Ganesh Housing Limited (526367) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q4 FY '24 Earnings Conference Call of Ganesh Housing Corporation Limited, hosted by Go India Advisors. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Rajat Gupta from Go India Advisors. Thank you, and over to you, sir.

Thank you, Muskaan. Good afternoon, everyone, and welcome to Ganesh Housing Corporation Limited earnings call to discuss the Q4 and 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 risks 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 evening, ladies and gentlemen. It gives me great pleasure to welcome you to this earnings call. I'm sure you would have had the opportunity to go through the presentation uploaded on our site earlier today. Let me start by quoting the sanskrit shloka, which I feel is very apt for the present. [Foreign Language]. To translate, on being subjected to harsh realities of life and difficulties, a righteous person, a strong person does not shed his intrinsic qualities and comes out more determined and victorious. Just as the rice, which is pounded only sheds the husk while it comes out clean. In the same way, Ganesh Housing has made a remarkable turnaround from being at its lowest, just 3 years back to its best performance ever in FY '24, and is still more to come, and I have the privilege to share this with you. This year has been truly remarkable for us, as I said. And I'm proud to state that on all parameters, we have surpassed all our earlier best performances and achieved new milestones unmatched in our company's history. And we believe that this is sustainable. It's a testament to the value of Ganesh Housing brand, its position in the Ahmedabad real estate sector, the hard work, dedication and innovative spirit of the team and the vision and foresight of the promoters above all. Let me just take you briefly through India's Real Estate Sector. It's been taking new strides in the past couple of years. According to the latest Knight Frank and CII report, India's real estate sector is valued at present at about USD 482 billion. However, the projection stated by 2034, this would actually go to USD 1.5 trillion. This forecast shows the vast potential and opportunities within the real estate domain. CREDAI has predicted that by 2034, the real estate sector will contribute about 13.8% of the GDP. Growth is largely attributed to the increasing businesses, a trend of local companies moving to special offices and the growing demand among Indians for improved residential accommodation, hotels, travel destinations, et cetera. And with initiatives aimed to bolster manufacturing, logistics and industrial hubs is evident that the real estate sector is poised for substantial growth. The Ahmedabad Real Estate Sector also in line, saw significant growth in real estate demand in FY '24, particularly in the areas of SG Highway, Bopal, C. G. Road and the Western part driven by proximity to job centers and improved connectivity. Residential houses demand rose by about 21.5% in the first quarter of this calendar accompanied by the average property rates. This is due to Ahmedabad's emerging status as a prime investment destination and growth in new businesses and commercial investments. Looking ahead, the city's real estate landscape is poised toward continuing growth and development, fueled by ongoing urbanization and infrastructure announcements. Ganesh Housing, as you know, has been at the forefront of all the developments in Ahmedabad. In the last 3 years, we have embarked on development of new projects and have earmarked exciting projects even this year. We have completed Malabar Exotica ahead of schedule, booked revenues partially in FY '24 in the fourth quarter, and even in FY '25 in the first quarter, we should be booking the balance revenue. In Q4, we also saw the announcement of the marquee projects Malabar Retreat, much ahead of our planning. The surprise launch in this quarter of FY '24 was actually a much forward to -- look forward to projects. And thus, we saw very good interest with booking as of now up to about 27 to 30 apartments totaling to around INR 67 crores and more in revenues and presales. This is going to be updated in this quarter, and it is going to increase every day. The ongoing commercial project of 1.3 million square feet in Million Minds, SEZ project is progressing very well and in all likelihood would be well ahead of it's scheduled once again. Let me brief about the new projects we are planning for FY '25. If you recollect, we have planned 2 residential projects in Million Minds, 1 in FY '24 and the other in FY '25. Instead of 1 of those, we actually launched Malabar Retreat, as I just mentioned, in FY '24. But in this year, FY '25, we shall be launching both the phases of residential in Million Minds. One phase being launched in third quarter of this FY '25. And the second phase in the fourth quarter, but together, the development of this is about 1.8 million square feet. Additionally, a new project, One Thaltej, which is a commercial project is being added to the repertoire in the current year. This is an additional 1.8 million square feet with about INR 2,100 crores in revenue, is expected to start in H2 FY '25, the second half of this year and finished by the second half of FY '28. That's about 3 years. There have been various developments in the area around the township project, the Smile City and Godhavi. Various projects of national importance are coming up around that area, like sports complexes, educational and skilled universities and malls. Witness the roads, infrastructure and connectivity, et cetera, is improving significantly. Looking to that, despite our plans being ready, we have through it's prudent to wait before launching the township project in the same manner as we planned earlier. We could have opportunities to develop it better and also realize a higher value once the other developments in the vicinity see some shape in the coming years. And we are now thinking that the project will start in H1 of FY '26. With all these ongoing and the upcoming projects, the company is set to develop over 5.5 million square feet of area which are under various stages of development, making this the highest development at any point in time in the company's history. We have already laid out our plans last year itself for the next 5 to 7 years and are progressing systematically in that direction. Now turning to the financial highlights of both Q4 and FY '24. As said earlier, this has been an extraordinary year for Ganesh Housing. The results have surpassed all previous achievements in the past 20 years on all fronts. The revenue for the full year FY '24 went up by 45% to INR 899 crores. The EBITDA went up by 146% to INR 630 crores. Similarly, in the quarter, if you see, the revenue went up by 53% year-on-year to INR 280 crores, and the EBITDA went up by 45% to INR 152 crores. The EBITDA margin for the full year was about 70%, and for the quarter was about 55%. And the PAT rose by 351% in FY '24 to INR 461 crores and the corresponding amount in Q4 at INR 113 crores, which is 186% growth over the previous quarter -- fourth quarter of FY '23. This has resulted into an increase of about 4.5x or rather 3.5x in the EPS to INR 55, and the PAT margin is around 51% for the full year and about 40% for the quarter 4 FY '25. Our cash flows have been very strong, and even after spending for CapEx on the SEZ, as you know, we have not raised any money, we have net debt zero, and given various advances for land purchases from our own sources, we still have a cash surplus of INR 230 crores as of March 31, 2024, far more than what we need for our CapEx this year. Our return on capital employed stands at 39.6% and a return on equity increase at 29.7%. Looking to the robust performance and the healthy cash flows, the Board of Directors has recommended a dividend of INR 11 per share, that is 110%. The previous best ever was 22%, and now it is 110%. This is a 20% payout in line with our dividend policy, having about INR 92 crores outflow. The company endeavors to continue to perform well, execute unique and value-adding real estate projects and make the Ganesh brand even stronger in the years to come. As we stand, we believe and are confident that the best performance is yet to come. With that, I open the floor for question and answers. Thank you.

