Lodha’s robust Q3 earnings largely baked into the stock

26 Jan , 2022 By : Kanchan Joshi

Mumbai-focused real estate developer Macrotech Ltd (Lodha) reported strong earnings in the December quarter.

Investors would remember that its operational update, a pre-cursor to earnings, on 6 January already pointed to a stellar Q3 performance. Sales booking at Rs2,608 crore improved 40% year-on-year (y-o-y) and was highest in the past 12 quarters.

The affordable housing segment contributed 63% to its overall sales and the balance came from the luxury segment. In Q3FY22, collections at Rs2,127 crore, up 44% y-o-y.

"The pre-sales numbers released last week, more or less indicated that actual results will be robust. On the positive side, debt is no longer a worry and listed companies continue to benefit from consolidation. But given the sharp rally in the stock in the past one year, many of these positives are already factored in," said an analyst with a domestic brokerage house requesting anonymity.

Lodha's net debt declined to Rs9,896 crore down from Rs12,500 crore in 2QFY22. With that, the company has achieved its FY22 debt reduction guidance, the management said. Further, the cost of debt eased from 12.3% in the March quarter to 11.1% at the end of the December quarter. One basis point is one-hundredth of a percentage point. Going ahead, the interest cost will continue to follow a downward trajectory, the management added.

Ahead of its Q3 earnings announcement on Tuesday evening, the stock rose 5% on the NSE. In the last year, the Lodha stock has rallied by 175% significantly beating the Nifty Realty index which rose 51% in the same span.

"We expect Lodha to see decent sales in Q4FY22 as well. But how sales pan out in the calendar year 2022 remains to be seen as stamp duty cut benefits are not there anymore and price hikes may happen on elevated input costs. Also, a high base of FY22, could make FY23 sales growth look lower," added the analyst.

Meanwhile, Lodha signed on six more joint development agreements (JDA) for around 4.8 million square feet with nearly Rs10,000 crores gross development value (GDV), during the December quarter. "Since our IPO (April 21), we have now added 11 JDA projects totalling for around 8.8 million square feet with GDV potential of around Rs14,600 crores, which gives us significant visibility of future growth," said the company press release.