, it went to INR 4,500 and now it is INR 6,500. So, if you -- the last 2 years, there has been a nearly 30% to 40% increase in the average realization. So, I think this is the new normal. And I wouldn't expect it to be much higher than this in the coming year or so.

Okay. Understood. Sir, one more question, like -- so can you please highlight a few primary drivers behind this strong growth in booking value. So, was it largely driven by specific projects like Trinity, Handing Gardens or improved market sentiment in Lucknow towards ultra-luxury projects?

So the demand, as we've been saying in all our previous calls have been quite strong. It was our inability to -- first, I think for a couple of years, we struggled about -- 5 years ago, we struggled with adding to our launch pipeline, then we took some time getting the approvals. So, we had been quite transparent with our struggles on that front. Luckily, we unlocked all that in the last year or so, and then the RERA approvals finally came through this quarter. And there is a lot of pent-up demand for Eldeco products. And obviously, we have a strong brand recognition in the market and our execution is well trusted by the market. So we feel that if we continue to launch projects, it is going to continue to get absorbed very well. So, it's not something which has changed suddenly. It was just that we had not been able to launch significantly in the last some quarters, but now that has got unlocked. And in the coming quarter or maybe the quarter after that, we are going to launch our big project, Solano Gardens, which will have multiple smaller subprojects also. So that problem is solved. So we think that this number is now sustainable.

We take the next question from the line of Karan Premchand Gupta from CAVI Capital.

Congratulations on a strong quarter. A few questions from my side. First one, on the construction progress, while year-over-year, it's a 10% increase, but it doesn't seem very strong compared to the prior quarter. So, could you just talk about some guidance for the year and how you see this going ahead?

I'm glad you asked that question. I was hoping somebody would ask that. So, the thing is that the execution, the construction follows the launch of the project. Obviously, once you get all the approvals, you go for the RERA approval and you -- in the business model, we launched the project and then we build it over the next 3 years or so. So as I already responded in to the previous question that the last 3 years, we were somehow -- there was a bottleneck in terms of launches, which has now got unlocked. So you see that in our last year bookings number, this year's booking numbers and construction and execution follows with a lag. And in my opening comments, I already said that now I expect the construction and execution numbers to ramp up significantly because the projects have got launched and they will have to be now built. Luckily, we have the booking numbers to back that. So advances from customers should also not be a problem. In the coming quarter, you would see that to ramp up significantly.

Great. So would this be around INR 50 crores to INR 60 crores a quarter? Or like can you put some number to it?

I don't have that number readily, but we can come back to it. See, all the bookings that have been done like Hanging Gardens, Skywalk, our plan -- Latitude 27 -- all these have to be executed in the next 3 years. So we'll have to go backward and see what that number will be, but it will be sharply higher than what it is right now. Let me come back to you with the real number. You can follow it up with the booking numbers, which I've given. Last year, so I'll just rattle out the numbers to you. The value of area booked in FY '23 was INR 92 crores, FY '24 was INR 388 crores, FY '25 INR 357 crores and Q1 of FY '26 is INR 221 crores. At some point, now it is going to start to ramp up because we have these bookings and these projects are in motion in terms of execution. All this execution has to happen in the next couple of years. I can't actually say what that number would be. As I said, I will come back to you, but you can see the gap between the value of the bookings and the execution all that are fine.

Great. Then a few updates on the other projects. So Bareily, Latitude 27 and Trinity, the booking numbers are quite low compared to the availability. So can you just tell us on the status of those projects?

So Trinity, definitely, the sales have been sluggish for the last few quarters, but we expect them to ramp up. We are making a show home at the site, and we have deliberately gone a little slow over the last couple of quarters, and we plan to kind of relaunch the projects in next quarter or so when we make the show home, and I expect the numbers to be much better. Latitude 27 is pretty good, actually. I don't know why you say that it's been slow because it's at certain stage. So we are already sold out 65% or 70%. So that's fine, and we are still building the structure, and we expect the rest of the project to be sold out by the time we reach completion and which is what happens typically. Bareily I believe we will be unwinding that transaction soon. We'll come back with further details when we have that. So that was -- so we'll be unwinding that. How we will be? We will come back to you probably next quarter or the quarter after that.

Okay. Latitude 27, just according to our calculations, it looks like the bookings were about 4,500, 5,000 square feet this quarter compared to about 35,000 to 40,000 in prior quarters. So that's where that question stem from.

Very good question. The answer to that lies in the location of Eldeco 27 and Eldeco Skywalk. What happened was that Skywalk is -- both of these are located within Eldeco City. And with the launch of Skywalk, some of Latitude 27 bookings got cannibalized, I think, because it was a newer project, priced slightly lower than 27. So some of the bookings went that side. But overall, Eldeco City did well. So it was -- I think it was in reaction to the launch of Skywalk that bookings dip in 27. But once Skywalk enters the sustaining phase...