[Operator Instructions] The first question is from the line of Neeraj Sadani from Wisdom Finest & Consultancy.

Great numbers as expected. So I think the last time we had discussed there was no mention of a project like One Thaltej. So I wanted to know, was it like a new opportunity that came our way or we already had a land bank and how did we decide to start this project suddenly because in our last meetings and calls, we've always discussed about Smile City and the Million Minds project.

That's right. See, land bank was always there. And the opportunities are always being explored. And we believe that it's the right time for it to begin, we start working towards that. And unless the entire plan is ready, and we believe -- we are very confident about actually executing, we tend not to announce it. And therefore, last year, this was still being thought about, various discussions were happening, but nothing was specialized. Now the moment it got specialized, we got confidence that this kind of a commercial venture is going to be a unique progress again is definitely going to be successful and therefore, we launched it this year.

So we didn't do any outflow for acquiring this land in this quarter, you mean?

No, no, no. It's an existing land bank that we already had on the...

When you say that we are the largest landowners of -- fully paid up land owners of Ahmedabad, that includes all these smaller pieces of land as well?

That's right. And this particular 1 that now what you occupy 2 bigger space, but yes, you are right.

Okay. And also -- so there is a lot of buzz around the GIFT City, but like even though we are doing so much of an upward in Ahmedabad, why not -- any particular reason why we have avoided to launch a project there? And what is your view, what is the management's view?

No, there's nothing like avoiding any project. Like what you just asked a question about One Thaltej not being there last year, hopefully next time you might ask about why -- you didn't talk about GIFT City and while you've gone in GIFT City.

I'm absolutely happy with you launching more projects -- it was just that...

No, no, I'm saying that similar way you know, GIFT City is also there in our minds. It's not that anything we are fortifying at this point in time. But yes, work is going on and really -- if something could come up, we can never know. At this point in time, we don't have anything to tell you, but it's a development which is happening and something can come up.

The next question is from the line of Rishith Shah from Nuvama Wealth.

Congrats on a good set of numbers. A couple of questions. So firstly, as usual, can you give us the split of the revenue from land sales and project sales in Q4 as well as the full year FY '24?

See, in Q4, the land composition, the revenue is around 60% and 40% of the revenue came from the project sale. And for the full year, it is around -- roughly around 80% of the sales come from the land and 20% from the project.

Okay. And -- so now of the land bank, we have kind of allocated -- had earlier allocated 500 acres for the project, almost 500 acres.

Right. That's right. We still have that, the various projects are either ongoing or are planned.

