Ganesh Housing Limited (526367) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Ganesh Housing Corporation Limited Q3 FY '24 Earnings Conference Call hosted by Go India Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand over the conference to Mr. Rajat Gupta from Go India Advisors. Thank you, and over to you, sir.

Good afternoon, everyone, and welcome to Ganesh Housing Corporation Limited earnings call to discuss the Q3 FY '24 results. We have on the call with us today, Mr. Rajendra Shah, Chief Financial Officer; Mr. Neeraj Kalawatia, Vice President, Finance; and Mr. B. Ravi, Corporate and Financial Adviser. We must remind you that the discussion on today's call may include certain forward-looking statements and must be, therefore, viewed in conjunction with the risk that the company faces. I now request Mr. B. Ravi to take us through the company's business outlook and financial highlights, subsequent to which we'll open the floor for Q&A. Thank you, and over to you, sir.

Thank you, Rajat. Good afternoon, everyone. I extend a warm new year wishes to all of you and also the seasons greeting. Uttarayan has just gone by, on behalf of the entire Ganesh Housing team. We thank you all for joining us on this call as we delve deeper into Q3 results. You must have had an opportunity to go through the earnings presentation, which was posted on the website a little earlier today. I'll take you through both the numbers as well as the scenario in the real estate. In the recent few quarters, we have witnessed noteworthy trends and developments that underscore the resilience and potential of the local real estate sector here in Ahmedabad, especially with the emergence of more and more development towards the central part of the city, the new CBD and the GIFT City. The recent reports by the real estate consultancy, Knight Frank, has highlighted robust performance in Ahmedabad real estate sector. The data indicates a noteworthy 15% surge in housing sales throughout 2023 compared to the previous year. Furthermore, the city achieved a substantial 8% uptick in the new housing project launches, reaching a decade high of 22,500 units in 2023. The research highlights a transformation in the real estate landscape of the city showcasing a growing preference for residential entities priced between INR 50 lakhs to INR 1 crores. These compelling statistics underscore the city's resilience and the growing demand for housing projects. And this reflects automatically positively on our market positioning and strategic initiatives. The market dynamics continue to evolve, presenting both challenges and opportunities that we have strategically addressed to drive substantial growth all these years. Furthermore, the Ahmedabad residential real estate market is poised for substantial growth and sustained growth this year buoyed by factors such as high affordability, relatively low prices per square foot and an increasingly favorable local and economic development and environment. These factors serve as compelling drivers that are expected to bolster market volumes in 2024 as well. Coming to the operational updates of Ganesh Housing's, ongoing and upcoming projects, the construction of Million Minds Phase 1 commercial project, that is an IT SEZ Phase 1, is progressing smoothly in fact, higher and better than expected. And we are pleased to announce that the project has already achieved a 30% completion milestone. Furthermore, our steadfast commitment to meeting the target completion date remains on track. Probably, like in every other project, we may even finish this project well ahead of schedule. In addition, preliminary discussions have been initiated with Tishman Speyer regarding the marketing and business development of Million Minds Phase 1. More comprehensive information on this collaboration will be provided in the upcoming quarters as and when this more progresses. Simultaneously, recent developments in both the processing and nonprocessing areas of GIFT City has fast increased vibrancy. The government's strategic plan to attract IT industry directly benefits our special economic zone also. And the recent announcement of the Prime Minister regarding making Ahmedabad also an IT sector really speaks well for our IT SEZ, too. This diversification permissible activities, including the allowance for liquor sales in GIFT city has led to a surge in demand, presenting a promising outlook for future growth and opportunities even within our operations. Maybe similar changes could be expected in SEZ also going forward. Recently, we conducted the groundbreaking ceremony for another upcoming premium residential project, Malabar Retreat, as highlighted in the presentation. The plan approval process project is currently in progress, and we anticipate an official launch in Q4 of this financial year, situated near Nirma University campus and also close to our existing projects. The more comprehensive details regarding the value, the construction costs and all that will be shared once we announce it. It is worth noting that Malabar Retreat is an addition to our previously mentioned upcoming project pipeline on slides 10 and 11, this is an additional one. The launch of this project amplifies our enthusiasm as we strive towards providing an outstanding experience to our customers in Ahmedabad. Ongoing residential projects, Malabar Exotica is now nearing an impressive 96% completion. The full finalization anticipated in Q4 FY '24. This accomplishment reflects our unwavering commitment to our investors, demonstrating a consistent track record of delivering projects before the stipulated time lines. This success story is not just about meeting expectations, but exceeding them, made possible through the strategic incorporation of cutting-edge technology and the utilization of efficient precast construction methods. Now I'll move on to the key financial and operational highlights in Q3 and the 9 months. The Q3 FY '24 revenues came in at INR 183 crores versus INR 67 crores in Q3 FY '23. 9 months figure for the same period -- this period has grown by 41% to INR 618 crores. We have achieved a remarkable 216% growth in EBITDA during this 9 months totaling to INR 477 crores. And the Q3 EBITDA witnessed a strong 192% year-on-year increase, reaching to INR 138.6 crores. The PAT also saw a substantial growth. In Q3, the PAT grew by 3.3x, reaching INR 100.6 crores mark and the 9 months PAT was a phenomenal 5.5x gross Y-o-Y that is year-on-year, amounted to INR 348 crores. This is the highest PAT ever on an annualized basis also. So we have never reached -- got INR 350 crores, which we have achieved in 9 months even on a yearly basis. The debt free status of the company continues and that cash positive situation is still there with from a peak debt of INR 650 crores, now we're at a cash surplus of over INR 55 crores in spite of spending all the money on the construction of the existing ongoing operation and projects. In conclusion, we have presented in a comprehensive plan, as you have seen, encapsulating our expansion, upcoming projects in our presentation, covering an impressive 30 million square feet. The prevailing trends of consolidation on corporatization overwhelm for established players like us. With a robust brand and innovative product portfolio, prudent capital allocation, a strong balance sheet and a commitment to operational excellence supported by existing governance structures, Ganesh Housing is well positioned to sustain its trajectory of profitable growth. Looking ahead, we are enthusiastic about further expansion to our phase of SEZ and additional residential projects on our existing land banks. With these developments, I will now open the floor for any questions.

