Eldeco Housing and Industries

I happen to speak to one of my friend in Lucknow, who is a real estate agent.
He told me there is an uptick in the no of units sold. He is doing around 10-12 units a month. Pre covid was around 18-20 units a month.

When asked specifically about Eldeco, he had no idea, as he is not dealing with Eldeco.

Disc : Invested


Investor Presentation

Concall with the management. Very frank discussion around certain interesting points


Eldeco did very well in terms of pre-sales, jumping from 2.5 lakh sq.ft in FY21 to 7 lakh sq.ft in FY22. They are now working on their project pipeline which can support this kind of pre-sales numbers. Here are my notes from today’s concall.

  • Will take a couple of quarters for new approvals to happen (thereby new supply to come in). Demand is very strong. Next couple of quarters, pre-sales numbers will likely be muted
  • Average realizations have increased from 3500/sq.ft to 4500/sq.ft this year. It appears lower in numbers as Q4 also had some sale of plotted land which comes at lower realizations
  • Construction costs: 40-50%, land costs: 20-30%. Overall trying to maintain gross margins (taking into account land + construction costs) of 40%+ which is much higher than peers
  • In affordable housing cos, construction costs are 70-80% of selling price. So increase in commodity costs affect affordable housing cos more than Eldeco. Eldeco is positioned towards the middle income segment with some premiumization element
  • Like the experimental project in Bareilly, company is looking at a luxury home project in Rishikesh, which will be positioned towards a second vacation home for HNIs. This will be announced soon
  • Imperia Phase I was sold out very quickly, have got 17 acre of land next to that. Approval process is expected to take a couple of quarters. Have not yet applied for Phase II approval as company is looking to add more land (increase from 17 to 25 acre) and go for the approval at one go
  • Eldeco City at Bareilly (40% Beneficial Interest) will not get recognized as revenues, only profit will be recognized. It’s because Bareilly project is <50% holding
  • Eldeco Luxa project was a premium project with 15-20% higher pricing than rates prevailing in that area. It took time for the market to accept the project, the company was able to sell well in FY22 and it’s no longer a slow moving inventory
  • Look for project specific IRR of 20%
  • Company was earlier maintaining 3-4 years land bank which has reduced to 1.5-2 years due to uptick in sales. Will look to bring land bank back to 3-4 years
  • How long does it take from purchase of land to getting all the approvals for project launch? Used to take 1-1.5 years earlier. Nowadays its lower at 6-9 months (3-6 months for local approvals + 3 months for environmental clearance)
  • How much of the saleable area of 13.23 lakh sq.ft can get launched in FY23? Half of it (Imperia Phase II and one of the two group housing projects)
  • With the current management bandwidth, how much can Eldeco grow? Can easily double or triple pre-sales numbers with the current setup. Only constraint is on launchable project
  • Project construction is completely outsourced to local contracts
  • Fixed costs are likely to go up from 3-4% of sales to 6-7% as sales scale up

Disclosure: Not invested



  • Less than 1 year supply in overall Lucknow market, the market is undersupplied
  • Out of the 5 forthcoming projects, confident of launching 3 in FY23 and further adding 3 more projects to the pipeline
  • Current pipeline is about 750 cr. (3-3.5 years of project pipeline) and will add to this pipeline
  • Have seen price increase of 10-15% in apartments and 40-50% in row housing & plotted development projects in last 18-months
  • Not averse to taking debt for construction finance + land acquisition. Have built a sizeable cash position and will be happy to use judicious amount of debt for building pipeline. Don’t intend to go beyond 1x on debt to equity
  • Hope to double pre-sales from 250 cr. in FY22 to 500 cr.+ by FY25

Disclosure: Not invested (no transactions in last-30 days)


Can anyone explain the above resolution in simple language?
Is the company loaning to the promoter? If yes why? What kind of business is this :confused:? Also, how is 5/6th of surplus related to 60% in the surplus?

  • Revenue Rs. 109Cr in FY18 vs Rs. 127Cr in FY22.

  • PAT Rs. 24Cr in FY18 vs Rs.50.8Cr in FY22.
    Is it sustainable to grow profit without growing revenue in this industry?
    Last 5 Quarters PAT and PAT margin has been falling.
    35 Subsidiaries and only 6 are profitable. Omni Farms Pvt. Ltd is the only big subsidiary.
    Can’t really understand the competence of the company?
    In my view, the company is just selling high-priced real estate. The company is just creating many subsidiaries with negative reserves and unproductive assets.
    Really doubt the company’s ability in cost-cutting measures and expertise in the technicality of building real estate. I am unable to see how these subsidiaries are maintained and why they are so unproductive.

