Ganesh Housing Limited (526367) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Ganesh Housing Limited Q2 FY '26 Earnings Conference Call. [Operator Instructions] I now hand the conference over to Mr. Rajat Gupta from Go India Advisors. Thank you, and over to you, sir.

Yes. Thank you, Huda. Good afternoon, everyone, and welcome to Ganesh Housing Limited earnings call to discuss the Q2 FY '26 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 Advisor. 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 the risk 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 morning, rather good noon, everyone, and a warm welcome to all of you to this Q2 FY '26 earnings call. Thank you for taking time out to join us and for of your continued interest in Ganesh Housing Limited. Q2 FY '26 has shown a beginning of a renewed momentum, both for the company and for the broader Ahmedabad real estate market. After a relatively measured start to the financial year we have seen an improvement in demand and improved buyer confidence from August '25 onwards. This inflection aligns well with what we have guided in our last call that sentiment and sales velocity would improve meaningfully in the second half of the calendar year. And this can be also seen from the Q-on-Q, that is quarter 1 to quarter 2 improved numbers. Before I start the discussion of the earnings call today, I would like to take time to share a couple of important corporate updates. First, our company has formally transitioned from Ganesh Housing Corporation Limited to Ganesh Housing Limited, reflecting a refreshed identity and our continued legacy of trust, transparency and excellence. The new name aligns with our simplified brand architecture and forward-looking vision as we scale new growth opportunities. The second is that the Board has approved a scheme of amalgamation of a wholly owned subsidiary, Gatil, with Ganesh Housing Limited. The amalgamation will simplify the corporate structure by eliminating a wholly owned subsidiary and consolidating its business, assets and liabilities directly into the holding company, resulting in streamlined governance, enhanced transparency and a unified management structure, all enabling more effective strategic control. The amalgamation also enables us to consolidate the operational capabilities, expertise and resources of the transferor company and the transferee company, which will provide impetus growth, enhanced synergies and focused management control. The consolidation of assets, capital resources and elimination of intercompany transactions will strengthen the balance sheet and capital base of the transferee company. The merged entity will have improved financial flexibility, enhanced borrowing capabilities and better leveraging of assets. Along with that, very importantly, it will also eliminate the holding company discount in valuations, which is normally there, thereby providing an opportunity for long-term capital appreciation of assets. Now on to the update. First, of course, the real estate update. Ahmedabad today stands out as India's most affordable, high-growth real estate market. With an EMI-to-income ratio of just about 18%, the city remains deeply affordable compared to other metros, which -- while offering high-quality infrastructure, connectivity and a strong employment base. The city selection as a host value for the 2030 Commonwealth Games is just a formality to be completed in that, coupled with a major infrastructure upgrades such as Metro Phase 2 and the GIFT City expansion has triggered a strong investment cycle. Property values are now expected to appreciate by about 10% to 15% annually, driven by genuine end-user demand, investor inflows and corporate leasing. Importantly, Ahmedabad has recently been ranked as India's cleanest large city under the Swachh Survekshan 2024-'25 initiative. This recognition is more than symbolic as it reflects the city's significant strides in urban governance, sanitation, infrastructure and quality of life. For real estate, this translates into higher livability scores, stronger migration inflows and greater investor confidence, especially among professionals and families seeking long-term residents or second home opportunities. Additionally, Ahmedabad now accounts for nearly 42% of Gujarat's total real estate investments and continues to rank among India's fastest-growing and most livable urban centers. Coming to individual product project updates and operational highlights. Malabar Retreat, which is a premium residential project, as you know, continues to move steadily towards completion. Construction is ahead of schedule and has well crossed the halfway mark. We are now seeing renewed traction in this and have seen almost 35% to 40% of the bookings either done or under active consideration. We expect stronger conversion through