Nomura has reiterated its Buy rating on Lodha Developers and raised its sum-of-the-parts (SOTP)-based target price to Rs 1,280 from its earlier estimate, citing additional value from the company's planned data centre land monetisation.

The brokerage said it has factored in the incremental value arising from the sale of around 140 acres of land earmarked for data centres. "We moderately raise our TP for Lodha to Rs 1,280 as we factor in the additional value arising from data center (DC) land sales for ~140 acres."

Nomura maintained its positive view on the developer, citing its expansion strategy across the Mumbai Metropolitan Region (MMR), Bengaluru and the National Capital Region (NCR), strong business model, and the potential to deliver around 20% profit after tax CAGR between FY26 and FY31. It also expects annuity income to increase tenfold by FY32, driven by growth in office, warehousing and data centre assets.

The brokerage noted that the ongoing conflict in West Asia has had only a moderate impact on demand. It said demand from the region accounts for 4-5% of Lodha's overall sales, or around one-third of its NRI business, with buyer sentiment remaining subdued. However, strong domestic demand continues to offset this weakness.

Nomura added that the company expects construction cost inflation of 1-1.5%, which could have a negative impact of around 35-75 basis points on EBITDA margins.

The brokerage highlighted that Lodha has maintained its FY27 pre-sales guidance of Rs 240 billion and expects pre-sales of more than Rs 50 billion in the September quarter, implying 13% year-on-year growth.

According to Nomura, the company has inventory worth Rs 413 billion and launches worth Rs 240 billion in the pipeline. It estimates total available supply of Rs 653 billion during the remaining nine months of FY27 and believes the company can achieve its guidance by selling around 30% of this inventory.

On the Palava township, Nomura said the land parcel continues to offer significant value creation opportunities across both residential and data centre businesses. It noted that data centre land values have increased sixteen-fold between CY21 and CY26, from Rs 26 million per acre to Rs 425 million per acre.

The brokerage also said Lodha has increased the land earmarked for data centres to 660 acres from 400 acres earlier. Around 143 acres are planned to be monetised at approximately Rs 600 million per acre, which is expected to generate around Rs 90 billion over the next three to four years.

These proceeds will be used to develop a 1 GW data centre PowerShell, which Nomura expects to generate annual rental income of more than Rs 20 billion. It also expects the opening of the Mulund-Airoli-Palava Freeway after the monsoon to support residential sales at Palava and Upper Thane.