Ganesh Housing Ltd Q3 FY2025 Concall Summary

Key Takeaways

• Land sales drive a super-normal quarter: EBITDA margin hit 83% and PAT margin 61% because the quarter’s revenue was 90-95% land sales on parcels acquired 7-8 years ago at low historical cost.
• The mix is about to flip: From Q2 FY26, the majority of revenue will shift to project sales (Godhavi), lease rentals (Million Minds) and One Thaltej, with land sales stepping down materially for the next three years.
• Million Minds leasing demand is running ahead of supply: Inquiries cover 30 floors, double the 14 floors available in Phase 1, making a Phase 2 prepone “almost certainly likely.”
• Godhavi is the next big presales event: A plotted-development launch on 450 acres, on track for Q2 FY26, carries a sales potential of ₹5,000 crores with immediate revenue recognition.
• What to watch next quarter: Closure of Million Minds LOIs (promised in 1-2 months), the One Thaltej approval and construction start, and any board decision on the dividend.

The Land-Sale Engine: Why Margins Look Like This

• Low-cost land bank: Revenue and profits are derived largely from sale of land acquired about 7-8 years back at low historical cost, sold at current high market prices. This is the structural reason EBITDA and PAT margins are so elevated.
• Competitive moat: The company develops projects only on land held historically, giving it higher margins compared to developers who acquire land freshly from the market.
• Current mix is temporary: 90-95% of this quarter’s sales came from land sales, with the rest from project sales. This mix will persist for some time because the SEZ processing area is meant for long-term lease, not lump-sum sale.
• Surplus land in Godhavi and Garodia: For the last two quarters, land sales have been the primary revenue driver because the company holds surplus land in and around these areas.
• Land strategy: The company sells surplus land around areas where it makes better sense to sell than develop, while buying at different locations from a future-development perspective where city expansion will happen.

B. Ravi: “See, these are all to historically invested land banks. And therefore, the investment costs have been quite low, and therefore, automatically, when we sell it at this juncture where the pricing is high in the market, the margins -- the cost being so low, the margins are remarkably high.”

Million Minds SEZ: Leasing Demand and the Phase 2 Call

• Phase 1 ahead of schedule: Construction will be completed by end of Q4 FY25, almost one year ahead of schedule, with possession for fit-out by April-May 2025. Revenue will be booked in FY26.
• Leasing traction outstrips inventory: The company has received inquiries for leasing almost 30 floors, double the 14 floors available in Phase 1. This is attributed to Ahmedabad’s commercial space demand and the SEZ’s GST benefits.
• Phase 2 prepone on the cards: Given the demand, preponing Phase 2 is “almost certainly likely to happen” but awaits a proper announcement.
• SEZ positioning vs GIFT City: Million Minds offers GST tax-free status, a larger benefit than income tax for businesses, while GIFT City’s tax benefits are limited to the IFSC zone for financial services only. Million Minds targets IT, IT-enabled services, manufacturing, R&D, and semiconductor/EV companies from Dholera.
• Lease rental timeline: The majority of the ~₹70 crore annual lease rental will be realized in FY26, with approximately 10 months of rental (70-80% of a full year) starting from Q1 FY26 after the fit-out period.
• Leasing preferred over sale: The company prefers leasing Phase 1 given the strong traction, though the option to sell remains open if a good opportunity arises.
• Delivery format: Units will be given as core and shell primarily, with fit-out services available on a chargeable basis if requested.
• LOIs imminent: Management says they are “very close to LOI itself” and larger announcements are expected in 1-2 months.
• Future phases: The master plan includes co-living spaces, co-working, hotels and service apartments in future phases. Data centers could be part of strategic planning in the total SEZ area in future phases but cannot be set up in Phase 1 buildings.

B. Ravi: “Bang on, Neeraj. That is almost certainly likely to happen. We -- of course, we’ll have to wait for a proper announcement on that. But you are right, that looks to be on the cards for sure.”

Godhavi Township: The Next Big Presales Catalyst

• Launch on track: Monetization is expected to start in Q2 FY26, which will be a big presales event.
• Sales potential: ₹5,000 crores on a plotted-development basis for 450 acres, with potential upside if the development horizon changes.
• Revenue recognition: If done as plotted development, revenue recognition happens immediately upon sale.
• Location advantage: Godhavi is a natural extension of South Bhopal, a saturated residential area, lying between existing club hubs (Karnavati, Rajpath) and newer developments ahead of Godhavi, creating a development corridor.
• Development timeline: Part of a 7-to-10-year plan. Work on building a sports complex will begin soon.
• Revenue mix shift: From Q2 FY26, the majority of revenues will come from project sales (Godhavi), lease rentals (Million Minds) and One Thaltej, rather than land sales. Land sales will remain a vertical but not at the current magnitude for the next three years.

B. Ravi: “If you go ahead with the plans that we have announced about Godhavi, whether it’s project or construction or as a plotted development from Q2 FY ’26, the majority of the revenues would be from project sales and not land sales.”

Other Projects: Malabar Retreat, One Thaltej and SG Highway

• Malabar Retreat: Launched at end of Q4 FY24, construction has progressed to about 22%, and presales have crossed ₹110 crores. A sample apartment will be ready in 15 days to one month, after which sales are expected to pick up. Completion is expected before time.
• One Thaltej commercial: Approval may come in the next quarter; construction may not start this quarter but “surely next quarter.” Sellable pricing is in the range of ₹6,000 to ₹7,000 per sq ft (approximately ₹6,500).
• SG Highway commercial project: Spans about 0.18 crore square feet; the plan has been submitted for approvals. Projected revenues are about ₹2,100 crores, with completion by H2 FY28.
• Another commercial project: Likely to come up in the second or third quarter of FY26, adding to presales starting from the next quarter or so.

Ahmedabad Market and Competitive Position

• Demand holding: Demand is not dipping; the last quarter was a little slower than before but developments in the area continue to drive demand. Prices have been increasing year-on-year in line with construction and inflationary trends. Premium apartment and office complex prices have never really abated.
• Supply-side tightening: There has been a reduction in launches despite increased absorption in Ahmedabad. Developers are holding back due to the upcoming revision of Jantri (circle) rates, which impacts project costs. Ganesh Housing is one of the largest developers in its micro-geography and does not expect significant competition from local developers.
• Commercial revival: After COVID, people had not been investing in new commercial spaces for two years up to FY21-22. Addition of good commercial spaces has hardly been there. Now traction has started.
• Jantri rate impact: Too early to determine; management is waiting for the dust to settle. It could be beneficial or have pros and cons.
• No other-city expansion yet: Ahmedabad opportunities are keeping the company busy for the next 2-3 years, so there are no immediate plans for other cities.

Management: “Just to add to what Raviji just said. In fact, I would go one step further in setting that we would have a competitive edge for other developers because generally, we tend to develop projects only on the land, which we historically on. So I -- there are my chances of making higher margins are remarkably high as compared to anybody who acquires land freshly from market.”

Capital Allocation and Technology

• Dividend: The board will decide at year-end (next four months). Last year’s payout was 110%; a similar continuation is possible given performance, but it is early to say.
• Land acquisitions: The company is actively scouting opportunities for various land acquisitions in high-potential areas. Buying is done from a future-development perspective where city expansion will happen, not from a distance perspective.
• Precast technology: Deployed to reduce labor dependency. The company is exploring technologies like 3D printing for smaller villas in township development.
• Tishman Speyer: Acts as a marketing partner for Million Minds.

Guidance & Commitments

Key Metrics