GANESH HOUSING LIMITED — Q2 FY25 earnings call

Call held 21 Oct 2024

Management summary

Ganesh Housing Corporation Limited delivered a stellar Q2 FY25, with revenue growing 52% year-on-year to ₹250 crores and PAT surging 84% to ₹159 crores, driven by strong margins. The company maintained robust financial health with ₹250 crores in cash and zero debt. Strategic projects like Million Minds SEZ and One Thaltej are progressing well, with significant long-term revenue potential and a focus on premium residential and commercial segments in Ahmedabad.

Highlights

  • Q2 FY25 Revenue of ₹250 crores, up 52% YoY.

  • Q2 FY25 EBITDA of ₹215 crores, up 76% YoY, with an 86% margin.

  • Q2 FY25 PAT of ₹159 crores, up 84% YoY, with a 63.5% margin.

  • H1 FY25 Revenue of ₹470 crores, up 8% YoY.

  • H1 FY25 EBITDA of ₹371 crores, up 9% YoY, with a 78.8% margin.

  • H1 FY25 PAT of ₹272 crores, up 10% YoY.

  • Cash and bank balances of ₹250 crores as of September 30, 2024, with 0 debt.

  • Malabar Retreat project achieved ₹100 crores in presale revenue.

Key financials

3 periods

Headline

  • Cash and Bank Balances
    ₹250 Cr

Q2 FY25

  • Revenue
    ₹250 Cr
    YoY +52%
  • EBITDA
    ₹215 Cr
    YoY +76%
  • EBITDA Margin
    86%
  • PAT
    ₹159 Cr
    YoY +84%
  • PAT Margin
    63.5%
    YoY +11.1%

H1 FY25

  • Revenue
    ₹470 Cr
    YoY +8%
  • EBITDA
    ₹371 Cr
    YoY +9%
  • EBITDA Margin
    78.8%
  • PAT
    ₹272 Cr
    YoY +10%

What they filed

Q1 FY27: revenue up 6750.0%, net profit up 560.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue242 255 39 4 104 −57%0 −100%17 −56%274 +6750%
EBITDA209 211 17 -12 79 −62%-11 −105%1 −94%112 +1033%
Net profit155 156 11 -10 57 −63%-9 −106%-1 −109%46 +560%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Profitability

  • Full Year PAT Growth Profitability · FY25 · High confidence around 30% year-on-year
    Our PAT for 6 months is almost 60% of the PAT for the full year FY'24, justifying our expected and projected growth in the bottom line by around 30% year-on-year.

    — B. Ravi

  • Bottom Line Growth Profitability · High confidence 30% to 35%
    So I think we are well on course to achieve that 30% growth year-on-year.

    — B. Ravi

  • Sustainable Growth CAGR Profitability · almost a decade, for almost 8 years to 10 years · High confidence 25% to 30% growth year-on-year
    We believe that we will be able to maintain this 25% to 30% growth year-on-year which is sustainable.

    — Rajendra Shah

  • Sustainable Growth CAGR Profitability · 8 years to 10 years · High confidence 20%, 25% CAGR
    And therefore sustaining this 20%, 25% CAGR looks to be definitely done.

    — B. Ravi

  • Bottom Line Growth (next 1-2 years) Profitability · next 1 or 2 years · High confidence 20% to 30%
    See, those numbers we have already given in terms of 20% to 30% growth in the bottom line. The top line we say might not be the certain thing, but bottom line, we are pretty sure that we will be targeting in those areas.

    — Neeraj Kalawatia

Project Revenue

  • One Thaltej Commercial Project Estimated Revenue Project Revenue · High confidence INR2,100 crores
    Spanning a saleable area of 1.8 million square feet, this project is set to generate estimated revenues of about INR2,100 crores, and we expect the construction to start in the next 3 to 5 months.

    — B. Ravi

Project Timeline

  • One Thaltej Commercial Project Construction Start Project Timeline · High confidence next 3 to 5 months
    Spanning a saleable area of 1.8 million square feet, this project is set to generate estimated revenues of about INR2,100 crores, and we expect the construction to start in the next 3 to 5 months.

