Ganesh Housing Limited (526367) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Ganesh Housing Corporation Limited Q1 FY '25 Earnings Conference Call 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, Mr. Gupta.

Yes. Thank you, Michelle. Good afternoon, everyone, and welcome to Ganesh Housing Corporation Limited earnings call to discuss the Q1 FY '25 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 Advisor. 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 afternoon, ladies and gentlemen. It gives me great pleasure to welcome you to the Q1 FY '25 earnings call. I'm sure you would have had the opportunity to go through the presentation uploaded on the exchanges as well as the website. It is indeed a pleasure to state that this was yet another rewarding quarter for Ganesh Housing. Building on its performance quarter-on-quarter for the last 10 quarters, Q1 of FY '25 was well on the expected lines. Let me begin by providing an overview of the real estate sector. India continues to be a driving force in the global economy, contributing about 8% to the GDP in 2023, projected to rise to over 9.23% by 2030. The residential market has continued to strengthen with demand reaching a 11-year high during H1 '24. Premium housing products priced over INR 1 crore have emerged as the largest segment, accounting for about 41% of the sales. The real estate sector has emerged as the top choice among foreign portfolio investors that, is FPIs, due to the consumption-driven CapEx streams. The Ahmedabad residential market has shown significant resilience and growth in the first half of 2024. According to a report from Knight Frank, primary home sales reached a post-pandemic high of 16,113 units in 2023 and in [ HY ] 2024 itself, about 9,337 units have already been sold. This is a 17% increase compared to the same period last year, marking a 10-year high for half yearly sales. A notable trend is the shift towards premium segment, premium housing products priced over INR 1 crore, now make up about 20% of the market compared to 11% a year ago. This shift is driven by the introduction of new lifestyle-oriented projects, offering better amenities and larger spaces, meeting the elevated demand and resulting in robust sales. As we move into the second half of 2024, the Ahmedabad residential market is well positioned to sustain its growth trajectory. Factors such as high affordability, comparatively lower prices per square feet and an improving local economic environment supports this optimistic outlook. In line with these trends, Ganesh Housing is actively contributing to the sector's growth. Recently, we completed the Malabar Exotica project ahead of schedule, which resulted in significant revenue bookings during the fourth quarter of FY '24 and continued strong performance into the first quarter of FY '25 also. The sale deed execution of Malabar Exotica is in currently in progress and is anticipated to be completed within this quarter. Malabar Retreat launched in Q4 FY '24 has met with the exact anticipated response. We have presales of over INR 72 crores and cash receipts of over INR 7 crores. The trend of bookings for such premium apartments generally increase after the first floor and the sample house is done. Hence, we expect that these bookings should pick up in the Q3 and Q4 of this financial year. Further, as always, we are confident that this project also will be completed well as ahead of its schedule. Our commercial venture, Million Minds SEZ continues to progress ahead of schedule. As already said, the marketing of these rentals for the space to large IT companies is on scheduled start in Q3 of this year. Looking ahead to FY '25, we are on schedule to announce the phased launch of our Million Minds residential projects, Phase 1 in the third quarter and Phase 2 in the fourth quarter of this financial year. These 2 projects collectively span a development of about 1.8 million square feet. Furthermore, the plans for the commercial project, One Thaltej, is in the approval stage. With a saleable area of 1.8 million square feet, this project is expected to generate anticipated revenues about INR 2,100 crores and a targeted completion by H2 of FY '24, as said earlier. There's a particular update in our Godhavi township projects, except for the fact that the surrounding areas, as we had told you in the last quarter, are continuously abuzz with activities, proving that our strategy to postpone its launch to the HY FY '26 is correct. Overall, Ganesh Housing remains committed to leveraging these opportunities to foster the growth of both the company and the Ahmedabad real estate sector. We are confident that our initiatives including the Million Minds commercial and residential projects, Malabar Retreat, the township project at Godhavi, the commercial project One Thaltej and the strategic land sales will drive value for our stakeholders. We have already laid out our plans for the next 5 to 7 years and are progressively systematically going in that direction. Now for the financial highlights of FY '25 Q1. We have registered the first quarter revenue of INR 221 crores, an EBITDA of INR 156 crores and a PAT of INR 114 crores. Though the revenue is lower than the corresponding first quarter of FY '24 or Q4 of FY '24, it would be appropriate to mention certain important aspects in this direction. The corresponding first quarter of FY '24 was an exceptional quarter with a whopping INR 161 crores of PAT and hence, it's not exactly comparable to Q1 of FY '25. Secondly, if you see the sequential numbers, that is Q4 of FY '24 and Q1 of this year, the PAT has increased which is in line with the trend seen in Q2, Q3 and Q4 of FY '24. So the revenue from the completed projects also has seen a 40% growth Q-on-Q. Thirdly, we'd like to mention that even in this year, that is FY '25, we expect to achieve a 30% to 35% growth in PAT over FY '24, that is over the INR 460 crores FY '24 what we achieved, we see a 30% to 35% growth in PAT as the coming 3 quarters of FY '25 are expected to be better quarter-on-quarter. Despite the significant CapEx in our ongoing projects, we have successfully maintained a strong financial position with surplus cash flows. The cash flows remain strong and will continue to improve in the coming quarters. Finally, I would like to mention that Ganesh Housing is well equipped to continue its path of profitable growth, thanks to its strong brand, innovation, strategic capital management, robust financial health and dedication to operational excellence, all supported by established governance framework. We are committed to continue our track record of exceptional performance, executing unique and value-added real estate projects and be the leading brand in the years ahead. As it is said in Bhagavad Gita, [Foreign Language]. Meaning, whatever actions great persons as leaders perform, the others follow. Whatever standards they set, all the world pursues. That is our goal. With this, I request the floor to be open for questions. Thank you.

