Eldeco Housing & Industries LtdQ1 FY23Realty

Eldeco Housing & Industries Ltd

Q1 FY23 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Revenue guidance

Category 2

→The Lucknow real estate market size is expected to double in the next 3-4 years, driven by strong demand and government infrastructure investments.
→Eldeco aims to achieve fresh bookings of INR 300-400 crores in FY 2024, with a further increase in FY 2025.
→The company anticipates substantially increasing its top-line and bottom-line over the coming years by launching new projects and expanding operations.
→Annual fresh bookings, which have been around INR 100-150 crores, are targeted to exceed INR 1,000 crores over the next 3-4 years, effectively doubling or tripling sales volume.
→Realization (price per square foot) is growing rapidly, with a 20% increase last year and an expected further 10% increase this year.
→Revenue recognition will largely happen as projects are completed and handed over, with significant project completions like Imperia expected in FY 2024.

Category 3

→Eldeco expects substantial increase in top-line and bottom-line over the next few years, driven by new project launches primarily in Lucknow.
→Target fresh bookings for FY24 around INR 300-400 crores, increasing to about INR 500 crores in FY25.
→Market size in Lucknow is expected to double in 3-4 years as supply constraints ease, fueling sales growth.
→Margins on new launches anticipated to start around 30-35% EBITDA, potentially increasing throughout project life cycle.
→Realization per sq.ft is forecasted to grow about 10% in the coming year following a 20% increase in the last year.
→The company foresees doubling or tripling of business scale over the next 2-3 years, with earnings following the same upward trend.
→Dividend payout ratio expected to increase gradually to about 25% of profits in the long run, reflecting improving profitability.

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Yes

→Eldeco plans to raise debt in the current financial year to finance new business development and projects.
→The expected quantum of debt raising is about INR 100 crores.
→The company aims to finance business development with an optimum mix of external debt and internal equity.
→There is significant interest from real estate funds to invest in the balance part of new projects in Lucknow.
→No specific details on equity fundraising were disclosed, but internal equity is part of the financing strategy.
→The fundraising is aligned with the company’s aggressive growth plans and new project launches scheduled for the next 1-2 years.

Yes

→The company has a sales pipeline with area available for sale in existing projects of about 1 million square feet.
→Similar area is planned in forthcoming projects, excluding fresh undeclared projects.
→Total sale value from these projects estimated between INR 900 to INR 1,000 crores.
→All sales value expected to be booked over the next 2-3 years.
→Fresh booking target for FY ‘24 is about INR 300-400 crores, with a further increase expected in subsequent years.
→The company aims to significantly increase its top-line and bottom-line by launching new projects, primarily in the Lucknow market once supply constraints are unlocked.
→New launches are expected at higher price points due to market conditions improving since previous underwriting.
→Overall backlog/orderbook reflects strong demand but constrained by supply available for sale and approvals.

Yes

→Eldeco Housing & Industries Limited is planning significant capital investment in new project launches, particularly in Lucknow.
→They have received RERA registration and commenced construction for their new residential project, Latitude 27, with a formal launch planned by end of May 2023.
→Another project, Imperia Phase 2, is expected to launch in the second half of the year.
→Two additional new projects are in the pipeline, with land assembly and approvals underway, expected to be announced within the next quarter.
→The company is working on building a strong project pipeline for the coming 2-3 years.
→To finance these developments, Eldeco plans to raise external debt (around INR 100 crores) alongside internal equity.
→They have also made a land bank addition of 20.91 acres between April 2022 and March 2023.
→Real estate funds have shown interest in investing in these upcoming Lucknow projects.

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