Real estate giant Macrotech Developers Limited (MDL) has captured the attention of investors and analysts alike after reporting its highest-ever quarterly pre-sales performance for the second quarter of FY25.
The company, which operates under the Lodha brand, achieved pre-sales of ₹42.9 billion during the quarter, representing a 21% year-on-year increase. This achievement comes despite the challenging market environment during the ‘Shradhh’ period, which traditionally slows down real estate activity. The impressive Q2 update has prompted a 4.32% surge in Macrotech’s stock price, with shares hitting an intraday high of ₹1,222.55.
Record Pre-sales and Growth Momentum
Macrotech Developers’ Q2 performance has been described as a testament to its market strength, especially considering the inauspicious ‘Shradhh’ period, which fell in September this year, compared to October last fiscal year.
Despite this, the company managed to grow its pre-sales by 21% on a Y-o-Y basis, demonstrating the effectiveness of its strategic approach in capturing demand.
In addition to the quarterly figure, Macrotech reported total pre-sales of ₹83 billion for the first half of FY25, positioning the company on track to meet its full-year growth target of 20%. The company’s robust performance in the first half of the fiscal year has been attributed to its ability to identify and capitalize on key micro-markets across India.
Brokerages have responded positively to these numbers. According to Nomura, Macrotech Developers’ granular sales strategy allows it to fully leverage specific regions. This strategy, referred to as a ‘supermarket’ approach, enables the company to cater to different market segments effectively, ensuring steady cash flow and market penetration.
Collections and Business Development
Macrotech Developers has also seen healthy growth in collections during Q2, reporting a rise to ₹30.7 billion, marking an 11% Y-o-Y increase. Collections are a crucial indicator of liquidity in real estate, and Macrotech’s rise in this metric further signals the company’s strength in managing its inventory and capitalizing on ongoing sales momentum.
Moreover, the company has expanded its business portfolio by adding four new projects during the quarter. These projects are located in Pune and Bengaluru, both fast-growing real estate hubs in India. The new developments contribute to Macrotech’s total business development of ₹166 billion for the first half of FY25. These expansions underline the company’s commitment to geographical diversification, a strategy that analysts at Nuvama believe will further bolster its market position.
Nuvama analysts highlighted that the Real Estate Regulatory Authority (RERA)-driven consolidation in the market is creating growth opportunities for organized players like Macrotech.
With housing demand on the rise, especially in regions like the Mumbai Metropolitan Region (MMR), the company is well-placed to benefit from this trend. The company’s strong position in the MMR, combined with its robust sales and expanding portfolio, is likely to result in continued cash flow strength in the near future.
Stock Surge and Analysts’ Outlook
Following the positive Q2 update, Macrotech Developers’ stock saw a significant uptick. Shares of the company surged by over 4% in early trade, reaching an intraday high of ₹1,222.55. As of 9:47 AM on October 7, the stock was trading at ₹1,200.20, up 2.42% for the day. In comparison, the BSE Sensex was trading just 0.31% higher at 81,942.36 points, reflecting the broad market’s moderate performance.
Analysts have reiterated their bullish outlook on Macrotech Developers, with brokerage firms revising their target prices for the stock. Nomura has set a target price of ₹1,600, while Nuvama has adjusted its price target slightly lower from ₹1,823 to ₹1,795. Despite the revision, Nuvama analysts remain optimistic about the company’s future growth, citing strong business fundamentals and market positioning.
Nomura’s positive outlook stems from several key factors, including the company’s ability to capitalize on the potential of micro-markets, its strategic focus on the township business in Palava and Thane, and its expectation of infrastructure upgrades that could drive price growth in these areas. Moreover, Macrotech Developers’ low net debt and strong operating cash flow are expected to support its business development targets in the coming quarters.
Financial Health and Debt Levels
Despite its robust performance, Macrotech Developers reported an increase in net debt to ₹49.2 billion as of the end of Q2. However, the company’s debt-to-equity ratio remains at a healthy 0.5x, which analysts see as manageable given its ongoing cash flow generation and business development activity.
Macrotech has been successful in managing its debt levels while simultaneously expanding its project pipeline, which is a positive sign for investors looking at long-term returns.
The company’s relatively low debt levels have also played a role in analysts’ optimistic outlooks. Nuvama analysts noted that Macrotech’s efficient inventory management and its strategic approach to land monetization in Palava could serve as significant growth drivers moving forward.
Moreover, the company’s ongoing geographical diversification into cities like Pune and Bengaluru is expected to help reduce reliance on any single market, spreading its risk and ensuring continued sales momentum in new regions. As a result, Macrotech Developers is well-positioned to outperform its peers in the coming quarters.
Valuation and Market Position
In terms of valuation, Macrotech Developers’ stock is currently trading at 31x FY25 forecasted EV/EBITDA, according to Nomura. This valuation places it within the range of 20-51x for FY23 and 37-60x for FY24, which indicates that the stock still has room for growth, especially given the company’s robust sales pipeline and strategic market positioning.
With strong pre-sales, healthy collections, and ongoing portfolio expansion, Macrotech Developers is well-positioned to achieve its ambitious growth targets for FY25. As brokerages remain bullish on the company’s prospects, it seems poised to continue its upward trajectory in the real estate sector, even amidst market challenges.