  • Standalone vs Consolidated difference in inventories is 42%.

  • Standalone vs Consolidated difference in PAT TTM is 20%.

Disclosure. Invested unsatisfied with my investment. Really doubt the real estate industry. Can’t understand the business model? The company seems shady.

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FY23Q2 concall notes

  • Demand in Lucknow is strong, market is undersupplied
  • 3 land parcels have reached term sheet stage in Lucknow, 2 are in primary land aggregation and 1 is prime group housing
  • Total inventory: 4.68 lakh sq.ft (in on-going projects) + 14.12 lakh sq.ft (in upcoming projects; 700 cr. potential sales) + 3 term sheets (500-600 cr. potential sales)
  • Drop in EBITDA margins was due to reversal in GST credit (5-6 cr. impact)
  • Group housing projects are lower margins vs plotted large township projects which are based on land aggregation model
  • Will launch 2 projects in FY23: Imperia Phase-2 (4.55 lakh sq.ft), 1 group housing project in Eldeco city. These two should contribute 450 cr. in topline in next 3 years
  • Will increase beneficial share in Bareilly project to 50% from current 40% due secondary purchase of shares
  • Currently focus in on getting more projects in Lucknow rather than venturing out to other cities
  • Average realizations have improved to 4500/sq.ft
  • Bareilly: 40 acres of land, have approvals for 35 acres and for the remaining 5 acres, will apply for approvals. For the 35 acres, presales have done very well (sold 5.83 lakh sq.ft of 8.74 lakh sq.ft available). Currently prices are around 4000/sq.ft (vs 2500 at time of transaction)

Disclosure: Not invested (no transactions in last-30 days)


FY23Q3 concall notes

  • In 9M FY23, have purchased additional land of 16.52 acres (for Imperia Phase III) + raised beneficial share in Bareilly project from 40 to 50%
  • FY23 Launches: Only one small project was launched so far in FY23 (Twin tower; 1.57 lakh sq.ft out of which 0.95 lakh sq.ft was sold worth 38.8 cr.). Plan to launch two additional projects in Q4 FY23. All other pre-sales were from sustenance inventory
  • Near term launch pipeline: Eldeco Imperia Phase II + Eldeco Latitude 27 (9 lakh sq.ft with 400 cr. revenue potential). Will take 4-6 months to launch (rera + environmental clearance required)
  • Within next 12 months, will launch projects worth 800 cr. Booking value at launch is around 50%
  • Only 25-30% of homes are sold on loans
  • Should be able to do presales of 300 cr.+ in FY24 (~1mn sq.ft)
  • 40% EBITDA margins are only possible in plotted development and not in group housing. Currently EBITDA margins are higher due to higher contribution of plotted development. Going forward with increasing contribution from group housing (50% contribution), blended EBITDA margins will reduce

Disclosure: Not invested (no transactions in last-30 days)

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FY23Q4 concall notes

  • Demand in Lucknow is buoyant, supply is a problem due to lack of new launches
  • Due to lack of new launches, pre-sales was low at 93 cr. Launches suffered because land assembly issues took longer. Company has advanced 25 cr. in these projects
  • Have witnessed interest from real estate funds who want to enter Lucknow and might use them to fund newer projects
  • Positive side of this delay is that prices have increased and launches will happen at price points higher than original underwriting
  • Added land bank of 20.91 acres in FY23
  • Received RERA registration for Latitude 27, which will be formally launch in Q1FY24. Imperia Phase 2 will be launched during H2FY24
  • Have signed two new projects where land assembly and approvals are under process, will announce them next quarter
  • Plan to raise debt (upto 100 cr.) for new projects
  • Total inventory: 9.22 lakh sq.ft (in on-going projects) + 10.95 lakh sq.ft (in upcoming projects) + 2 term sheets
  • Current saleable volume is ~2mn sq.ft. At avg realization of 4500-5000, it will give potential revenue of 900-1000 cr.
  • Realizations have increased to 4600 (20% vs last year). Expect 10% increase in FY24
  • FY24 delivery: Imperia Phase I (by Q3FY24)
  • Will maintain 50-50 split between horizontal plotted development and group housing
  • Dividend payout has increased to 18%, aim to take it to 25%
  • Don’t believe affordable housing is a sustainable business model as margins are very low
  • EBITDA margin in newer projects will initially be 30% and increase to 35%