[Operator Instructions] The first question is from the line of Rishith Shah from Nuvama Wealth.

Sir, 2 questions from my end. Actually, for the first question on the Malabar Retreat, so we said we have kind of did a presale of around INR 72 crores, INR 7 crores collection. So just a little bit on the project as a whole, so what is the expected GDV and the expected construction cost of the entire project? And secondly, what is the scheduled completion time line from when we start looking -- seeing the revenue flow into the P&L?

See, the total sales value of this project is around INR 450 crores, and the cost of the project is somewhere around INR 340 crores. And this is, like, say, the 2 towers of the premium segment with [ Commercial-4 ] building. And with each unit is around having a minimum carpet area of 2,400 square feet. And in terms of the target time line to complete the project, that is -- as per our estimated schedule, we have taken a 3-year period. But as you see in last 3, 4 projects, the way we have completed our project, we will complete that project ahead of the schedule itself.

So it could be well into March, FY '27. It could be in the third -- or fourth quarter of FY '27.

Okay. Great. And during this period, we kind of intend to exhaust the inventory, I mean, sale during the construction period, right?

Yes, that's our mission. That's our plan also.

Yes. Mostly that happens with us. When project is about to get completed completely, in these kind of projects, we would have sold at least 80% to 85% of the inventory. We will keep some remaining base units for -- meaning, some friends and family. But 80% to 85%, we will be exhausting by the time we have completed major construction work.

Awesome. Yes. Sounds great. And the second question, so we kind of saw -- as you were explaining, we saw dip in the revenue maybe sequentially as well as year-on-year. So the fluctuation in my sense would be, again, in the land sale part. So can you give us a split? I mean, what was the land sale in the quarter and how it compared to the previous quarter and year-on-year as well?

Yes. So you're right. Till the time, though the bookings may be there, the cash flows may be there, unfortunately, because of the accounting standard we cannot book the revenues till the time it is completed. And therefore, yes, the revenues from these projects may not come exactly the way the bookings happen. However, yes, as we had said, the strategic land sales is happening. Even this quarter, I think, about INR 46 crores, INR 50 crores are from the completed projects and the balance of about INR 160 crores was from the land sales. And in the coming quarters, things could continue. And maybe another -- moving 4 or 5 or more till the time, let's say, the new projects have come on stream. So this quarter, it is about INR 160 crores of land sales and about INR 46 crores, INR 50 crores of project sales.

Okay. Okay. And the project sales was largely related to Exotica, right?

That's right. Yes. But -- that's a 40% increase year-on-year. Last year, in the first quarter, it was about INR 32 crores-or-so. Now it is more than INR 46 crores, that's about 40% growth.

Right. And last question, any new project additions in site in the near term, do we see?

No, no. All that we have announced remain. As I just mentioned, all those projects are on schedule. And so these are the ones which we have -- we're still going to do. Let's say, it is One Thaltej or residential, 2 projects this year. These are the 3 projects which will start this year. I think else is anticipated at this point in time. Of course, the SEZ will continue. It's going on really well. That would -- that is slated to complete, as we said, maybe less than a year from now.

Yes, and if we -- if the response is good, we may prepone some of the launches of next phases of SEZ commercial or SEZ residential.

[Operator Instructions] We'll take the next question from the line of [ Satyam Wadera ] from Profitmart Securities.