    — B. Ravi

  • Million Minds SEZ Phase 1 Completion Project Timeline · Q1 FY26 · High confidence early first quarter of FY'26
    So interest being there, we are quite sure that the pre-leasing, what you are saying, because the project is likely to be completed in the early first quarter of FY'26, which is just about 5 to 6 months from now.

    — B. Ravi

Project Rental

  • Million Minds SEZ Rental Rate Project Rental · High confidence INR70 per square feet
    And coming to INR70 per square feet, what you said, we believe this is maintainable and sustainable rent, and we kind of stand by this.

    — Rajendra Shah

Long-Term Development

  • Total Saleable Area Long-Term Development · next few years · Medium confidence 33 million square feet
    And in the investor presentation, in Slide Number 20, I see that there is a target mentioned that the company wants to develop 33 million square feet in the next few years, having a total presales value of INR17,500 crores.

    — Ishita Lodha

  • Total Presales Value Long-Term Development · next 8 years to 10 years · High confidence INR17,500 crores
    All these INR17,500 crores what we are saying we will achieve is going to happen on land which is already acquired and paid for.

    — Rajendra Shah

Capitalization Rate

  • Capitalization Rate for Lease Assets Capitalization Rate · High confidence 7% to 8%
    7% to 8%.

    — B. Ravi

Development Mix

  • Commercial Development Percentage Development Mix · High confidence about 25%
    Meaning, overall if one wants to see, about 25% of the development will be commercial and 75% will be resi.

    — Rajendra Shah

  • Residential Development Percentage Development Mix · High confidence 75%

    — Rajendra Shah

Risks & concerns

  • Construction delays due to weather

    medium

    Malabar Retreat project saw slower progress (12% completion) in Q2 FY25 due to heavy rainfall impacting basement construction.

    Management acknowledged

  • Potential oversupply in Ahmedabad real estate market

    low

    Management believes oversupply is unlikely in their operating areas (SEZ commercial, premium residential) due to strong demand.

    Analyst downplayed

  • Increase in labor costs

    low

    Management stated labor costs have increased but their dependence is reduced by deploying precast slab technology.

    Analyst acknowledged, mitigated

  • Project approval delays

    low

    Management highlighted Gujarat as a progressive state with seamless approvals, unlike Mumbai, and they don't face such problems.

    Analyst downplayed

Areas of evasion (1)

  • Specific names of potential partners for Million Minds SEZ

Q&A highlights

3 direct
Impact of competition and rising land prices on Ganesh Housing's strategy and profitability, and the sales/leasing strategy for Million Minds IT SEZ. Direct
any such kind of an increase in price which a competitor will have, because they're buying the land now, will drive up their prices, ultimate sale price of the projects completed, which will have a perfect impact on Ganesh Housing, because their land price being the same, we will still be, on the final prices, still be much cheaper... The Million Minds marketing efforts... I'm unable to take the name at this point in time, at least till December, by which time we'll be actually finalizing everything.

Addresses market dynamics, competitive advantage from historical land bank, and provides a timeline for the Million Minds SEZ monetization strategy (sale vs. lease).

Asked by Rishith Shah

Reasons for the slow construction progress (12% completion, up 2% QoQ) for Malabar Retreat and the outlook for price hikes in the Ahmedabad market. Direct
in terms of Malabar Retreat, you see, the last quarter has been largely dominated because of the rainy season. And largely where most of the construction activity was happening for the basement... prices per square feet in Ahmedabad is one of the most affordable if you compare any Tier 2 city or some metro cities. Meaning, there is still a lot of hope for price to increase without affecting affordability.

Explains project execution challenges (weather-related delays) and provides a positive outlook on Ahmedabad's real estate pricing, suggesting room for further appreciation without impacting affordability.

Asked by Eesha Shah

Clarification on the INR17,500 crores projected sales value, whether it includes future price increases, and the sustainability of the 25-30% CAGR. Direct
All these INR17,500 crores what we are saying we will achieve is going to happen on land which is already acquired and paid for... We believe that we will be able to maintain this 25% to 30% growth year-on-year which is sustainable... And therefore sustaining this 20%, 25% CAGR looks to be definitely done.

