As disposable incomes rise among Indians, more individuals are opting to invest in real estate, which remains a preferred choice for households in India.
Amid this backdrop, the majority of constituents of the Nifty Realty index have delivered stellar returns, and Macrotech Developers is one such stock in this regard. The company’s shares, which were valued at ₹456 apiece a year ago, have jumped 160% to trade at the current level of ₹1,227 apiece.
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This boom has resulted in the stock gaining 404% in 3 years and 481% from its all-time low of ₹211.30 apiece. The company’s shares hit the Indian secondary market in April 2021.
Robust sales
The company, which sells its properties under the Lodha brand, reported a remarkable 40% annual growth in its sales bookings, reaching ₹4,230 crore in the fourth quarter of the last fiscal year, driven by robust housing demand. This marked the company’s best quarterly performance to date.
For the full FY24, it achieved a 20% growth in its sales bookings, reaching a record of ₹14,520 crore compared to ₹12,060 crore in the previous financial year, as stated in a regulatory filing.
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On the business development front, the company successfully added new projects with a cumulative gross development value (GDV) of ₹20, 300 crore in Q4 FY24 across various micro-markets in MMR, Pune, and Bengaluru. This exceeded the company’s guidance of ₹17,500 crore.
The company boasts a notable presence in the Mumbai Metropolitan Region (MMR) and Pune, with recent forays into the Bengaluru housing market. Leveraging a dual approach, it acquires land outright while also forming strategic partnerships with landlords to secure a land bank for future development initiatives.
Debt reduction achieved
Benefiting from robust operating cash flows and a recent equity raise, the company successfully trimmed its net debt to ₹3,010 crore, which now stands at less than 0.2 times the equity. This achievement aligns with its target of maintaining a net debt-to-equity ratio of less than or equal to 0.5x.
“Continuing robustness in business fundamentals and strengthening of the balance sheet has led to further credit rating upgrade to ‘AA- (Stable)’ by ICRA,” the company said in its regulatory filing dated April 05.
Last month, the company raised ₹3,300 crore by selling shares to institutional investors. The QIP was subscribed nearly three times within 5 hours of issue opening and witnessed traction from a diversified set of investors, including sovereign funds, pension funds, and insurers.
This marks the fourth equity raise by Lodha in the last 36 months, bringing the total capital raised to over ₹13,000 crore.
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Promising outlook
India’s rapid economic growth positions it as one of the fastest-growing economies globally, projected to transition from a low-income economy to a mid-income one by the end of the decade. This trajectory fuels the demand for the housing market within the country.
Factors such as urbanisation, lifestyle changes, and the expanding affluent class contribute to this robust demand.
Moreover, government initiatives and substantial investments from high-net-worth individuals (HNIs) and ultra-high-net-worth individuals (UHNIs) in the Indian residential market are expected to further drive this demand.
“We see all the structural factors are in place for significant growth in volumes and are in only the fourth year of a multi-decade-long housing cycle. With this capital raise, our balance sheet is exceptionally well placed and will allow us to improve profitability, while we continue to deliver on our growth outlook,” the company said.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
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Published: 12 Apr 2024, 11:47 AM IST