How does we plan to manage the operational aspects of the commercial SEZ project, while concurrently constructing the residential projects and completing the remaining phases of commercial projects within the SEZ?

Yes, by operations, you mean arranging finance for the same. Right now, we are sitting on -- meaning we have a financial closure for Phase 1 of commercial SEZ has already happened. Meaning, we have enough cash balance which will take care of entire cost of construction of Phase 1.

For residential?

Residential will come out from the bookings itself, right?

Yes, presales of resi itself will give enough cash to start construction of...

See, the majority of the cost is already incurred long back in the land itself. So that has already been spent for -- there's no cash outflow for that. Only for the construction is what we need to spend. And more often than not, this comes in either from the approvals which are already there from our other businesses, other sales and the cash flows or from the booking itself. So it funds for itself.

[Operator Instructions] We'll take the next question from the line of Gunit Singh from Counter Cyclical PMS.

So can you please share the revenue potential from projects being completed in FY '25 and separately in FY '26?

Please repeat.

Can you share the revenue potential of projects that will be completed in FY '25 and also FY '26...

So, Gunit, in FY '25, in fact, after we have completed Malabar Exotica, which is only few flats of Malabar Exotica for which agreement is yet to happen, are remaining. After that, we have new projects, which is launched after that is Malabar Retreat, which will take at least about 2.5 years from now to get completed. So we don't expect any revenue from projects to further come in rest of the FY '25 or '26 for that matter.

FY '27?

But there will be sales from the past completed projects.

Yes. We hold some inventory of some of the past completed project like Maple Tree and Maple Trade Centre, which is market value of that is roughly about, say, INR 40 crores to INR 45 crores. We can encash that and that can reflect in our, meaning, project revenue. But other than that, for FY '25 and FY '26, I -- we don't see any project revenue. But at the same time, we are seeing a lot of traction and a lot of attraction in terms of whatever land bank we are holding, which are getting sold at very decent prices and which is going to give us continuous kind of EBITDA margin and decent EBITDA margin.

For like also, for FY '25 and '26, our revenues would come only from sale of our land banks?

FY '25 for sure. And FY '26, we need to see how the second part of the year, how the Godhavi, the whole project start because that is slated for the H2 of FY '26 as we said. If that comes in as scheduled, then yes, there will be project sales from that also. So that could be quite a major revenues coming from project sales at that point in time. From the [ be a ] residential ones which we have announced, there may not be anything in FY '26. But from the new sales, which -- for the new project of Godhavi, yes, we will see projects sales.

All right. Sir, so you mentioned that PAT to grow by 30%, 35%. So what kind of revenue sales are we looking at from land bank in FY '25? And also, can you share the revenue potential for projects being completed in FY '27?

Yes. What is the second question? Please repeat.

Can you share the venue potential of projects being completed in FY '27?

INR 450 crores.

FY '27 from -- yes. No -- in FY '27, yes. FY '27, the project which will be completed would be Malabar Retreat, and that would be having about INR 450 crores or INR 470 crores of revenues, which could be coming in FY '27. And from -- in FY '25 that you asked, the revenues which we see, I have given you a guidance for the PAT 30%, 35%, which looks to be definite. The exact value of the revenues is slightly difficult to tell because of the various price ranges in the land. But we do expect it to be about 10%, 15% higher than what we have registered in FY '24. That's our expectation.

All right, sir. My Last question would be what is the value of -- what is the current market value of the land bank which we hold overall as per your internal estimates?

Well -- I've always maintained one particular sentence in this, it is very difficult to say. It can range from INR 15,000 crores, INR 20,000 crores and beyond. And with every quarter, the value only increases by over 10%, 15%, 20%. But frankly, the value of that comes in along with the development of the project itself. And in that the value of that land is much more than that. So once it's executed, it can be much more valuable than that. That's the way we would say. And in the next 7 to 10 years, we already have projected that land bank, which we have to be used in the various projects, -- and that is going to give us all the revenues which we have -- which is there in the presentation already.

All right, sir. So unconstructed, we can consider baseline to be minimum INR 15,000 crores -- INR 15,000 crores, INR 20,000 crores?

Yes, yes. Surely. Yes, much higher than that, but conservatively, yes, INR 20,000 (sic) [ INR 20,000 crores ].

The next question is from the line of [ Deepesh Sancheti ] from [ Manya ] Finance.

Since you have a lot of cash in the books, what is the -- first I want to know what is the average cost of the company incurring every year to accumulate land parcels? And ahead of that is like how does the company plan to allocate its capital between ongoing projects, new developments and potential land acquisitions?

