Ganesh Housing Limited (526367) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Ganesh Housing Corporation Limited Q3 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rajat Gupta. Thank you, and over to you, sir.

Yes. Thank you, Sagar. Good afternoon, everyone, and welcome to Ganesh Housing Corporation Limited earnings call to discuss the Q3 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 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 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's my pleasure to welcome you all to the Q3 FY '25 Earnings Call for Ganesh Housing Corporation Limited. I trust that you have had an opportunity to review our latest presentation shared on the exchanges. We are pleased to state that the third quarter of FY '25 has been yet another remarkable period for Ganesh Housing, continuing the momentum built over the previous quarters. With every passing quarter, we have surpassed all our earlier numbers and have grown from strength to strength, further establishing our credentials as Ahmedabad's foremost real estate company. First, the industry highlights. India's real estate sector has maintained its strong trajectory in the entire year of 2024. With institutional investment in Indian real estate reaching an all-time high of $6.5 billion, which is about 22% growth from $5.4 billion in 2023 calendar. This surge was driven by the industrial and warehousing segments, particularly, which attracted $2.5 billion, accounting to about 39% of the total investments, followed by the office sector, which is having a share of 36%. The residential sector also showed significant momentum, growing 46% year-on-year to $1.1 billion. External investments comprised 66% of the total inflows, while domestic investments also rose, and they rose by 27%. The final quarter of 2024 was particularly dynamic with about $1.9 billion investments and local investors contributing 43% of the total inflows, underscoring growing confidence in India's expanding real estate landscape. Ahmedabad also has been marching ahead. The Ahmedabad real estate market has reached a significant milestone in 2024 with residential unit sales taking a 10-year high. Residential sales grew by 15% year-on-year with around 18,400-odd units sold compared to 16,100 in 2023. The mid-range segment comprising properties priced between INR 50 lakhs to INR 1 crore did dominate the sales, but the premium segment also has seen an increase. The year also witnessed a record introduction of 22,000 units, reflecting strong dynamic market. Notably, the office transactions volume surged by 64% compared to the previous year with 3 million square feet transacted, driven by the city's evolving economic landscape and robust government support. Ahmedabad emerges as a financial and economic hub, supported by initiatives like the establishment of the international financial services center has further solidified this solution as a real estate hot spot. Ganesh Housing also saw a similar traction in the office space with the IT SEZ, Million Minds attracting huge inquiries. Now, on the operational highlights. Ganesh Housing continues to play a pivotal role in driving Ahmedabad real estate growth. Let me share a few updates on the ongoing projects. Malabar Retreat, first. The project was which launched at the end of quarter 4 of FY '24, continues to receive strong market traction. Construction has progressed to about 22% and presales have crossed over INR 110 crores. Demand from premium apartments has been rising. And in our case, it is expected to rise further as construction milestones are achieved. The sample apartment is being ready anytime now. And after that, we see that this will actually increase. This project will be a landmark project in premium housing in that area of Ahmedabad and we are sure that we exceed customer expectations. On the Million Minds SEZ Phase I, this marquee commercial venture is almost 1 year ahead of schedule, with completion expected by end of Q4 FY '25, that is this year, is expected to give possession for fit-outs by April-May 2025. Marketing efforts targeting major IT players have garnered significant, almost overwhelming interest reinforcing the confidence with which we started. This project aligns with Ahmedabad's emerging hub for technology and innovation, and we are committed to ensuring its success. I'll talk about more of that later on in the question-answer session. On the one front-page, this commercial project, again another marquee project on SG Highway, it spans about 1.8 million square feet as leases the possession of the process of securing all necessary approvals with the plan having been submitted. The project is projected to generate revenues of about INR 2,100 crores and is set for completion by H2 FY '28. It's strategic location and design makes it a highly anticipated addition to Ahmedabad's commercial landscapes. To remind you here, the commercial landscape of Ahmedabad was really quite vacant all these years because after COVID, people had not been investing in new commercial spaces. So with this, actually the entire traction has started, and we believe that we really go places in the coming years. Now, on Godhavi township, I already informed you earlier, the surrounding project has attracted huge interest and work on building sports complex is to begin soon. With this, the buzz around this area where we have 1 of the largest land banks is building with every passing day. We believe that the earlier plan where we had earlier announced that we shall be working on the monetization of this in Q2 FY '26 is on schedule. In addition to these developments, we are actively scouting opportunities for various land acquisitions in high potential areas. Our extensive land bank remains a corner stone of our strategy, enabling us to respond swiftly to market demands while maintaining cost efficiency. Now to come -- coming to the financial performance. In Q3 FY '25, Ganesh Housing has once again surpassed all earlier quarters. Revenue surged to INR 264 crores, reflecting a 44% year-on-year. EBITDA stood at about INR 218 crores, a growth of 37% Y-o-Y with an EBITDA margin at 83%, supported by effective cost management and operational efficiency. PAT reached INR 160 crores, a 60% increase over Q3 FY '24, resulting in a PAT margin of 61%. For the 9 months ended December 2024, our revenues have reached INR 734 crores, which is a growth of 19%. EBITDA has grown by 23% to INR 589 crores and PAT has grown by 25% to INR 433 crores. This PAT is almost equal to the entire full year's PAT of FY '24. This robust performance positions us well to exceed our predicted 30% to 35% PAT growth for FY '25, as already told you to earlier. Ganesh Housing is poised to capitalize on Ahmedabad's growth trajectory. By leveraging our extensive land bank, we are uniquely positioned to deliver high-value developments across residential and commercial segments. Our focus remains on mid to premium housing, driven by evolving consumer preferences for spacious and luxury homes. Despite significant investments, our balance sheet remains robust with near-0 debt and strong liquidity. This financial strength enables us to pursue growth opportunities and deliver long-term value to all stakeholders. We also remain committed to leveraging technology and sustainable practices to enhance project efficiency and reduce environmental impact. Our road map for the next 5 years has already been announced. It includes the expansion of our presence in Ahmedabad's Ring Road corridors. With a strong pipeline of projects, we are confident in our ability to sustain growth and drive innovation in the real estate development. In closing, I would express gratitude to the entire Ganesh Housing team for their unwavering support and of course, to the entire community at large, all the stakeholders. Together, we are reshaping Ahmedabad Skyline while creating enduring value for all our stakeholders. Our commitment to excellence, innovation and customer satisfaction will continue to guide our journey forward. With this, I will open the floor for questions. Thank you.