H2 as the structure gets more completed, the visibility increases and the buyer confidence rises. In the Million Minds IT SEZ Phase 1, the quarter has seen a steady progress in this project, which is our flagship commercial development undergoing. About 50% of the leasable area has -- already has LOIs and the balance leases are under active consideration. This is expected to be completed by Q4 of FY '26. The interest from global capability centers, hybrid workspace providers and leasing technology firms continues. As mentioned earlier, we have actually [indiscernible] start, and we have started that in Q3 FY '26. This will pave the way for lease rentals to commence by -- latest by Q1 of FY '27. We are operationally ready. The project, as you know, is designed as an ESG certified platinum development, featuring sustainable architecture and energy-efficient infrastructure. Once operational, Million Minds will anchor Ahmedabad's emergence as a technology and services hub and serve as a key annuity income driver for Ganesh Housing. Looking to the buoyancy, we are likely to start Phase 2 very soon. In the 191 Thaltej commercial development, the entire planning and approvals are in the final stages and construction is set to commence shortly in H2 FY '26. As you know, it's located in Ahmedabad's emerging central business corridor. This project is designed as an institutional grade office and retail hub with a potential lifetime revenue of INR 2,100 crores, it will be our flagship commercial development over the next 3, 4 years. The Godhavi area cluster development, which is approximately, as you know, measures around 450 acres is going on well. This continues to be our anchor land monetization engine. We had earlier announced, if you recollect, that in Phase 1, it consists of 50 acres, which we will be monetizing. We are pleased to say that of those sale of 33 acres, that is about 66% has been completed. The average realizations also in all these transactions have been stronger than what we had estimated. This is due to the various developments in other -- in that area. The other phases, as always mentioned, would be developed after the current developments in the area crystallize more and the requirements are frozen. With over 418 acres still available, Godhavi provides multiyear visibility for plotted residential and mixed-use development. //Our other land bank continues. We still have about approximately about 524 acres diversified not only across Godhavi but Million Minds SEZ, Thaltej and Malabar Retreat corridors. We also have initiated discussions for select new parcels in growth micro markets, ensuring that we stay future-ready as the city expands westward and towards key infrastructure roads. Now coming to the financial highlights during the quarter. As we had discussed in our last call, the first half of FY '26 was expected to be somewhat muted as project execution and leasing activity ramp up throughout the year. We are told that there is a pickup in demand. Hence, the Q-on-Q, that is Q1 to Q2 results of this FY '26 have shown the improvement with the revenue in Q2 being INR 174 crores, which is a Q1 to Q2 growth of about 15%. The EBITDA margins remained strong and stable at around 85%, underscoring the continued strength of our business. And the EBITDA grew by 16% quarter-on-quarter to INR 148 crores. The PAT margins expanded by 40 basis points sequentially with PAT at INR 108 crores as compared to INR 93 crores in Q1 FY '26. The year-on-year numbers have been lower by about 30% as FY '25 was an exceptional year and the real estate stayed muted for almost 9 months of this calendar year, which is a reflection of slow offtake of land deals in recent times. Overall, the profitability metrics remain robust, and we are well positioned for a stronger performance in the second half of the year. Our balance sheet also continues to remain very strong. Looking to the current position, we would like to mention that the guidance given of 25% to 30% year-on-year growth in PAT does not look possible. At this point in time, we trust we may be able to maintain the last year's numbers. The final picture, however, and the final guidance, however, would emerge in Q3 results, and we shall get back to you on that. On the other hand, the land bank reserves and the valuation of those land bank reserves continue to be very strong and upward looking. As we have mentioned in the last earnings call, our strategic priorities remain consistent. And this year also we have shifted from planning to execution. Each of the focus areas continues to strengthen the foundation of the next phase of growth. As you know, our focus areas are execution excellence, revenue diversification, capital efficiency and city-wide alignment. Thank you once again for the time, and we can now open the floor for Q&A. Thank you.