Disclosure: Not invested (no transactions in last-30 days)



  • No launches in Q1FY24
  • Bookings should atleast double in FY24 (vs 92.5 cr. in FY23)
  • Eldeco Latitude 27: Launched in July 2023 (4.35 lakh sq.ft; potential of 250 cr. pre-sales)
  • Eldeco Imperia Phase 2: 250 cr. potential pre-sales
  • Have acquired 3 acre of land for Eldeco Trinity, this was a recent deal and they hope to launch in FY24 (can also get shifted to FY25 depending on approval process)
  • 75-80% of inventory that was opened was sold in Bareilly project
  • Will require 200 cr. for project investments in FY24, will raise 100 cr. debt from Piramal with early repayment option
  • In horizontal development projects, ~25% of inventory is blocked by authority, which gets released once they deliver the projects (after receiving OC)
  • Horizontal development costs: 2-3 cr./acre land; 2 cr./acre for development; 1 cr./acre for getting registrations & 1 cr./acre in overhead costs
  • Approval process in Uttar Pradesh and Haryana is getting elongated which is actually benefitting company right now as their actual launch prices are higher than earlier planned
  • Given the city land prices are high, focusing on high rises within the city

Disclosure: Not invested (no transactions in last-30 days)


Eldeco came with a muted set of nos, they are very confident of crossing 200+ cr. of presales in FY24 on back of 3 new projects (1 already launched, 2 in pipeline for FY24). Concall notes below


  • Eldeco Latitude 27 was launched this quarter (5.17 lakh sq.ft total area), it has 5 towers of ~1 lakh sq.ft each. Have opened 2 towers (~2 lakh sq.ft) and will open 3rd tower in current festive season. Sold 41 units (36 cr., 73,766 sq.ft) and allotted 44,200 sq.ft to partner
  • Eldeco Trinity (high rise; luxury group housing in Shaheed path): Seeking RERA registration, will add 5 lakh sq.ft (received layout/map approval). 6500-7500 sq.ft realization
  • Eldeco Imperia Phase II: Received layout/map approval, expect RERA approval in next few weeks (6.3 lakh sq.ft). Imperia Phase I last sales was done at 4200/sq.ft, expect 4000-4500 sq.ft realization for Phase II
  • In group housing projects, EBITDA margins will be 25-30%
  • Acquired 18.1 acres of land in Q2
  • Raised debt of 160 cr. from two lenders (Piramal, ICICI), 80 cr. has already been allocated and deployed

Disclosure: Not invested (no transactions in last-30 days)

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  • 2lsf booking (79.14cr) = 3957/sq.feet
    • 44cr from Imperia 2 (3500sf?)
    • 25cr from Latitude 27 (5100sf)
    • Twin tower + Imperia 1= 8cr (4600-4700sf)
  • Total booking area: 3,22,831 sq ft (135.24cr)= realisation (2387/sq. feet)
  • Delivered= 56.6k sq feet (q); 1.53lsf (9m)
  • Applying for CC : Eldeco Imperia, E. Twin Towers
  • Imperia 1: total saleable area:3lsf
  • New Launches
    • E. Trinity (high end)
    • E. Imperia Phase II (received 101 bookings in pre-launch for 1,28,450sf ; avg realisation was 3500sf
  • New land parcels
    • 3 new pieces; hope to conclude land assembly and aggregation in 6m
    • Total land acquisition in 9m= 63acres

Other highlights

  • Lucknow developing swiftly; however Slow approvals; unable to meet demand; hence hardly any inventory in market
  • If they open 100 bookings demand is for 200 bookings
  • At present increased land prices are not leading to margin pressure as able to pass on to end users, however cognisant that this might start hurting margins later when unable to pass the increase in land prices
  • D/E is 0.3
  • If money is needed they can manage if required apart from debt can also raise funds in a SPV format from PE funds or AIF’s who are keen to invest
  • avg time to get CC can be 1-3months after filing.
  • hope to launch 2 other projects by end of next year from the new aggregated land however unable to commit.
  • no new cities or areas being considered as find good demand in Lucknow for next few years.

[Discl: invested]

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