Mahindra Lifespaces Q4FY21 Results Review - On track - HDFC Securities

Mr. Parikshit D Kandpal, CFA, HDFC Securities and Mr. Chintan Parikh, Institutional Research Analyst, HDFC Securities

Mahindra Lifespaces Developers Ltd (MLDL) reported operationally strong quarter with pre-sales value/volume growing 77%/67% sequentially to Rs 3.5bn, driven by four new launches. For FY21, MLDL registered de-growth in pre-sales value/volume of 15%/25% as 1HFY21 was impacted due to COVID-19. Labour availability has reduced to 60% and is expected to ramp up by 1QFY22 end as COVID-19 impact reduces. Over last 9M, MLDL has added 3 land parcels with ~Rs 15bn presales potential and is in advance stages of negotiation on land parcels with preslaes potential of Rs 45bn. Residential presales/IC business leasing guidance of ~Rs 25/5bn annually by FY25 remains intact. Given strong growth trajectory, robust balance sheet, trustworthy brand and tailwinds for organized players, we remain constructive on MLDL. We maintain BUY with SOTP valuation of Rs 773/sh.

Financial highlights: Revenue: Rs 560mn (-45%/-14% YoY/QoQ, ~2x est.); EBITDA: Rs (371) mn (Rs (514)/(185) mn in 4QFY20/3QFY21, vs Rs (212) mn est.); Interest cost: Rs 19mn (+43.1%/-41.3% YoY/QoQ); Other income: Rs 70mn (Rs (403)/156 mn 4QFY20/3QFY21); RPAT/APAT: Rs (272) mn (Rs (893)/(112) mn 4QFY20/3QFY21), vs estimated loss of Rs 161mn.

Operational highlights: Presales value for the quarter came at Rs 3.5bn (-13%/+77% YoY/QoQ) and volume stood at 0.5msf (-31%/+68% YoY/QoQ). For the year FY21, presales value stood at Rs 6.9bn (-15% YoY) and volume at 1.1msf (-25% YoY). While new launches contributed Rs 2.6bn in pre-sales during FY21, sustenance inventory contributed 34% of the sales. 60% of the sales came from mid-premium segment and rest from the affordable. In the IC&IC business, MLDL leased out 28/55.6acres for Rs 664/1,287mnmn during 4QFY21/FY21.

New launches/business development key for Rs 25bn annual presales by FY25: MLDL completed three land acquisitions in last 9 months with sales potential of Rs 15bn and launched four projects of 0.94msf. To reach the target, it would have to acquire land parcels/launch projects with Rs 20bn sales potential every year. Currently, MLDL has BD pipeline with Rs 45bn sales potential which should augment its 4.71msf forthcoming area. Management is hopeful of opening >2 msf area for sales in new launches during FY22. Opening of international travel may aid IC&IC business.

Healthy balance sheet supportive of growth: MLDL consolidated net debt stood at Rs 1.1bn with net D/E at 0.07x, which provides ample room for expansion. Standalone borrowing cost at 5.9% is the lowest vs peers, which is a good sign for land bank acquisitions. However, MLDL's first preference would remain internal accrual to fund its Rs 5bn land outflow annually. Management could also adopt platform approach to fuel growth.

Shares of MAHINDRA LIFESPACE DEVELOPERS LTD. was last trading in BSE at Rs.491 as compared to the previous close of Rs. 502.15. The total number of shares traded during the day was 2219 in over 190 trades.

The stock hit an intraday high of Rs. 516 and intraday low of 490.1. The net turnover during the day was Rs. 1113218.

Source : Equity Bulls

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