The first question is from the line of from [ Siddesh ] from Ambit Capital.

few questions from my side. So have any new land parcels under negotiation in Q2 been finalized?

Yes. In Q2 also, the Godhavi land, as you know, we have been monetizing that as per our plan. So 100% of the revenue comes from that. Yes, we have monetized about 12 acres.

And what is the average cost of these acquisitions relative to your legacy land bank and…

You're talking about the new land bank acquisition?

Yes.

We won't be able to tell you the real -- the actual value at this point in time, but it is in such growth areas wherein we see future potential. That's all I can say. Once we have completed the transaction, all the transactions, we can come back to you with the actual average acquisition cost.

Understood. And the time lines for our planned projects have been consistently extended since we first announced them.

Yes.

So some by almost a couple of years. And additionally, our earlier cash flow expectations have also been revised downwards. So just wanted to understand the status of these planned projects in more detail since we have not been aggressive with project launches. Can we expect this [indiscernible] projects to now progress in a more timely manner or in a…

Yes. Well, they can -- I would like to make a small correction. Not all the extended -- all the planned projects have been extended. Actually, of the planned project, 2 of them, whether it is a retreat or the SEZ have been on stream and actually before -- they will be also completed beforehand. The only -- and also the Godhavi, what we have talked about Phase 1, 50 acres, that's been absolutely on stream, and we have been monetizing that and that's 3 acres already been done as I told. So even those that has been exactly on time. The only thing which has really been extended, I can say, is the 191 Thaltej commercial project, wherein I think the -- it's also good because the kind of the traction which is now being seen in the commercial space has really risen in the last 6, 8 months. The plan approvals and those things have taken slightly longer than envisaged. But as we speak, almost all of that is quite under control. So yes, that has been a delay of about 6 months in terms of execution, but now we are more confident about that. The other one which we had announced was Phase 2 of SEZ, that is Million Minds. And we had said that the moment we see 80% of the leases, that's when we'll start the Phase 2. And we had actually completed this project well ahead of schedule. And therefore, if you talk from that time line, the Phase 2, which I just said will commence from maybe in the next couple of months or at least in the Q4 FY '26. I would say that it's almost on time, give or take a few months of here and there. But the right way to look at the entire thing is there's been a lot of developments which are happening in Ahmedabad, specifically in all areas of residential as well as commercial. And sitting on a very large land bank has helped us, and all paid for, and that too at a very low cost has allowed us to have patience in trying to announce this project at a time when the market is just right for it rather than announce and wait for the bookings and have a cash flow problem. So I think though agreed, some of these projects have been slightly delayed and has extended. As we speak looking into all the developments now, we believe that whether it's Phase 2, what we have just already said that we'll be doing it in the next quarter itself of Million Minds or other projects like 191 Thaltej, which we just announced, all of them, I think, will continue in this time line what we just mentioned. I hope I'm able to satisfy your question.

The next question is from the line of Natasha Singh from Arihant Capital.

Sir, my first question is, as you earlier targeted 20% to 30% of annual profit growth, so…

[indiscernible].

Hello? Hello? I'm audible?

Can you take next one in the queue?

[Operator Instructions] The next question is from the line of [ Shyam Garg ] from [ Neolan ].

My first question is with respect to -- you have remained debt-free for over the last 3 years. How are you thinking about the capital allocation for upcoming launches like 191 Thaltej and Godhavi Township while maintaining this position.

Shyam, we'll have to -- Shyam, sorry -- sorry to interrupt, Shyam, we missed your first part. We'll have to start the question all over again.

Sure, sure. No problem. So you have remained debt-free for over the last 3 years. How are you thinking about the capital allocation for upcoming launches like 191 Thaltej Godhavi Township while maintaining this position?

I think we have a strong -- continue to have a strong cash flow position. And therefore, even for the construction of these things, at this point in time, we do not -- we have enough -- we would have enough cash to do that on our own without any debt. So we do believe that the debt-free position would continue even after commencement of 191 Thaltej. As you know, 191 Thaltej is actually a sale project. So just like the Malabar Retreat, which is again a sale project, as we launch and we start gathering money on a continuous basis as per the progress of the project, that because the land is already invested in, will automatically take care of the major part of the construction. So we don't feel that even after these 2 projects we will need to take any debt.

Okay. All right. And my second question is with respect to the, presentation has highlighted that 418 acres, we had 418 acres at Godhavi as the anchor land monetization engine. Could you outline the phasing plan and expected launch milestones through FY '26, '27? And how are you evaluating price strategy for the plotted development phase given the recent land price has appreciated to INR 30,000 per square meter?

Yes. I would actually like to be -- to mention that we are pleased that it's not just INR 30,000. The rate always -- land always pays. Waiting always pays. So today, that's what we have projected at INR 30,000 is around INR 35,000, almost 20% higher than what we had told you earlier. This land in that area is only appreciating because of extremely good development in that area. So as far as the first phase is concerned, I think it was 50 acres of which we have already completed 33. The balance 17 should be done in these quarters itself. For the FY '26-'27, we will actually weigh at the end of this current year as to what are the new developments which are frozen around there because in terms of the -- whether it is the games side or other infrastructure, a lot of things are happening in that area. And therefore, the next phase of it in what manner would it be, whether it continue to be plotted development or any other developments will be more clear in the next 6 months. And therefore, when we finish our year of FY '26, that means when we tell our annual results and when we give the guidance for the next year, we'll be able to tell you more clearly as to what could be the next phase of development in Godhavi.

Okay. And sir, what will be the [ patent ] strategy for plotted development phase?

Revenue strategy would be both, it will be the plotted development as well as other schemes, whether it could be commercial, if need, or definitely residential for sure in that area.

The next question is from the line of Natasha Singh from Arihant Capital.

So my first question is, as you earlier targeted 20% to 30% annual profit growth. So the given current execution pace and upcoming, do you maintain the outlook for the FY '26-'27?