[Operator Instructions] Our first question comes from Akash from Nomura.

Am I audible?

Yes, you are.

Sir, congrats on the great results. So my first question is on your presales. So can you give me an expectation of what kind of presales can we expect over the next 2 years? And second question is on the demand trend in Ahmedabad. Like, how are you looking at on-the-ground demand, any negative signs with respect to demand? And second is like how are you looking at the pricing trends overall?

Let me start with the demand and the pricing strength first. Ahmedabad demand doesn't seem to be dipping. In fact, yes, for the last 1 quarter, probably that's been a little slower than ever before. But because of the developments which are happening continuously in this area, the demand hasn't slowed down or it hasn't dipped for sure. The prices also have been on the increase year-on-year in line with every other development, whether it's part of the construction or even just still inflationary trends. And the prices for real good apartments or office complexes, the premium ones, has never really abated. On the presales, if you really see the project which we have today is the Malabar Retreat, okay? That is supposed to be completed, let's say, in the next 2 years. That's the only one which we have on the ground. Apart from that, yes, we will be having the residential projects of SEZ. We had Million Minds that are not processing those, maybe in the next 6 months, that will be -- whenever it is announced, we will be able to talk about the presales at that point in time. At this point in time, I think we'll only talk more Retreat. But for the next 2, 3 years, yes, there will be Retreat, which probably would have been completely sold off, then there will be SEZ residential 1 and 2. And 1 more addition would also happen is 1 commercial one, which I just talked about. That is likely to come up, let's say, in the next quarter-or-so, that will add to presales from -- starting from next -- maybe second or third quarter of FY '26. And not to forget the township project that is the Godhavi Project, let's call it as a Godhavi Project because they it's a huge land bank there. That is also going to -- as told you just now is going to start maybe in the Q2 of FY '25-'26. If that happens, then that will be a big presales sell. So I would want to say that as of today, if you really want to talk about the presales, I think we should wait for a real number, a good number. We have to wait for Q2 FY '26.

