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Mumbai-based Macrotech Developers Ltd, which sells homes under Lodha brand, shares rose by more than 2 percent on April 25 following the company’s report of a robust overall performance in the March quarter. The company’s pre-sales of Rs 3,000 crore were bolstered by new launches, and collections of Rs 2,900 crore.

At 9.30 am, Lodha shares were trading at Rs 913 on BSE, up 1 percent from its previous close. In intraday, it rose as much as 2 percent to Rs 925 a share.

In the fourth quarter of FY2023, Lodha recorded revenues of Rs 3,250 crore, indicating a year-on-year decline of 5 percent, but a quarter-on-quarter increase of 84 percent. The company's EBITDA for the quarter was Rs 770 crore, marking an 11 percent decrease compared to the same period the previous year, but a 91 percent increase from the previous quarter. Lodha's PAT for the quarter was Rs 740 crore, reflecting a year-on-year increase of 39 percent and a quarter-on-quarter increase of 84 percent.

Lodha achieved pre-sales of Rs 3,000 crore in the fourth quarter of FY23, resulting in total pre-sales of Rs 12,000 crore for the fiscal year 2023, a year-on-year increase of 34 percent. This performance is slightly better than the company's projected pre-sales of Rs 11,500 crore. In the fourth quarter of FY23, Lodha had an embedded EBITDA margin of 31 percent, while for the entire fiscal year, the margin stood at 32 percent.

Lodha has set a target of achieving sales of Rs 14,500 crore in FY24, representing a year-on-year increase of 20 percent. The company plans to achieve this target by leveraging a robust launch pipeline of 10.6 million square feet, with a gross development value of Rs 12,900 crore, in addition to Rs 9,700 crore worth of ready inventory. Furthermore, Lodha aims to maintain a compound annual growth rate (CAGR) of 20 percent over the period spanning FY23-26, and targets pre-sales of Rs 21,000 crore in FY26.

Kotak has factored in pre-sales of Rs 14,000 crore for FY24E and Rs 17,000 crore for FY25E. It is noteworthy that in FY23, 26 percent of the pre-sales were attributed to Joint Development Agreement (JDA) projects. However, Lodha has set a target to increase this proportion to 40 percent in FY24E.

"Strong pre-sales guidance and project additions drive our FY24/25 pre-sales by 5 percent/6 percent. PAT is cut by 3/4 percent for FY24/25; as the higher pre-sales will reflect only towards FY27 onwards. Management said that it may consider if Percentage completion (PoCEM) a/c can be applied vs. current project completion; as PoCM tracks cash flows better. Cashflow performance shows growth-deleveraging dynamics is sustainable", said Jefferies India in a note to investors. The brokerage firm has maintained a buy rating and cut its target price to Rs 1,225 from Rs 1,325 a share.

Lodha's board of directors has approved the issuance of bonus shares in a 1:1 ratio and a dividend of Rs 2 per share (pre-bonus). Going forward, Lodha intends to pay out 20 percent of its PAT as dividends, as long as this is below its debt ceiling targets. "This decision reflects the management's confidence in the company's ability to generate cash during the current real estate upcycle, which we believe will continue to trend upwards, especially as interest rates are expected to peak sometime in FY24", Kotak report added. Kotak has maintained a buy rating and kept a target price of Rs 1,330 a share from Rs 1,300 a share.

According to Jefferies India, the operating cash flow for Lodha is projected to be Rs 6,000 crore in FY24, with a boost from a Rs 550 crore inflow resulting from the winding up of its London investments. The net debt target range implies a reduction of approximately Rs 1,500 crore year-on-year. As a result, there will be sufficient room for capex of around Rs 2,500-3,000 crore and potential dividend payouts, Jefferies India added.

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