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Off-late there’s been a buzz that the demand for the real estate is picking and the real estate stocks are expected to do well.
In the past we haven’t recommended any real estate stock, nor do we have any real estate stock under coverage for our Premium Members.
Recently we were reading about Eldeco Housing and Industries which is primarily focused on Lucknow market and has had a good track record over the past few years.
Below, we have shared notes from the Q4 FY 23 con-call of the company. Hope you find the details useful for your own investments or to add the stock to your watch list.
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Eldeco Housing and Industries – Notes from Q4 FY 23 con-call
– General Points
- Fiscal 2023 was a flat year for us
- Due to the lack of new launches, sales remained flat throughout the year
- Despite signing up for some new projects, we were unable to move them to the launch stage owing to land assembly issues, and approval issues
- We expect the issues to get resolved in the first or second quarter of the current financial year
- The positive side of this delay is that the prices have turned up in our micro-markets and the launches will happen at price points higher than our original underwriting
– Operational Highlights
- During the year, the company handed over 4.15 lakhs square feet with the registration of 322 homes
- The FY ‘23 collections were INR 158 crores. The area booked for the financial year was 2.01 lakhs square feet
- We have successfully added land bank of 20.91 acres between April 2022 and March 2023
– New Projects
- We have received RERA registration for our new residential project, Latitude 27, and construction has commenced. We plan to formally launch it by the end of May, 2023
- We expect strong sales from Imperia Phase 2, which we will launch during the second half of the year
- Apart from these, we have signed two new projects where land assembly and approvals are under process
- These are all residential. So it will be a 50-50 split between horizontal plotted development and group housing which is apartments. All will be in the Lucknow area
- As of now we are focused on the Lucknow market. U.P. itself is growing very fast now. It is a 20 crores population. And real estate and urbanization is really exploding in this part of the country
– Real estate market
- The demand for quality real estate, particularly residential real estate, continued its strong trajectory in FY ‘23
- The size of the industry, which has been stagnant for nearly 10 years, is predicted to grow in the next 3-4 years substantially
- Lucknow’s real estate market remained robust during the year. Demand was not a concern, but supply was a concern due to the absence of new launches
- I expect the market size to double in the next three to four years. Had it not been for the supply constraint in Lucknow, it could have already done so
– Realization
- This year we have seen the highest improvement in realization in the last many years on a per square foot basis. Last year it was INR 3,800 per square foot. This year it is INR 4,600 nearly
- The last year was outlier in terms of residential market realization. The prices increased on an average by 20%
– Guidance
- The area which is available for sale in existing projects is about a million square feet
- And similar areas are already planned in the forthcoming projects. And this is not counting the fresh projects which we have not declared
- So 2 million square feet at an average utilization of INR 4,500 to 5,000 per square foot which is what our latest numbers are. So that is the sale value of INR 900 to INR 1,000 crores. this will all get booked in the next 2-3 years
- The revenue will get recognized towards the latter part of this period, 3-4 years
(End)
Disclaimer: This is not a recommendation to buy/sell Eldeco Housing and Industries. The securities quoted are for illustration only and are not recommendatory.
Best Regards,
Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.
SEBI Research Analyst Registration No. INH100001690
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