Sorry to interrupt, sir. That participant is out of the queue.

Okay. We can take the next.

[Operator Instructions] We take the next question from the line of Priyank Gupta from Guardian Advisors.

My question is, we would like to know in terms of Lucknow market, how do these booking hold? I mean to understand the market share and whether our competitors were able to do it better than us or worse than us.

Priyank, the data of the market is not very reliable. But from what we can source from our sources and whatever research reports we've seen... Can you hear me, Priyank?

Yes, I can.

Yes. We believe that the overall number in Lucknow is about INR 5,000 crores a year of sales, and we are doing about less than 10%. And we believe that overall, the market is -- we have opportunity to expand our market share and more importantly, for the market itself to expand. That number is very low right now. And as I've been saying in the previous calls, it is, I think, not because of lack of demand, it is because of lack of proper supply. But as it is getting -- supply is getting debottlenecked, I expect the market size to expand sharply.

So can you throw some light on the rank we would be there in Lucknow market in terms of...

I would not know for sure. I don't have access to our competitors' data, but I would expect it to be in the top 3 or top 2, I don't know.

So the next question is, you just said that probably you will be winding up Bareily transaction. So do you think that experiment of going out of Lucknow did not work and probably we should not consider going out of Lucknow?

So 2 parts to that question. First, that Bareily didn't work out. I think that was a project-specific thing. So I would not say that the experiment per se failed, that project did not work out. So I don't think that experiment failed. We will be trying the Gorakhpur market soon probably. But the second part of the question is, do we need to look outside right now? Or when I say that the market size in Lucknow is going to expand significantly as supply gets debottleneck. So should we be going out at all? Because I think with Solano Gardens and some other locations that we are tying up, we've entered those in the presentation. I think our hands will be full for the next couple of years. So even though the experiment -- I would not draw a judgment that the experiment has failed, but immediately, I think we should be focusing on the Lucknow market.

We take the next question from the line of Raj from [indiscernible] Partners.

Sir, am I audible?

Yes.

Sir on the ongoing side, how much will be our total GDV?

We don't declare our GDV numbers. We do declare our sellable area because GDV also -- so GDV has a component of your salable area and it has a component of what price you want to sell it at. We don't like to put a price that we want to sell it at out there because it's subject to so many things. But how much gross development area we have, GDA, I think it is there in the presentation.

Yes, yes. So sir, is it fair to assume your current sales per square feet into the GDA [indiscernible] estimate of GDA?

I have already said that, that seems to be the new normal.

New normal. All right. And sir, how much EBITDA percentage we operate on the ongoing side?

So it depends on what kind of project mix we have at this particular point in time. But generally, it ranges -- weighted average is between 30% to 40%.

30%, 40% EBITDA percent right. And sir, how much cost is pending for completion on the ongoing GDV side?

I don't have that number readily, sorry. If any of my colleagues has it, you can give it. Rajiv and Manish?

We'll get back on this number, sir.

We take the next question from the line of Runit Kapoor, an individual investor.

So I have a question in Eldeco Latitude... Am I audible?

Yes, please.

Yes. In Eldeco Latitude 27 and Imperia Phase 2, there has been a reduction in the value of area booked actually. So what the cancellation during the quarter like?

Latitude 27, reduction in area?

Reduction in the value of area, like so in this new presentation is showing INR 177 crores and earlier presentation it showed INR 183 crores. And for Imperia Phase 2 value of area books was showing INR 299 crores in the earlier presentation. But as of now, showing INR 275 crores.

I'll have to get one of my colleagues in. Manish or Rajiv, can you explain this?

So, sir some of the units may have gotten canceled due to our push on the allotment. But the gap should not be that high.

No, it's around INR 25 crores, so like around 10% of your -- in Imperia Phase 2 housing. So, some cancellations do happen during -- when you press -- if there are some chronic defaulters, you press them for payments and they do not pay up. So, it's a routine thing that they do -- we end up canceling them and temporarily your value of area both goes down. But correspondingly, your area left for sale increases. But let us in any -- I don't know if anybody has a ready answer to this, we can get back if that was exactly the reason for it.

But your value of area booked has not decreased.

So, the value of area book would decrease if cancellation happen.

Yes, yes, but that's not decreased. So, your value -- I mean your -- like the total number of area booked like in square feet, that has not decreased, but your value has decreased.

Then we have to get back to you. Thanks for pointing this out. We should get back to you. We should have an answer for that.

Sure. And one more question is regarding your -- what is the anticipated construction costs expected during the year?