Definitely for FY '26, this growth of 20%, 30% does not look possible. I think we may be able to give a clearer picture after Q2, but I think we'll maintain the profit of the last year, which was a very astronomical year, as you know, having almost INR 600 crores of profit. I think we may be able to maintain that. But in terms of the future one, it is too early. Frankly, I think FY '27 or '28, I don't think we need to really be concerned about it at this point in time because things have changed, are changing and will continue to do better as we see from here. But FY '26 for sure, I've already stated in my earnings call.

Okay, sir. Sir, my next question is, could you please elaborate about the wholly owned subsidiary, what balance sheet and operational synergies are expected post merger?

Yes. See, normally, always when we have a subsidiary having a land bank and development in that, the funds required can always be interchangeable. More often than not, when such kind of a wall gets removed between a holding company and subsidiary that it becomes a seamless kind of an operation. It becomes one entity and therefore a lot of benefits which come up from whether it is a passing of plans or the people who are attending to it and of course, from the balance sheet strength of it. When 2 different companies are there, the cross block and everything changes. And therefore, the capabilities of trying to develop more and more land in the development in these areas changes when it becomes one entity. And also, of course, the total financial stability and the capability of borrowings and all that changes. And more importantly, as I mentioned, -- there's always a holding company discount when we talk about it because there are 2 different entities. When we merge them into one, it automatically becomes one entity. Today also, of course, all the profits are all consolidated. We are not listed entity other than Danesh Housing, as you know. But the walls when broken, they become one, even the way people look at it changes, and that's how I think the synergies flow in.

The next question is from the line of [ Arvind Mahadevan ], who is an individual investor.

So I have 3 to 4 questions. Question number one being, how has the month of October been with regards to Q3? Can you give some insights upon that?

I couldn't get the question.

October month.

Okay.

October month, how has October month turned out to be?

Yes, okay, okay. Yes, go ahead, yes.

Apart from that, I also would like to know -- we already hold around 500 acres of land. And how many -- how much more are we planning to add with regards to the land acquisition? In terms of percentage would be fine. Question number three being with Commonwealth Games in the picture, are we planning towards any contribution towards the infrastructure development with regards to the Common Wealth games in particular? So these are my questions if you try and --

Sure. I'll take that in that order only. October month was a month of festivities. And therefore, as far as the Malabar retreat residential project, that's where we can always see visible stuff because the other commercial development has been going on well, and we have seen a lot of traction even in that in terms of the leasing, the million mines one. But it was very visible in Malabar Retreat because the moment the vacation got over, the Diwali festivals are over, and that is a new year for Gujarat also, we saw a lot of bookings -- I mean, a lot of inquiries during the festive season and almost immediately after that, what we call as [ Peej ] and Pancham here, the fifth day, we saw about 5 or 6 bookings all happening together. So yes, October month in terms of the Retreat has been very good. And generally, in terms of the pricing, as I mentioned, we expect it from August and definitely from October onwards we see that things have been slightly on the upside. The second question is, yes, we hold about 524 acres at this point in time. And we are also in the process of acquiring more land from all this land advances we have given. And therefore, there should be a definite addition to this. How much would it be? Yes, it could be about 5%, 10% of the existing land bank is something which we have always been adding. And therefore, at any point in time, in spite of all these monetization of Godhavi land and rest of the other land what we have said what we started off with about 550 acres, let's say, 3, 4 years back, we continue to be in that even today. So therefore, effectively, there has been an acquisition of land on an ongoing basis, and that will continue. In terms of the Commonwealth, infrastructure development, no, we are not, at this point in time, directly involved in any infrastructure as such because the games infrastructure will be done many times with mostly with the government. But yes, the other local stuff, wherever the games are being held, including the Games Village at Godhavi, there we would have a lot of things to contribute to in that in terms of the requirements of the game, more often than not it will be either residential or commercial or any other aspects. We will be able to really plan what exactly can be the next phase to be done in Godhavi only by the year-end, as I said, by which time the entire development in that would be a little more clearer. At this point, it has been a few months, as you know. So I think we'll still need about 4, 5 months to really see what is emerging out of that area.

Fair enough. Sir, fair enough. My last question would be just to simply to match previous year's turnover, we would be requiring around INR 600 crores to INR 650 crores in addition in Q3 and Q4 itself. That's around INR 300 crores, INR 325 crores per quarter. So are we on line to just to ensure that the revenue is in place with regards to Q3 and Q4? Can we expect INR 300 crores to…

May not be. Frankly, we normally have always guided the bottom line. The top line can change depending on which particular area, what development is happening, especially the monetization of the land that we have. So -- but yes, looking to that, both the top line and of course, for the top line we have not given a guidance. But still what you are saying, looking to that or the bottom line, as I said, can stay muted. It may not show that kind of growth.