Macrotech Developers - Record quarter/year for sales bookings - ICICI Securities

Macrotech Developers (LODHA) achieved record Q4FY22 India business sales bookings of Rs34.6bn vs. Isec estimate of Rs32.5bn (up 37% YoY and 33% QoQ) and record FY22 sales bookings of Rs90.2bn (previous highest was Rs81.2bn in FY18). We believe that the sales were largely sustenance driven with no major launches during the quarter and the company has achieved its FY22 sales guidance of Rs90.0bn. The company has added new projects having total saleable area of 8.8msf with an estimated GDV of Rs146.0bn in 9MFY22, majority of which are slated for FY23E launch. Considering the strong launch pipeline and momentum in sustenance sales, we estimate sales bookings of Rs110.1bn in FY23E and Rs119.0bn in FY24E. We upgrade our rating to BUY from HOLD with a revised target price of Rs1,348/share (earlier Rs1,304) incorporating new JDA projects and value the company at a 30% premium to our Mar'22E NAV of Rs1,037/share. Key risks are a demand slowdown in the MMR market and rising interest rates in India.

- Record quarter/year for sales bookings: LODHA clocked Q4FY22 India business sales bookings worth Rs34.6bn vs. Isec estimate of Rs32.5bn (up 37% YoY and 33% QoQ) and it is the highest quarterly sales booking clocked by the company till date. For FY22 overall, this translates to Rs90.2bn of India sales bookings (up 52% YoY) and is in line with the company's guidance of Rs90bn of sales at the beginning of FY22. This is also the company's record annual sales bookings with the previous highest bookings being Rs81.2bn achieved in FY18. While the company had launched projects having GDV of RsRs38.7bn in 9MFY22 and had planned to launch another Rs35.1bn of projects in Q4FY22, our channel checks indicate that the company's Q4FY22 launches were largely limited to extended eastern suburbs (Upper Thane/Palava) and eastern suburbs (Powai) with a luxury South Mumbai launch being pushed to FY23E. This suggests that the sales bookings for the quarter have been driven largely by monetization of inventory in existing projects or sustenance sales. India business collections for Q4FY22 stood at Rs28.4bn (up 36% YoY and 34% QoQ) and the company has clocked FY22 collections of Rs86.0bn which is largely in line with sales bookings. Another positive was the company achieving Q4FY22 sales bookings of GBP173mn or Rs17bn in its London projects while FY22 London sales bookings stand at GBP531mn or Rs53bn.

- Net debt reduced by Rs6.2bn QoQ to Rs93.1bn: The company's India business net debt reduced by Rs25.5bn QoQ to Rs99.3bn in Dec'21 from Rs125bn in Sep'21. The company's net debt has reduced further by Rs6.2bn QoQ to Rs93.1bn which we believe is driven by improved collections and may enable further debt reduction over FY23-24E.

- On track to achieve over Rs100bn of annual sales bookings over FY23-24E: Post listing in Q1FY22, the company has added new projects having total saleable area of 8.8msf having an estimated GDV of Rs146.0bn in 9MFY22, majority of which are slated for FY23E launch. Considering the strong launch pipeline and sustenance sales momentum, we estimate sales bookings of Rs110bn in FY23E and Rs119bn in FY24E.

- Valuations: We upgrade our rating to BUY from HOLD with a revised target price of Rs1,348/share (earlier Rs1,304) incorporating new JDA projects and value the company at a 30% premium to our Mar'22E NAV of Rs1,037/share. Our GAV of Rs592bn includes Rs351bn for FY23-30E post-tax-FCFF, Rs221bn for company's land bank and Rs20bn from UK project surplus.

Shares of Macrotech Developers Limited was last trading in BSE at Rs. 1164.50 as compared to the previous close of Rs. 1164.30. The total number of shares traded during the day was 30545 in over 2494 trades.

The stock hit an intraday high of Rs. 1223.55 and intraday low of 1155.15. The net turnover during the day was Rs. 36018724.00.

Source : Equity Bulls

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MacrotechDevelopers INE670K01029 LODHA Realty ICICISecurities