Our next question comes from Krishna Shah from Ashika Stock Broking.

So my first question is on the margin line. So how are our net EBITDA and PAT margin is so high? If you could just explain our moat for these numbers?

Did you complete your question or should I go ahead with the answer?

Yes, this is my first question, so you can answer it.

Yes. See, these are all historically invested land banks. And, therefore, the investment costs have been quite low, and, therefore, automatically, when we sell it at this juncture where the pricing is really high in the market, the margins -- the cost being so low, the margins are very high. So the margin is only a factor of the cost itself being lower.

Got it. Got it. So there's a land that is driving this margin. So if you just quickly explain for any of your competitors, what would be the land prices percentage of the venue cost -- line cost and what is yards currently?

You're talking about price per square yard you're talking about or as a percentage...

No. Land cost as a percentage of revenues.

We did not get your question exactly.

I'm just trying to ask that if, for example, your competitors, what would be the land cost, which would form part of our cost of goods sold, [Foreign Language] versus what is yours currently as a percentage of revenue, which is why the margins are so high, right?

There are 2 parts to my answer. One is, if you are developing a project in case one is developing a project, generally land cost depends on what area, what location you are having in your project. But a good yardstick is provided by RERA where RERA allows you to withdraw about 30% of the collections of project, assuming it to be land cost.

Okay. Got it. Got it.

However, in our case, there are -- meaning, our margins, net margins and our EBITDA margins are high only because of 2 factors. One, a lot of our revenue and profits are derived from sale of land and not from projects. And secondly, the land also, whatever we have sold is one, which has historically acquired about 7, 8 years back and that is why historical cost of that land was very low. However, this is sold at real market prices. And hence, the margins are really high.

So let me add to this. See, if you really want to have a comparison, Ganesh Housing has been always investing for our future growth. So wherever the land banks have been acquired, they have been acquired with the vision for the next 5, 10 years and more. And, therefore, historical cost of the land has always been lower in all the projects also. Now that cannot be probably the same, if you have to compare with others because all other developers maybe having a similar kind of a land bank, others may actually do a land bank buying and add value to it in terms of construction. So they cannot be any one, what I call, as measuring rod for all the projects. But generally, the land cost can be comparative to the current market prices of that, if it's bought at that time and then developed, it can be very low. It has been already there in the books like in our case. I hope that clarifies.

Just to add to what Raviji just said. In fact, I would go one step further in setting that we would have a competitive edge or other developers because generally, we tend to develop projects only on the land, which we historically are on. So I -- there are my chances of making higher margins are very, very high as compared to anybody who acquires land presently from market.

Got it. Got it. Sir, just a last question. Firstly, how much land bank do we currently have? And if that is paid for everything or not? Are there any payments left? And secondly, about the revenue that we have currently of INR 2,641 crores in this quarter, what has been the split between land sold versus units sold?

See, the total land bank we have in Ganesh Housing is subsidiary, and which are fully paid around 535 acres of land and this land is fully paid for and fully account for. And in terms of the breakup of the sales, we will land and this year, around 90% to 95% of the sale is coming from the land in this quarter, and the rest is coming from the project sales.

Okay. And going forward, where do you see this revenue split going?

See, this at least for the coming quarter and the coming year, we see this momentum will keep on going on. And subsequently, we will have on substantial revenue coming from this developed project, 1 or 2 of them, which we explained in the earlier call was Malabar Retreat and will have a substantial presale value that will add lot to the top line and bottom line.