[Operator Instructions] We have a first question from Amit Agarwal, Nuvama Wealth.

Congrats for a good set of results, which you have. Definitely, a very strong set of results. On [indiscernible] revenue, how much has come in from sale of land? And how much is come in from completion that is recognition of completed projects, which are normally your revenue recognition methodology.

It's a substantial portion from land, is about over 90% and more. And the completed projects, as you know, there was only one, which was -- the balance sale of which, had to be done this quarter and that's about 5% to 8%.

So when will the revenue recognition actually kick in for the projects, which are there because there are a lot of projects, which probably are going to be recognized over a couple of quarters.

Yes, so the project, which is 96% complete, that is Malabar Exotica will be recognized -- the recognition of the revenue will partially probably happen in this quarter itself that is Q4 of FY '24 and probably it might spill be the first quarter of FY '25 also. And the other projects, like let's say, the SEZ or any other projects will happen thereafter. So the current projects, which are to be -- yes, the revenue is yet to be recognized, which is on ground is the Malabar Exotica immediately.

And my final question, what would be your cash flow from operations for this quarter?

The entire thing. See the patch effectively has transferred into cash flow from operations.

Okay. No depreciation or...

No, there's any hardly any depreciation. It's a very miniscule amount of depreciation and the cash flows, of course, from the previous quarter were also there, which were used for our projects and, therefore, still leaves us a cash balance of INR 55 crores as I said.

How much of cash balance did you have?

INR 55 crores as of now, as of December.

We will have next question from the line of Jay Shah, Dolat Capital.

So there are a couple of questions I have. First would be, what would be the cumulative land sales in 9 months of FY '23 versus complete -- versus FY '22? And where are these land parcels located? And what would be average price to acre at which these land parcels are sold? And secondly, from the cash inflows from these land sales, how much incremental land would we have purchased in FY '23?

I'll take the first question first. Cumulative land sales this year has been about 60 acres or so and -- 60 acres, the entire period. I think the first 9 months that is. This quarter we have done about 20, 21 acres and prior to that around 40 or so, so it's around 60, 70 acres is what we have sold these 9 months. And the corresponding one, I think it was much less -- around the same or a little less in the FY '22 part. I don't have the immediate numbers for the previous year as such. But I think cumulative, this has been around 40, 50 acres also last year. So somewhere around close in the 9 months to 9 months period. The average price is very difficult to say because ranges. It depends -- because the land has been there at previous places, which has been sold, some of them have got an acreage of around INR 8.5 crores, for example, and some may be a lesser or more than that. So we don't have -- we don't really take an average part sales value per acre. Because that really doesn't help in understanding it because these projects or these lands could be at various places. And therefore, we don't calculate that at all. And that's it. What was the other question? Regarding the cash flows, is it right?

