Eldeco Housing

Eldeco Housing reported a robust Q1 FY26 with booking value soaring to Rs.221 crores, marking a significant 274% year-on-year increase, driven by successful new project launches. Collections also demonstrated healthy momentum, growing 41% year-on-year to Rs.78 crores, indicating strong cash flow generation from ongoing projects. Deliveries for the quarter comprised 101 homes, totaling 85,000 square feet, primarily EWS and smaller homes.

The quarter saw the successful RERA registration and launch of Eldeco Hanging Gardens and Eldeco Skywalk, both receiving strong market responses, with Hanging Gardens selling 84% of its inventory within a week. Looking ahead, the company plans to launch its flagship integrated township, Eldeco Solano Garden, in FY26. This project, spread over 50 acres, is expected to have a gross development value exceeding Rs.1,000 crores, with its first phase (plots and villas) targeting Rs.300-400 crores GDV within the current financial year.

Construction expenditure in Q1 FY26 stood at Rs.39.3 crores, a 10% year-on-year increase, but management acknowledged it was not as strong as prior quarters. They anticipate a significant ramp-up in coming quarters, expecting it to stabilize at Rs.50-60 crores per quarter by year-end, as execution begins on recently launched projects. Revenue recognition, which follows project completion, is expected to see a substantial boost in Q3 and Q4 FY26, particularly from Imperia Phase II, with overall numbers looking 'very good' from FY27 onwards.

The EBITDA margin for Q1 FY26 was reported at 17.6%, lower than historical averages. Management attributed this to a mix of revenue recognition from lower-margin EWS and low-income housing units, coupled with the front-ending of marketing expenses for new launches like Hanging Gardens and Skywalk, which are treated as period costs. They expect the EBITDA margin to revert to its mean of 30-40% in subsequent quarters as higher-margin projects contribute to revenue.

Sales for the Trinity project have been sluggish, prompting a planned relaunch in the next quarter. Latitude 27 bookings saw a temporary slowdown due to cannibalization from the newer, slightly lower-priced Skywalk project within Eldeco City, though Latitude 27 is 65-70% sold. The company is in the process of 'unwinding' the Bareilly project transaction in the next couple of quarters due to land issues and delays, but expects to recover its principal with a minimum guaranteed return.

Average realizations have stabilized at Rs.6,500 per square foot, a significant increase from Rs.3,500 in FY20, which management considers sustainable and the 'new normal'. In the Lucknow market, Eldeco estimates its market share to be less than 10% of the approximately Rs.5,000 crores annual sales, but sees significant opportunity for expansion as supply constraints ease and their launch pipeline grows, aiming to be among the top two or three players.

Eldeco continues its land aggregation efforts, with approximately 35 acres already under planning across three different locations and under further aggregation. This strategy is crucial for maintaining a robust launch pipeline and is cited as a key factor contributing to the company's historically higher EBITDA margins compared to the industry average. Management expects further progress on this front in the coming quarters.