And 1 more thing. This mix is going to remain so for some time because SEZ what we are developing processing area of SEZ is made for long-term lease. So we will not -- we will be incurring a lot of expense. We will be constructing projects. However, we will be earning rent in terms of revenue. So there will not be lump sum sale kind of thing.

Got it. You're currently forming the annuity income in the Million Minds project, right?

Yes. Correct.

[Operator Instructions] Our next question comes from [indiscernible] from ULJIK.

Am I audible?

Yes, please. You are.

Yes. So my first question is regarding the one commercial project. So are we still on track to begin the construction this quarter? And what are the initial market responses to this development?

No, it is -- it may not be starting this quarter because we -- the approval of the plans are -- have been submitted and the approvals may or may not come by this quarter, but surely in the next quarter. And as I said, in terms of the demand, there has hardly been any good commercial space has been given out off late. And people have diverted all the attention from commercial to the residential ones, 1 that after the COVID impact for the 2 years up to '21, '22. And, therefore, addition of good commercial spaces have hardly been there. Now, people have started, and, therefore, we do believe that One Thaltej, demand of that will be high as soon as we start. And generally, we have always been getting a good traction for this kind of spaces, especially the kind of a building that we are building. And this is going to be very close to a commercial hub. Like there's a mall opposite, there are various offices. I mean spaces also, it's quite close towards the -- you might be knowing Palladian, mall of Bangalore -- Bombay, that's there in Ahmedabad also opposite to that. It's going to be that. So -- and also it is there very close to the next CBD that is the specialty demand. So I think this particular line has been really growing. So we do believe that we'll get a very good traction for this.

That's perfect. That's perfect. Okay. And I have 1 more question regarding -- we try to comment on the trends and consumer preferences in the residential properties in the mid-segment, and, say, the premium segments, 3 BHK-or-so in Ahmedabad or are there any shifts right now towards any other segments?

It maybe PSK, premium or this has been the ones, which have been most in demand.

The next question comes from Ishita Lodha from Swan Investments.

Sir, is it possible to comment on the profile of the buyers of the land?

That's not possible right now. No. But they are very well known developers of though not in [indiscernible] but all are having very, very creditable background. So basically take it off-line for the time being we can't.

No problem. And I have another question. Our land bank is about 35 acres. And even in last con-call, you had mentioned it was 535 acres, and we had sold some land. So at the same time, we are buying some land. So are we buying it at the same?

Yes, it is sale -- the buying can happen at different locations, Ishita. And the selling is happening around the Godhavi as we had said last time too, we do have surplus land around that, which we had done it with development cost objective as well as land sale objective itself. So we do have enough for the Township project. So other than that, whatever you believe can be a good 1 to sell it off. We have been selling in that area too. Buying has been happening at different locations on a required basis.

So it is nearby area or it is far off like...

Nothing in Ahmedabad is really far away. Even Godhavi from where we are sitting right now, One Thaltej is a matter of 20 minutes. So we are buying land not from a distance perspective, we're buying it from a future development. So even if let's say this, let's say, 20 kilometers away or 15 kilometers away, we believe that, that is where the expansion of the city will happen. This is what we have done, whether it was the SEZ Million Minds what we are doing today, that was bought historically many years back. Godhavi also was bought 15, 20 years back. So this is well in advance that you're looking at. So distances many at times -- by the time the development comes in, they vanish. And the distances are hardly there.

Okay. So my understanding is right that the thought process behind buying and selling of the land is because we believe that the land where we are buying, where the development would be better and there we could do better sales.

Yes, it's a mix also. So, even if we do believe that the land that we have in Godhavi, we are selling some places nearby, this all areas, which are also developing. We actually look at saying that whether it makes better sense to develop that piece of land or it makes sense to sell it off if we are getting a good price. And sometimes, the latter wins our development. That's where we sell. These are part of the vertical, right? So we can sell wherever we believe that, that makes more sense than just developing it.

The next question comes from Rohit Shinde from Market Memories Wealth Advisors Private Limited.

Am I audible?

Yes, you are.

Yes, Rohit.