Yes. From the cash inflows from these land sales, how much incremental land would have been purchased in FY '23?

Purchase of land have been -- not FY '23, you are talking about FY '24, this 9 months right?

Right, right. Yes.

So that is an ongoing process. I think you would have added at various stages of acquisitions happening even as of now. So as much as we have sold probably we would have even been acquiring at various stages. So even today, as we speak, we do have about 550 acres of land, which we have been talking about during the last year. So ongoing -- it's an ongoing basis. That acquisition of land and sale of land as a part of our vertical, it's an ongoing process. So we keep adding land and we will be doing it given the current year and probably at the end of the year, we will be able to tell what has already come on the books and what is the amount, which has been paid for or which are there at the various stages of acquisition.

Okay. Okay. And also, I have one more question that -- and this new project that we have outlined in the presentation, Malabar Retreat, Why was this not presented earlier in the upcoming project details? Also, is this something new that we have planned recently or any other specific reason?

No. It is actually not a new project, but the development in that was a little slower than what we had anticipated. And therefore, we didn't announce it along with the other projects at that point in time. But now a lot of work has gone into it and, therefore, it has come to a stage where we can be more confident about announcing it, and that's the reason why we have done that groundbreaking and we can be sure that the approvals will come in this quarter, and we can launch it officially in this quarter itself. It was always there on the cards, but nothing substantial had come in to allow us to really say when we can announce that. And that's the reason why we did not. Now that we're confident that it will come in this quarter, we have done the groundbreaking.

We will have our next question from the line of Eesha Shah from Axis Securities.

My first question would actually be what segment are we looking at for future demand? Like for the previous year, we saw demand in the premium and upper sale sector. Going forward, do we see more demand towards luxury sector or more affordable segment?

This has been, as I told earlier in the speech itself, I think the demand for more affordable -- which is not in the affordability, actually it's going towards the premium side is increasing. And therefore, we see and our concentration also has been on the mid and premium segment and not on the affordable, if you see. All our projects are there upwards of INR 1 crore. Therefore, I think the demand from what we have been seeing has been going towards INR 1 crore and more. So that I would call from an Ahmedabad standard as a premium segment or mid segment. The affordable has its own buckets of growth and development. At this point in time, we are not looking at it and, therefore, we won't talk about it. But our projects, let's say, the Exotica, the [indiscernible] which is going to come about the Retreat one, is definitely a premium residential project or the ones which will come in SEZ is going to be a premium residential project. And there's a lot of demand for that now.

Okay, okay. Also one more question would be, do you see any more key players entering the Ahmedabad market? And if so, what segment would they be entering in?

There are existing players only and we are not seeing any specific new players coming in, except for 1 or 2 pockets like rare. The SEZ and all the south construction companies have come, one of them. Ahmedabad has got a very good set of developers and headed by -- the leader being Ganesh Housing. So I think we have our good developers and they will continue to develop. Each person normally is very strong in their city. And therefore, if you see construction and developing companies have been quite closeted in their respective cities. And we see the similar thing happening in Ahmedabad. And a lot of them are there in different pockets of Ahmedabad and each are there in the commercial as well as in the residential sector. But I would dare say that none of them are exactly in the same way as well balanced as Ganesh Housing in terms of both residential and the commercial. Especially, the new projects that we are looking at is really very well balanced.

We will have our next question from the line of Rishith Shah from Nuvama Wealth.

Couple of questions. Firstly, on the bookkeeping side. If you can just give us some figures to the presales of the bookings that we have done in FY '23 and in 9 months of FY '24.

Presales is, there are no new projects on the residential that we have launched. So all that presales was already in FY '23 itself. Only the booking of the completion projects happened in FY '24. There has been a certain soft commitments at various places of our existing projects. And those soft commitments is not something which we can really say as presales till the time the project is launched. So I wouldn't want to really address that. But yes, I can only say that this anticipated or expectations, high expectations on any project, which is launched by us. And therefore, we do believe that even the Retreat has seen great anticipation. Once it's announced, probably we can tell how much has already been sold.

