New Delhi: Macrotech Developers Ltd (Lodha) impressed the Street with its robust pre-sales or bookings for the June quarter (Q1FY24). Bookings grew by 17% year-on-year to ₹3,353 crore, also the highest Q1 number delivered by the company. Lodha has now achieved 23% of its FY24 pre-sales guidance of ₹14,500 crore in the first quarter. Demand is robust, says Lodha’s management. The company’s shares are up 4% since the update after market hours on Tuesday.
Thus, it requires 21% year-on-year growth in bookings in Q2–Q4 FY24 to meet the guidance, reckon analysts from Nuvama Research in a report dated 5 July.
Reserve Bank of India has paused interest rate hiking cycle. With likelihood of a downward journey of interest rates in the next few quarters, the management sees momentum for housing strengthening further.
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The company also added five new projects with gross development value (GDV) potential of ₹12,000 crore across different micro-markets. For perspective, Lodha’s full year guidance for new project additions is ₹17,500 crore. “The company’s business development GDV in Q1FY24 was a positive surprise for the market and that is driving sentiment towards the stock. That said, granular details on locations of these projects will be awaited,” Parikshit Kandpal, institutional research analyst at HDFC Securities Ltd, said.
Collections at ₹2,403 crore in Q1FY24, fell sequentially and annually, but the management expects collections to pick up in the remaining quarters of the fiscal year.
More importantly, net debt increased marginally to ₹7,264 crore from ₹7,073 crore, sequentially, due to investments on business development projects. Lodha plans to reduce debt to lower than 0.5x equity, as guided for FY24. For this, the company will reduce debt significantly in second half of the year.
“There has been a slight uptick in debt, but the debt issue is largely out of the way for the company,” Kandpal said. In this year so far, the stock has rallied by 33%, in keeping with the gains seen in Nifty Realty index. “However, since Q2 is a typically weak quarter for the sector, we expect pace of new launches to meaningfully pick up in H2FY24,” he added.
As such, like other listed real estate peers, the company will continue to benefit from ongoing consolidation in the sector. That said, macro risks such as demand slowdown can be a dampener. “Faster land monetisation at Palava, portfolio growth, geographical diversification and annuity asset sale can be potential stock catalysts,” according to Nuvama.
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Updated: 06 Jul 2023, 11:18 PM IST