Brickwork Ratings assigns 'BWR A-(SO)' for Lodha Dwellers Private Limited's NCD Issue

Brickwork Ratings (BWR) has assigned BWR A-(SO) (Pronounced A Minus -Structured Obligation) Rating for Lodha Dwellers Pvt. Ltd's structured secured NCD Issue of Rs.100Crore with a tenor upto 36 months 'BWR A-(SO)' stands for an instrument that is considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk.

Lodha Dwellers Pvt Ltd is a SPV of Lodha Developers Ltd and as such BWR has essentially relied upon the audited financial results of Lodha Developers Ltd of FY11, estimates for FY12 (audited results are yet to be announced), projected financials and information and clarification provided by the issuer and its promoters, draft term sheet outlining the structure of the deal, and collateral value analysis.

The rating factors, inter alia, the experienced management team of Lodha Developers Ltd, its healthy order book position, its dominance in residential segment, and the underlying securities of the proposed NCD issue. The rating is however constrained by project execution risk, very high leverage, and the current situation in the real estate industry.

Establishedin1980,theLodhaGroupisprimarilyfocusedontheMumbairealestate market, with approximately 97% of its 4238 acre land-bank in the Mumbai Metropolitan region with total saleable area of 284 mnsq ft.

The Lodha group is one of the largest players in the residential real estate segment, and has registered sales of Rs.2853.8crores (4.2 million sft by area) in FY12.Current project portfolio of company includes 60 residential projects with 72 mn Square feet of saleable area including 30 mn square feet under construction (24 residential projects) with a delivery projection of 12 mn square feet in FY 13 and FY 14. Company is also constructing 9 commercial projects with total saleable area of 3 mnSq ft. Company delivered 1.5 mnsqft and 2.2 mn sqft of area respectively in FY11 and FY12.

In FY11the Lodha Developers consolidated net worthwas Rs.744 Cr and total borrowings wereRs.5736.6 Cr including compulsory convertible debentures of Rs.2767.3 Cr. The interest outflow for FY11 was at Rs 795.2 Cr, as against Rs 309.5 Cr for FY10. As per March 2012 provisional figures the consolidated net worth increased to Rs.1150 Cr and total borrowingsare atRs. 4734 Cr including fully convertible debentures of Rs. 645 Cr. As of FY11, company reported net sales of Rs 2161.7 Cr and PAT of 266.8 Cr as against FY10 reported sales of Rs 1657.7 Cr and PAT of Rs 300 Cr.

Source : Equity Bulls

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