Eldeco Housing Q4 FY23 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Management growth scorecard
Revenue
Category 2
Margin
Category 3
Fundraise
Yes
Order
Yes
Capex
Yes
3 of 5 growth signals are positive.
Full analysisRevenue 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.
See what Eldeco Housing management said on margin guidance — free account, 30 seconds.
Fundraise plans
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.
See what Eldeco Housing management said on order book — free account, 30 seconds.
Capex plans
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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Margin guidance
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.
Order book
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.
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