Got it. And just, sir, if you can add FY '23, the bookings or the presales number in terms of square feet or value?

Rishith, I can get back to you on that. I don't have it on hand, please. Rajat can note it down, please.

Okay. And secondly, you said we are kind of in discussions with Tishman Speyer, but you would kind of not like to add more details on that in this quarter. But if you can just give out some brief strategy?

Yes, the work given to Tishman was both on the project management and ensuring that the construction comes up as planned and in time, which is going extremely well. Now the other work given to them, the assignment was of getting us good tenants and good clientele, especially the anchor clients in the SEZ, that is the work which is pending -- ongoing right now, and there has been people who have approached or have been talked to in terms of attracting them through the SEZ because we don't have anything at this point in time to announce any specific names for want of specific arrangements with them or for confidentiality's sake, I will not be giving names. But a lot of work is going on, on that side to ensure that the project, which is growing, as I said, ahead of schedule. By the time the project completes, we want substantial interest in terms of the tenancy there. And so therefore, very good work and fast work is going on from Tishman side on that aspect. That's the only thing which I can tell you at this moment.

All right. Great to hear that. And basically, on the -- I mean, future development potential per se. So we actually have a -- for the projects that we have already announced, that is the 2 projects in Godhavi and near the SEZ. So we have around 30 million square feet that we have kind of already announced and working on that and the potential that we see of the current land bank would be around 40 million, 45 million square feet. So you definitely be announcing projects over that area in maybe 1 year or so. So beyond that, what kind of -- I mean, do we look to outright acquire land and add more projects? Or we think of partnering with landowners, any kind of strategy over there right now?

Traditionally, and all these years, it has been done on our own. There's no partnership, which has really happened in terms of joint development and all that. But that's not something which can be ever ruled out. There's never say no kind of a thing. But we do have a land bank and the land bank is continuously being acquired also. So we do believe that a lot of development and activities can be done in-house and to get us to ourselves. But yes, in future, if any such opportunity comes up wherein our brand can be utilized to even do projects on a joint basis, we are open to that. It's not a shut-down kind of thing.

We will have our next question from the line of Mayur Liman from Profitmart Securities.

Congratulations on a good set of numbers. My first question is the Smile City I project in Godhavi, going to be the launch in Q4?

No, it would be -- we had said earlier, it will be the first half of FY '25. So not by March, but maybe thereafter.

Okay. Given the real estate demand price -- the demand and the price appreciation, how much cash booking value do we expect from this project? Is it still the same INR 500 crores or any upside to this?

If you go by the present value, yes, from the time when we gave this number of INR 500 crores, and now, things have looked up. There is an appreciation. But I would -- I'll wait for the project once it is launched and then the bookings are started, at that point in time, probably we'll be able to tell you the price points better. But yes, you're right, there has been demand and the price appreciation in the last 1 year since we have talked about the project.

Okay. And my next question is, how do you see the emergence of GIFT City impacting the real estate demand in Ahmedabad. Given that Ahmedabad is still one of the most affordable of the big cities, do you see the more projects and more developers rushing through? Any plan of launching residential projects near the GIFT city?

No. At this point in time, we have enough on our plate in terms of the land and the projects already announced this part of it. That is the CBD new area that is the Nirma University area, which is very, of course, very close to GIFT City as well. So I think the kind of development which will happen will from -- on the GIFT City will actually spill over to the areas that we are working. So I think they should finish these projects, which are there for at least the next 3, 4 years, we have enough to go on. So as of today, there's nothing, which we are looking at GIFT City. The demand generally has been high, GIFT City or no GIFT City across Ahmedabad, that development has happened in the real estate across Ahmedabad especially in the areas where we have been working, whether it's the west part of Ahmedabad or the north central part of Ahmedabad, that is that Nirma University side. So I think if an opportunity comes up sometime later, we may look at it. But at this point in time, no, we don't have anything on hand, in the GIFT City that is.

We will have our next question from the line of Vignesh Iyer from Sequent Investments.

My first question here. I'm wondering what is the our total project share value when it comes to Malabar Exotica.

The sale value?

Yes.

It's INR 150 crores.

And also I was wondering what would be our breakup of land when it comes to the land that are already under -- that is being utilized for our project and land that is available for sale.