Confirms that the significant long-term sales target is based on existing, already-paid-for land, and reiterates strong confidence in achieving a high, sustainable CAGR without relying on future land acquisitions or speculative price increases.

Asked by Rajesh Jain

3 min read 6 chapters

Detailed narrative

Q2 and H1 FY25 Financial Performance

Ganesh Housing reported a stellar Q2 FY25, with revenue reaching ₹250 crores, a significant 52% year-on-year increase. EBITDA grew by 76% to ₹215 crores, achieving an impressive 86% margin, up 15.6 percentage points from the previous quarter. Profit After Tax (PAT) surged 84% year-on-year to ₹159 crores, with a healthy PAT margin of 63.5%. For the first half of FY25, total revenues were ₹470 crores (up 8% YoY), EBITDA was ₹371 crores (up 9% YoY) with a 78.8% margin, and PAT stood at ₹272 crores (up 10% YoY), representing almost 60% of the full year FY24 PAT. The company maintains a strong balance sheet with ₹250 crores in cash and zero debt as of September 30, 2024.

Ahmedabad Real Estate Market Dynamics

The Ahmedabad real estate market is experiencing robust growth, with residential sales up 11% year-on-year, totaling around 4,600 units. Demand for 3 BHK properties remains strong, accounting for 56% of the market, and premium housing units above ₹1 crore saw a 41% increase. Commercial real estate also shows significant momentum, with a recent land transaction by Ahmedabad Municipal Corporation at ₹3.07 lakhs per square meter, marking a new high. Management believes Ahmedabad's prices per square foot are still affordable compared to other Tier 2 and metro cities, indicating further potential for price appreciation.

Million Minds SEZ Project Update

The Million Minds SEZ project is progressing well ahead of schedule, with Phase 1 expected to be completed and ready for fit-outs by Q1 FY26 (April-June 2025). Marketing efforts targeting large IT companies have commenced, and the company is seeing strong interest across all 12 floors planned for lease or sale. Management is confident in achieving a rental rate of ₹70 per square foot, which is considered maintainable and sustainable. The decision between outright sale or leasing for the SEZ will be finalized within the next 1-2 months, with strong traction potentially accelerating the start of Phase 2.

Malabar Retreat and One Thaltej Commercial Projects

The Malabar Retreat project, launched in Q4 FY24, has received a strong market response, accumulating ₹100 crores in presale revenue. Construction is 12% complete, with slower progress in Q2 FY25 attributed to heavy rainfall impacting basement work, but the project remains on schedule for March 2027 completion. The One Thaltej commercial project, spanning 1.8 million square feet, is in its final approval stages, with construction expected to commence in the next 3 to 5 months. This project is projected to generate estimated revenues of ₹2,100 crores over its lifecycle.

Land Bank Strategy and Future Growth

Ganesh Housing holds a total land bank of approximately 535 acres, strategically located in the western and northwestern parts of Ahmedabad, aligning with the city's growth trajectory. The company sold 23 acres and acquired 25 acres in the current quarter, emphasizing continuous land acquisition as a raw material for future development. Management aims to develop 33 million square feet in the coming years, with a total presales value of ₹17,500 crores, entirely from already acquired and paid-for land. The overall development mix is projected to be 25% commercial and 75% residential.

Long-Term Financial Outlook and Revenue Recognition

The company is highly confident in sustaining a 25-30% year-on-year growth in its bottom line for the next 8-10 years, with a '20%, 25% CAGR' considered 'definitely done.' Revenue recognition follows Ind AS 115, where revenue is booked upon project completion and occupancy certificate issuance, typically resulting in a 1 to 1.5-year lag between pre-bookings and reported revenue. However, projects like Malabar Exotica completed ahead of schedule, allowing for earlier revenue recognition. The company expects strong growth over FY25 base in FY26, driven by projects like Godavari township.

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