Eldeco Housing & Industries Ltd Q3 FY2025 Concall Summary

Key Takeaways

• Margin dip is a one-off, not a reset: EBITDA margin compressed because low-margin Imperia Phase 1 dominated revenue recognition; Phase 2 carries much higher margins and the weighted average points back toward historical levels.
• Lucknow’s supply constraint is the moat: The city absorbs 2,000–3,000 units annually but could double that if supply existed; land aggregation and approval difficulties keep competitors out, letting Eldeco sell out launches at velocity.
• Realizations have structurally re-rated: The new normal is INR5,000–6,000/sq ft, up from INR3,500 a year ago, driven by infrastructure upgrades and a shift in buyer proclivity toward premium product.
• A big launch is teed up for Diwali: A project comparable to or larger than Imperia 2 is planned for H2 FY26, with land already owned and planning complete; two smaller launches hit the market in 2–3 months.
• What to watch next quarter: Whether the two imminent launches (Skywalk, Hanging Gardens) secure RERA approval on schedule and sell at the guided INR6,000/sq ft, and any disclosure on the Diwali mega-project’s GDV.

Margin Structure & the Imperia Mix Effect

• Imperia Phase 1 loaded the costs: Club and infrastructure costs were entirely absorbed by Phase 1, leaving it with a ~17% margin; Phase 2 carries none of that load, so its margin is substantially higher and the blended project margin normalizes toward historical levels.
• 9M performance already shows the recovery: Across all metrics, 9M FY25 improved over the prior year, confirming the Q3 dip is quarter-specific rather than a trend.
• Competitive pressure is real but manageable: Management expects long-term EBITDA margins could settle at 32–35% rather than 40%, but the current quarter’s level is not the new baseline.

Pankaj Bajaj: "But there is no long-term reason to think that our EBITDA margin is going to fall below what it has been historically. A little bit, yes, because of competitive pressure, 40% could become 35%, 32% in that range. But definitely not what it is shown in this quarter."

Lucknow Market Dynamics

• Supply-constrained city with pent-up demand: Annual absorption sits at 2,000–3,000 units, but management believes the city could easily double that if supply were available; land aggregation difficulties and approval bottlenecks choke new supply.
• No stalled-project overhang: Unlike Noida or Gurgaon, Lucknow has no legacy stalled projects, so any new launch finds ready buyers in an undersupplied market.
• Infrastructure inflection driving premiumization: A new airport, ring road opening up developable land, metro expansion, and two mega malls (LuLu and Phoenix) have shifted buyer willingness to pay for premium product.
• Buyer profile broadening: Demand comes from first-time homebuyers, upgraders, and investment inflows from Eastern UP, for which Lucknow is the nearest metropolitan town (West UP invests in NCR).
• Sales velocity has structurally changed: Projects now sell out most inventory at launch, a pattern that never existed in Lucknow historically when sales were sustained over a project’s life cycle.

Pankaj Bajaj: "Lucknow is a supply-constrained city. I think the city can absorb much more than the numbers show right now."

Launch Pipeline & Project Visibility

• Two imminent launches: Eldeco Skywalk and Eldeco Hanging Gardens (combined 5–5.5 lakh sq ft saleable area, ~INR360 crores GDV) await RERA approvals and should hit the market in 2–3 months at ~INR6,000/sq ft.
• Diwali mega-launch: A project comparable to or larger than Imperia 2 is planned around Diwali this year; land is fully owned, planning is done, and municipal approvals are being applied for shortly.
• Trinity delay resolved: The basement stage took three months longer than expected due to a high water table in that area, but the project is now out of basement and should progress smoothly.
• Twin Tower revenue recognition unlocked: Eldeco Twin Tower received its completion certificate; 90% of inventory is sold, so revenue recognition should begin flowing.
• Five-year visibility: Existing projects alone provide cumulative visibility of ~INR2,000 crores over the next five years, excluding any new projects added.
• Imperia 2 revenue timing: Revenue recognition may begin in FY26 (touch and go) or FY27; the RERA completion date is April 2027 but on-site execution is running faster.

Realizations & Sales Outlook

• Realizations have re-rated sharply: The new normal is INR5,000–6,000/sq ft, up from INR3,500 a year ago; fresh bookings average INR6,500+, though the revenue-recognition average lags that.
• Mix will determine the weighted average: New launches are poised at INR6,000, the Diwali mega-project will be slightly lower at ~INR5,000, and the majority of the business sits in the INR5,000–5,500 range.
• Annualized sales target: INR400 crores of fresh bookings per year, including next year, is a fair expectation per management.
• Q4 FY24 was an abnormal comparator: Last year’s Q4 was inflated by the Imperia 2 launch where everything sold out; no comparable launch has occurred yet this year, so Q4 FY25 will look different.

Pankaj Bajaj: "I think INR5,000 to INR6,000 will be the new normal. It used to be, if you remember, till last year, it used to be INR3,500."

Land, Capital & Growth Levers

• Land bank strengthened: Eldeco acquired an additional 7.3 acres during Q3 FY25, funded by a INR120 crores debt facility deployed for land acquisitions.
• No further debt on the horizon: Management has no plans to take on additional debt beyond what has already been deployed.
• JDA route is unavailable: Eldeco is fully open to joint development agreements, but the local landlord ecosystem in Lucknow does not operate in that format; North India broadly and Lucknow specifically have very low JDA adoption.
• Inorganic opportunities are scarce: Management is not aware of any acquisition targets in Lucknow, as other developers face the same supply constraints around land and approvals.
• Labour availability is a watchpoint: A general industry labour shortage exists because welfare schemes in Bihar, Jharkhand, and Odisha (where labour typically originates) are reducing migration, though Eldeco’s projects remain on schedule for now.

Pankaj Bajaj: "We are 100% open, but the local market, the local landlord ecosystem does not seem to be that open, unfortunately. ... North India does not work that much on the JDA format and especially Lucknow works even less."

Guidance & Commitments

Key Metrics