Yes. So I have 2 questions. So my first question is, how has the Malabar Retreat project advanced given the earlier weather-related delay? And are you on track to meet the revised completion time line?

There's no revise. Actually, Malabar Retreat will, like all other projects, we are sure that it will be completed before time. As you know, Exotica was completed almost 10, 12 months before the due date. The same thing would happen because in a matter of a few months, let's say, by 7, 8 months, the structure has come to almost in the 2 towers comes to almost INR 6 crore and INR 8 crore. So we believe that it's absolutely on track, maybe even earlier. And the sales part of it will pick up once the viewing happens on the sample flats, which is expected in 15 days where from now, maybe or 1 month. Yes, Neeraj.

I think there is slight confusion here. There is no delay in terms of construction. I think you're coming out of the last quarter call, where we have said the progress has been a little slower. Now, we explained during that call also the progress was slower because of the rainy season. And whenever we account for the total completion period, we account for those contingency also monsoon period where the work remains slower. So there is nothing like it is not as per the schedule or it is delayed. It is as per the schedule only. And this progress is well accounted for when we take into account the total period of the completion.

Got it, sir. And my second question, sir, is that you have deployed precast technology to reduce labor dependency across your projects. So are there plans to adapt other innovative construction methods across projects?

At this point -- see, that's a continuous development, maybe [indiscernible] is also there. [indiscernible] would you like to take that?

So we are always exploring new technologies even as we develop the township, we can probably use technologies like 3D printing for smaller villas. So we are always exploring technology. So as and when the new projects come up, depending on the size and scale of the projects, we definitely implement on newer technologies.

The next question comes from Sarthak Asasthi from Sea Funds Management India Private Limited.

Am I audible?

Yes.

Yes. So sir, my question is on the supply side in the Ahmedabad city. So how much supply we have seen increase in the past 5 years and how much we are expecting in the coming 5 years? Because that will be the defining the pricing point in that city. So can you brief on that?

Now in terms of the supply, if you see, the latest report which is published there in terms of the total launches, in fact, there is sudden reduction in terms of the launches. But whereas there is an increase in the absorption. So while there is -- if you see on the demand side, though, the market is progressing, but on the launch side, there's a little, I'm saying, hold by the developer largely because of there's one big major event, which is taking place in Ahmedabad is the revision of the [indiscernible]. Now because that is impacting the cost of the project. So there is which way the developers are waiting and watch before launching the project.

So we are not expecting a lot of supply side, meaning supply side better. And secondly, the areas in which we operate, in fact, Ganesh Housing happens to be the one of the largest developer in that area. So again, microgeography while also we don't expect a lot of competition from local developers or developers operating in that area. From that perspective, actually, we are kind of, I would say, well equipped, and we are safe.

Okay, sure. My second question is on that we have a moat in Ahmedabad, like we have an edge over other companies as we have a land bank. So are there any plans to cater to entering new cities by emerging cities, which can be the future? So we are -- my question is on the capital allocation part. As we are under cash surplus, so where we are going to allocate that capital so that the returns to the shareholders should be maximum?

So at this point in time, we have on hand in terms of developing various products which we have announced in Ahmedabad itself. And, therefore, though we do explore other cities, we haven't yet gone into any other cities, and there are no immediate plans of that. Having said that, I don't think it was very good opportunity comes in, it could be ignored. But there are enough has been happening in Ahmedabad, which is keeping us busy. And we do believe that in the next 2, 3 years also, this will continue to be busy.

The next question comes from Prit Nagersheth from Wealth Finvisor.

Yes. Just 1 clarification. Sir, you mentioned Godhavi Township to be launched by quarter 2 of financial year '26. Is that what you said?

That's right. This is the same time last quarter, we had said that looking to all the developments which are happening there, we are trying to realign our planning in line with that. And, therefore, yes, as of today, is absolutely on track. The base stay as what announced already, Q2 FY '26.

Got you. Got you. And what do you think would be the impact of the Jantri or the circle rate increases that have been planned? How do you see that impact Ganesh?