[ Deepesh ], we lost you. The third question, see, I think you'll have to repeat. I'm sorry, the line was bad. Can you just repeat your question?

Yes. I wanted to know since you have a lot of cash in the books, how do we plan to allocate that capital between ongoing projects, new development and potential land acquisitions?

Yes. See, the ongoing projects and new developments are almost the same as we say because every new development will have an increased cash inflows also, except for the SEZ commercial, if we decide to do the second part of -- second phase of SEZ also on a rental basis, then yes, we will need a cash flow for that. But otherwise, it will be paying for itself like just the residential one because we'll be selling and we'll be collecting cash. Having said that, the -- see, all the cash flows obviously would first be applied for the ongoing projects itself. And we also have to look at opportunities to acquire new land, which is always -- I think -- because that's the raw material for the future. So as of March '24, if you'll see, we have got various amounts which has been allocated, I think almost like INR 400 crores, INR 500 crores or more allocated for the land acquisition. So at that time, we had quite a few surplus amount available. In this year, we also -- we see a good amount of cash surpluses coming in. And the way the costs are going to be incurred between the allocation between the land and the projects could be in the ratio of about 30 to 70, probably. So 30 in favor of maybe land acquisitions, for which maybe additional money may have to be given or it will be just getting the executed -- the land -- the sales deed in our day for advances already given. But about 70% of this cash flows will be used for the ongoing projects, including much we are announcing, which will be starting rather. I hope I was clear in that. So I hope I've been -- I made myself clear. Have I answered all your questions?

Yes. Just wanted to know what is the average cost of the company incurring every year through accumulate land?

See, it's very difficult to say what is the average cost because the land acquisition are happening in different places where everywhere the rates are different and mostly our land acquisition happening on the untapped areas.

And structure of acquisition also is different because you might contract for, say, INR 100 crores of land acquisition today, but that INR 100 crores is payable when we -- meaning, vendor does certain things. So it's difficult to say what is the kind of amount we outlay towards land acquisition in particular year. It is a very dynamic thing. Having said that, I would definitely want to add, [ Deepesh ], that the track record of Ganesh Housing has always been to tap those land parcels which have not been in the -- I mean in the eyes of the general public and therefore, more often than not, the price at which it is acquired is one of the lowest ever in the market. That is the reason why all these lands which we have acquired over the period of years are giving us this kind of an excellent EBITDA margins of 70%, 79% and all. So I believe that this kind of -- looking to the track record, the trend would always be the same.

That's right. So are we planning -- I mean, going ahead, are we planning to hedge ourselves by doing a lot of JVs? And -- or are we still looking at acquisition of land and then developing it?

No. See, it's always as per the occasion and as per the opportunity which comes in. At this point in time, we have our hands full with all the projects which are there. And yes, the land has to be always kept -- keep acquiring. But if something comes up wherein we believe that a JV will give us -- because of the use of the brand Ganesh, which as I said, is the leader, if that can be used as we get a good project where we don't need to invest in the land, we just become the developer along with them or co-developer, we are open to such kind of projects, too. And look into the future, yes, that kind of things might come up, but nothing which we can announce at this point in time.

Okay. Just 1 last question was what are the presale figures which are projected for FY '25-'26 from our residential projects, if any kind of guidance would be helpful? And what is the expected time line for occupancy of the constructions commercial projects?

The first question, and I'll ask you to repeat the second question. But the first question, I think the guidance we would refrain from giving 2 years in advance, we've given it for this year. And I think towards the close of this financial year, we will be able to tell you more correctly or accurately what would be the numbers for FY '25-'26. So I'm sorry, I won't be able to give you any number at this point in time. And the second one, sorry, what you said?

What is the expected time line for achieving occupancy in our constructions commercial project?

Yes. So that is expected to complete be, let's say, around quarter 1 of FY '26. And the rentals are -- looking for the rentals, the clients and all starting from Q3, Q4 of this financial year itself. So I think in FY '26, it's a little guesswork at this point in time. But I think going above 30%, 40% rentals -- occupations are already people signing up on the agreements should be possible. That's what we look at. But there again, we would be able to give you a better picture in Q4 of FY '26 because by that time, a lot of traction with the expected or probable clients will come into this SEZ would have happened because that's when the real marketing starts.

Right. And our focus is only going to be Gujarat and around. Or are we looking at other states also?

As of now, Gujarat, Ahmedabad.

Only in and around Ahmedabad?

Yes.