Right. So what area would be occupied by One Thaltej and is a smaller parcel, I believe, right?

Yes, it's a very small portion. It is within that acre land that we have. It's not just those 2 large portion of 64 to [ 60 ] acres and 400-odd acres in Godhavi. Apart from that, also, we have got various land parcels, and this is going to come up just next to our corporate house, which is the existing land. So it's not going to occupy too many acres land.

Okay. Got it. And post addition of this project. So what kind of plan do we still have that can be traded?

No, there's nothing like can be traded. That office city is always seen as and when we see some value in buying or selling a plan. It's an ongoing process like we have been acquiring land over the last couple of years. And some of the land we have acquired and sold over also directly and we got a very good rate. And this year also, as we speak, we have various acquisitions on the [indiscernible] and is going to be either completed this year or it can go to next year. So acquisition of land whether for the project or for the process of making the fit deal is always on. So we keep acquiring the land continuously.

Okay. Got it. Sir, regarding the Retreat project, actually, I had also attended last call, but I kind of missed that figure. So can you tell me what kind of GDV that the project has. And we said we have already kind of booked INR 67 crores out of it?

Sorry, we missed your...

Retreat, Retreat, details of the Retreat.

Retreat is around, it is happening in the 2 acres of land with 2 towers, with G+24 floor, this thing. And it is actually somewhere in the range of INR 2.5 crore to INR 2.7 crore per unit with all the amenities. And it is right on the SG Highway near to Nirma University. Each unit will have area of roughly about 4,000 square feet. It is up market meaning, up market apartments.

It's about 160 apartments, each of those average size of 4000. There are some which are even bigger than that, and the average price we are selling at INR 2.5 crores to INR 2.7 crores, but there are also INR 5 crores and odd kind of larger sizes in each of these towers. So the total development is right again in the half of the new development that is happening. And as we call the new CBD, that's right to Devi Circle just behind Nirma. So that is a place where we already had land and it's being developed on that.

Okay. Got it. So combining all the apartments of different configurations, what kind of total developable area or a salable area would be having -- would we be having on street? And what would be the estimated development value?

The total development area will be around somewhere 7 lakh square feet.

Okay. Got it. And lastly, on the One Thaltej, [ IT SEZ ] so this will have you -- I mean it's frozen that it's for sale? Or do we or -- are we also thinking about maybe using it for...

Sale model. It will be mostly outright sale model.

[Operator Instructions] The next question is from the line of Akshat Shah from Niveshaay.

So first question is what is the valuation of current inventory? And what revenue is recognized from already sold projects? If you can give me.

See our current inventory is somewhere around INR 421 crores. It has to be sold over 2 to 3 years, this is at cost.

And revenue recognized.

What was your second question?

What was the revenue recognized from soled inventory and what is...

See, we have realized around 60% of revenue from the Malabar Exotica project and 40% of the revenue of Malabar Exotica will be coming in this quarter.

Okay. So another thing is that what would be the expectation for future cash flow if you consider Malabar Retreat?

It would be -- this thing is coming over the next -- the bookings that happen over this year or it can even spill over some portion of that in the next year. So the cash flows of the entire Retreat projects could come in the next 1 or 2 years itself. And the last 1 year is the time when we finish it and deliver it.

The next question is from the line of Shreyans Mehta from Equirus.

My question is primarily towards your commercial segment. So as far as the ACs and [indiscernible] is concerned, are the issues which were there earlier getting addressed? Are we seeing more people or more tenants showing interest for our properties?

Yes, Shreyans. This actually has been always been of interest, and we started it on the lease model because we saw a lot of interest in that. So there was no particular issue in that. We actually, it's the first time we are going into a lease model, right? So first, we saw whether there would be such kind of tenancy, which is be possible. And Tishman Speyer as said, have been also given the responsibility of trying to find at the right tenants. We are confident. And as we speak, actually, there's a lot of developments have happened in terms of speaking to the likely tenants by Tishman itself. And I think in this year, as we go closer towards completion of that, maybe in the second or third quarter, I say we will be completed as a schedule. So we'll start actually talking to people and getting the interest on tenancy in maybe in the second or third quarter.

Okay. Sure. Sir, secondly, in the commercial, which we plan to launch the One Thaltej one. So that would be also on a lease one or it would be outright sale.

That's an outright sale. And people may invest it are doing on their own, but we are going for an outright sale.

Got it. And lastly, when we -- I mean, in the slide, where we are showing the actual expected FCF of roughly INR 10,000-odd crores, the capitalized value, so it does not include the SG one right, the Thaltej one?

It includes that also. Because you see in that slide also, we have already mentioned what are the projects included there. So it includes the full sale value of the One Thaltej project.