So the SEZ area of 60 acres is under development. The Smile City of 450 acres is under development. That leaves us with more than 40, 50 acres, which are there, some of them, 1 or 2 projects could come up in the future. So we do have -- and we are in the various stages of acquisition of land, as I said. So if you ask me at this point in time, we could have anywhere between 40, 50 acres, which are not yet announced as -- on any project on, plus any acquisition that will be coming up.

Right. And if I'm not wrong [indiscernible] you had said, we are thinking -- I mean, your area of work is quite restricted to Ahmedabad and nearby areas. Have you, I mean, thought of expanding to other areas within Gujarat, maybe...

Can you repeat the question. I couldn't really catch it, there was a problem in the line, please.

Okay. So I was saying, as your operations are more or less limited to Ahmedabad majorly, are you -- with the amount of investments that have come recently after the Gujarat Summit, have you thought about expanding your operations to other smaller cities probably, which have a potential to be one of the top tier cities in the coming years.

We do look at certain opportunities that come our way. We have evaluated a couple of projects. And if something comes up really interesting, it might happen. But at this point in time, as I said, so many -- 30 million square feet, which we have to develop in the next 5, 7 years, might leave very little room for trying to expand right away. But yes, as I said, if something very interesting comes up, like it had come up earlier and we have evaluated and chosen not to go. We might do that. I mean it can't be -- it may not be ruled out absolutely, but nothing as on card in the near future.

Okay. Just one last question from my side. If you could, as things stand, could you guide us on how our presales could look for FY '25 or FY '26. What is -- I mean, when it comes to -- in terms of square feet and value, right, what are the internal assessments says for the presales value?

You really have to see the presentation where we have said that various projects of various phases are being announced. Let's say, we are already working on SEZ Phase I that is the commercial one, which is going to be probably completed, as I said, well ahead of schedule, FY '25 or FY '26 for sure, okay, maybe even FY '25. So that will start yielding us the rental revenue from the next year onwards, FY '26 onwards itself. And then there's a residential project of SEZ, which will be commenced, let's say, probably in the first quarter of FY '25 itself. Now that will be only once it is completed, the project is completed, maybe a couple of years thereafter. So in terms of the sales, yes, once the project of residential is announced or this project of Retreat is done in the first quarter, at that point in time, we'll have all the presales numbers and we'll be able to tell you. At this point in time, it's good enough to be saying that both this Malabar Retreat project and residential put together, which is almost 1.8 million square feet will deliver into sales in the -- from starting FY '24 itself.

We have our next question from the line of Aayush Rathi from IDBI Capital.

Congratulation on a good set of numbers...

Mr. Rathi. Your line is not clear. Can you please use your handset?

Is it better now?

Yes. It's good, go ahead.

Yes. Congratulations, sir, on a good set of numbers. I just had one question on the precast technology, which is used in the real estate space. I just wanted to know that if you are making it by your own or outsourcing that technology?

No, it is outsourced. It is bought from outside. We use it substantially, but not -- we don't do -- we are not into that. We outsource it.

Okay. So could you name any company like, whom we are outsourcing it from?

I think there are couple of companies and there are -- actually very few companies were named in the precast. So there's only a couple of companies. We have one located very close to Ahmedabad itself. And therefore, and he has been performing extremely well, so we've been considering within. But there are a few companies in India who do that.

We will have our next is from the line of Janak Shah from Wealth Advisors.

Sir, congratulations on excellent set of numbers. Now I have just one question about the commercial property, like it was mentioned that there is a commercial property on SG Road, which is growing like to have a INR 1,800 crores top line for the company. So when would that project be announced? And secondly, like our sales should be in the region of INR 800 crores this year. Should we assume that by the next year, it should cross INR 1,000 crores mark?

Well, I would definitely want you to be continuing to say this. Yes, if our well wishers are there, INR 800 crores can go to INR 1000 crores. But I wouldn't want to give any particular guidance on the next year's numbers because we normally don't give any such kind of very specific guidance. And on the other question, yes, we have a very good property, which we are working on. And just as we could not announce the Retreat till the time we had things absolutely clear that we'll be launching it. That's the reason why we have not been talking about that project. But yes, it is absolutely on the cards and, God willing, which will be done pretty soon.

Sir, can we assume just like when the Smart City launched in Q1 '24/'25, that project also would be like launched in the similar time frame?