At this point, it is very difficult to say exactly because nothing is certain. There have been all various ways, various values, various news, which has been coming in, but nothing really concrete. So it's very difficult to really pinpoint as to what could be the impact. I think that wait for the dust to settle to be able to sell anything very concrete. Generally, as you see, this can -- it can be beneficial also going forward. It has got is both pros and cons actually, it's a debate, which is exactly what's going on right now also in the market. So I think we'll have to wait for some time to review the comment on that.

Right. And lastly, for a bookkeeping question. We seem to be on track for the targets that you have mentioned, guidelines for this financial year. What about the next financial year? Any guidelines that we can have from you?

We'll have to first -- when we have our budgets done in the next board meeting before the next year, I think that will be the appropriate time to talk about it in the year-to-year. So I think in the next call, we'll surely tell you what would be the targets. Because we are not giving the projections as such. We've been only giving 1-year view. So I think we'll do that in the month of May.

[Operator Instructions] The next question comes from Khushwant Pahwa from KPAC.

Am I audible?

Yes.

Yes, you are.

Congratulations on great set of numbers. My question is regarding your project Million Minds. You mentioned that you'll be finishing the construction in Q4 of current financial year and giving it for fit-outs April onwards. I also recall 1 of the discussions in previous con call, wherein we said that as per Ind AS 115, we can only book revenue when the construction is complete or OC is given and sale deed is happening. So just wanted to understand when do you see the revenue for this project getting booked in this fiscal year or next fiscal year?

This will be in FY '26 starting. I'll explain. As you know, Million Minds is the Phase 1, what we are doing right now, it's all going to be on the lease-out basis. It's going to be giving us continuous annual lease rentals. And the kind of traction, I told in my opening remarks that I'll be talking about the traction in the SEZ, now is the time to talk about the Million Minds. Though they are about 14 floors -- 14 of 15 floors including the general utility one, the kind of marketing, which has been done and it's been continuously been happening at various road shows in various cities, top tier cities, we have got inquiries for leasing out almost 30 floors. So it's almost double than what we have available as an inventory. That is the traction, which I earlier also told about the commercial spaces really receiving very good attraction in the city of Ahmedabad. So with that, we do believe that though earlier in terms of whatever we have said that the least happens once the building is completed, it might happen for -- in the next 6 months fully leased out. The way the traction is that we'd be able to get a majority of the lease rentals in the next FY '26 itself. So almost like what we had said about INR 70 crores is the lease rental we'll be earning on that year-on-year. The way it is, it will be more than INR 70 crores. It'd not be less, but even more than that. And also, the lease out can happen because of the demand, which has come up, it can happen quite immediately, giving us almost the entire INR 70-odd crores or more in the year FY '26 itself. So the revenue will start flowing. It's not going to sold. If it was sold, yes, it could have been -- as and when sold, it would have come up. If it is leased out in rentals for that month itself.

Understood. Understood. And just 1 more question. Your land bank continues to be around 530, 535 acres. Can you just give an idea about how much land was bought and sold in this quarter in terms of acreage?

We can tell you the sold. The ones which are there in acquisitions can always be 521 that is already acquired. Obviously, amount 25, 26 acres have been sold, and there will be more additions also because there are which are being added to it.

Congratulations and all the best.

Thank you very much.

Thank you.

The next question comes from Yasmin from Antique Stockbroking.

Congratulations on good set of numbers. My question pertains to basically 1 is land sales. I think you sold around 20, 25 acres last quarter also, right? A similar number this quarter?

True. Very true. Just around the same '23 and now '25. Correct.

And what was the sales from that in terms of crores or rupees?

I think it was almost like INR 250...

No, roughly around 90%.

90%.

Sorry, 90?

90% of the total revenue of that quarter comes from the land, INR 266 or 90% of the revenue.

[Foreign Language] That is from the land sales.

Yes.

This land was in that Godhavi belt, right?

Not necessarily, like we have a lot of surplus land in and around Godhavi like there is an area like Garodia Nagar, which are adjoining to the Godhavi area, where we are holding a surplus land also.