Incorporated in 1995, Macrotech Developers [Formerly known as Lodha Developers] is the largest real estate developer in India. The company is primarily engaged in affordable residential real estate developments and in 2019, it entered into the development of logistics and industrial parks and also developed commercial real estate.
The company’s large ongoing portfolio of affordable and mid-income housing projects include Palava (Navi Mumbai, Dombivali Region), Upper Thane (Thane outskirts), Amara (Thane), Lodha Sterling (Thane), LodhaLuxuria (Thane), Crown Thane (Thane), Bel Air (Jogeshwari), LodhaBelmondo (Pune), Lodha Splendora (Thane) and Casa Maxima (Mira Road).
The affordable and mid-income housing developments accounted for Sales of Rs.3055 crores during the financial year 2020 and constituted 57.77% of our total residential sales.
Company Business:
- The Company develops Real estate across the residential and commercial sectors in the Mumbai Metropolitan Region, Pune, and London.
- In the Residential Portfolio, the price of the Flat they sell is in the range of 35 Lacs to 59 Cr.
- In the commercial portfolio, they develop office and retail projects as income-generating assets on the lease model and sale models, with an increasing focus on the former.
- The company has a good track record of completing projects from acquisition to launch to completion thereby improving Return on investment.
Strength of the Company
- Largest residential real estate developer in India.
- Strong sales distribution network across India as well as NRI markets
- Brand equity and premium pricing.
- Strong project execution capabilities.
- Experienced Management Team.
RISKS RELATING TO BUSINESS:
- There are material outstanding legal proceedings involving Company, Subsidiaries, Associates, Directors, Promoters, and Group Companies
- The company may not be able to successfully identify and acquire suitable land or development rights, which may affect business and growth.
- The company’s business and results of operations could be adversely affected by the incidence and rate of property taxes and stamp duties.
- Compliance with, and changes in, environmental, health and safety, and labor laws and regulations could adversely affect the development of projects and financial conditions.
IPO Details:
IPO DateApr 7, 2021to Apr 9, 2021Issue TypeBook Built Issue IPOIssue Size51,440,328 Eq Shares of ₹10(aggregating up to ₹2,500.00 Cr)Fresh Issue5,14,40,329Eq SharesOffer for SaleNILFace ValueRs.10 per equity shareIPO PriceRs.483 to Rs.486 equity shareMin Order Quantity30Listing AtBSE, NSE
IPO Objective:
- Reduce the aggregate outstanding borrowings of the company on a consolidated basis.
- To acquire land or land development rights.
- To meet general corporate purposes.
Financial Performance:
FY2018FY2019FY20209M FY2021Revenue13,726.611,979.912,561.03,160.5Expenses11,017.09,490.011,560.23,218.8Comprehensive income1,767.91,641.6732.5-264Margin (%)12.913.75.8-8.2
Tentative Time Table:
- IPO Opens on: Apr 7, 2021
- IPO Closes on Apr 9, 2021
- Basis of Allotment Date: Apr 16, 2021
- Initiation of Refunds: Apr 19, 2021
- The credit of Shares to Demat Account: Apr 20, 2021
- IPO Listing Date: Apr 22, 2021
Outlook:
Lodha Group has been involved in the real estate business since 1995. Further, the Company is led by Abhishek M. Lodha, Managing Director and Chief Executive Officer. The company has a leadership team of experienced professionals with relevant functional expertise across different industries who are instrumental in implementing the business strategies.
The company commenced operations in Mumbai, developing affordable housing projects in the suburbs of Mumbai, and later diversified into other segments and regions in the MMR and Pune. In addition to the ongoing and planned projects, as of 31 December 2020, the company has land reserves of approximately 3,803 acres for future development in the MMR, with the potential to develop approximately 322 million square feet of Developable Area.
The company has clocked sales of approximately INR 6,569 crores with gross collections of approximately INR 8,189 crores for FY 19-20. The company reported a total income of ₹3,160.49 crores for the period ended December compared with ₹9,357.35 crores a year ago. The net loss stood at ₹264.30 crores compared to a profit of ₹503.08 crores.
Their residential and commercial spaces are aimed at every segment, right from super luxury to budget, thereby enabling every aspiring consumer to fulfill their dream. The company’s brands include “Lodha”, “CASA by Lodha” and “Crown – Lodha Quality Homes” for our affordable and mid-income housing projects. The “Lodha” and “Lodha Luxury” brands for premium and luxury housing projects, and the “iThink”, “LodhaExcelus” and “LodhaSupremus” brands for office spaces.
The company’s in-house sales team is supported by a distribution network of multiple channels across India as well as key non-resident Indian (“NRI”) markets, such as the Gulf Cooperation Council, United Kingdom, Singapore, and the United States.
The real estate market in India has grown at a CAGR of approximately 10 percent from $ 50 billion in 2008 to $120 billion in 2017 and is expected to further grow at a CAGR of 17.7% to reach $1 trillion by 2030. The real estate market contributed approximately 6 percent to India’s GDP in 2017 and is likely to contribute approximately 13% to India’s GDP by 2025.
Valuation of Macrotech Developers (as of FY2020)
Earnings Per Share (EPS): INR18.46Price/Earnings (PE ratio): 26Return of Net Worth (RONW): 17.8%Net Asset Value (NAV): INR103.86 per share
Macrotech Developers has a strong reputation in the Mumbai region with delivery of close to 10,000 homes annually. Has the ability to price at a premium which results in higher margins.
The listed peers are Brigade Enterprises Ltd, DLF Limited, Godrej Properties Ltd, Oberoi Realty Ltd, Prestige Estates Projects Ltd, Sobha Ltd, and Sunteck Realty Limited. Among these, only Sobah Ltd has the lowest P/E ratio of 15.12, while Godrej Properties Ltd has the highest P/E ratio of 135.51
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