Please refer to important disclosures at the end of this report
1
MACROTECH DEVELOPERS LIMITED (LODHA) is one of the largest real estate
developers in India, by residential Sales value for the financial years 2014
to 2020. Its core business is residential real estate developments with a
focus on affordable and mid-income housing. In 2019, it forayed into the
development of logistics and industrial parks and entered into a joint
venture with ESR, it also developed commercial real estate, including as
part of mixed-use developments.
Positives: (a) One of India’s largest residential real estate developers,
Lodha having a market share of more than 10% in micro markets of MMR
Market (b) Diversified portfolio across price points and micro-markets in the
MMR with a focus on affordable and mid-income housing. (c) Change in
customer preference of buying ready to move inventory will help the
company to increase its market share in MMR region as the company has
significant inventory of completed units. (d) We have seen a very good
housing demand after the sector was hit by the covid pandemic, sales
momentum to continue for Lodha developers in near future.
Investment concerns: (a) Lodha developers having a net debt of 16700
crores as on 31st December 2020, any downturn in industry may affect the
company significantly. (b) Company product portfolio is too concentrated
on the residential market of MMR region any change in rule and regulation
by authority may affect the company significantly. (c) Company not able
to generate significant positive cash flow for the shareholder in the last 3
years and may continue to have negative cash flows in the near future.
Outlook & Valuation: Company has a strong brand in affordable and mid
income housing projects, but is not able to deliver the growth in sales and
free cash flow in the last couple of years. The company has posted sales
degrowth of 68% in 9MFY21 and reported a negative profit after tax of 265
crores. Given weak revenue growth in the past and leverage balance
sheet we assign a "NEUTRAL" rating to the IPO
Key Financials
Y/E March (` cr)
FY2018
FY2019
FY2020
9MFY2021
Net Sales
13,527
11,907
12,443
2,915
% chg
-
-12.0
4.5
-68.6
Net Profit
1,789
1,644
745
-264
% chg
-
-8.1
-54.7
-152.5
EBITDA (%)
24
27
15
19
EPS (Rs)
45.2
41.5
18.8
(6.7)
P/E (x)
10.8
11.7
25.8
-
P/BV (x)
8.5
4.4
3.8
4.0
ROE (%)
79.4
37.6
14.7
-
ROCE (%)
11.5
10.6
6.7
2.1
EV/EBITDA
12.5
13.3
19.4
66.5
EV/Sales
3.1
3.5
3.0
12.9
Source: Company, Angel Research.
Note: Valuation ratios at upper price band.
NEUTRAL
Issue Open: April 7, 2021
Issue Close: April 9, 2021
Offer for Sale: N/A
QIBs 50% of issue
Non-Institutional 15% of issue
Retail 35% of issue
Promoters 88.5%
Others 11.5%
Post Issue Shareholding Pattern
Post Eq. Paid up Capital: ₹ 448 cr
Issue size (amount): ₹2500 cr
Price Band: ₹483-₹486
Lot Size: 30 shares and in multiple
thereafter
Post-issue mkt. cap: *₹21605 cr - **₹
21740 cr
Promoters holding Pre-Issue: 100%
Promoters holding Post-Issue: 88.5%
*Calculated on lower price band
** Calculated on upper price band
Book Building
Fresh issue: 5.1 crore shares
Issue Details
Face Value: ₹10
Present Eq. Paid up Capital: ₹396 cr
Macrotech Developers (LODHA)
f
IPO Note Real estate
April 06, 2021
Macrotech Developers Ltd (Lodha):| IPO Note
April 06, 2021
2
Company background
Company core competency lies in professionally managing the real
estate value chain as we have in-house capabilities to deliver a project
from conceptualization to completion. Its brands include “Lodha”, “CASA
by Lodha” and “Crown – Lodha Quality Homes” for affordable and mid-
income housing projects, the “Lodha” and “Lodha Luxury” brands for
premium and luxury housing projects, and the “iThink”, “Lodha Excelus”
and “Lodha Supremus” brands for office spaces. Lodha group has been
involved in the real estate business since 1986. It commenced its
operations in Mumbai, developing affordable housing projects in the
suburbs of Mumbai, and later diversified into other segments and regions
in the MMR and Pune. Its large townships are located at Palava (Navi
Mumbai, Dombivali Region) and Upper Thane (Thane outskirts).
Issue details
The issue comprises of fresh issues of up to Rs. 2500 crore in the price band
of `483-486.
Pre and post IPO shareholding pattern
No of shares
(Pre-issue)
%
(Post-issue)
%
Promoter
395,878,000
100.0
350,352,030
88.5
Public
0
0.0
96,966,299
11.5
Total
395,878,000
100.0
447,318,329
100.0
Source: Company, Angel Research & RHP.
Objectives of the Offer
Repayment/ Reduction of the aggregate outstanding borrowings
of our Company on a consolidated basis
Acquisition of land or land development rights
General corporate purpose
Macrotech Developers Ltd (Lodha):| IPO Note
April 06, 2021
3
Key Management Personnel
Mukund Manohar Chitale, aged 71 years, is an Independent Director and
Chairman of the Company. He holds a bachelor’s degree in commerce
from the University of Mumbai and is a qualified Chartered Accountant.
He was appointed as an Independent Director of the Company with
effect from November 23, 2016. He has nearly 43 years of experience as a
practicing Chartered Accountant. He is a fellow member of ICAI and has
served as the President of ICAI in the year 1997-1998. He was also the
Chairman of the Ethics Committee of BSE. He was a member of Advisory
Board on Bank, Commercial and Financial Frauds of Central Vigilance
Commission.
Abhishek Mangal Prabhat Lodha, aged 41 years, is the Managing Director
and Chief Executive Officer of Company. He holds a master’s degree in
science (industrial and systems engineering (supply chain & logistics) from
Georgia Institute of Technology. He was appointed as the Managing
Director of the Company with effect from March 9, 2016 and was
reappointed as ‘Managing Director and Chief Executive Officer’ with
effect from March 1, 2018.
Rajendra Narpatmal Lodha, aged 54 years, is a Whole-Time Director of the
Company. He holds a bachelor's degree in civil engineering from M.B.M.
Engineering College, University of Jodhpur, Jodhpur. He ceased to be the
Director of the Company from March 9, 2016 and was re-appointed with
effect from June 21, 2016.
Rajinder Pal Singh, aged 69 years, is a Non-Executive Director of the
Company. He holds a post graduate degree in mathematics from
Advanced Centre for Pure Mathematics, Punjab University, Chandigarh.
Raunika Malhotra, aged 41 years, is a Whole-Time Director of the
Company. She is President – Marketing and Corporate Communications of
the Lodha group. She has been with the Lodha group for 12 years,
including two years as Deputy Regional Chief Executive Officer. She holds
a bachelor’s degree in engineering (electronics and telecommunication
branch) from the University of Pune and a post-graduate diploma in
industrial engineering from the National Institute of Industrial Engineering,
Mumbai.
Macrotech Developers Ltd (Lodha):| IPO Note
April 06, 2021
4
Consolidated Profit & Loss Statement
Y/E March (` cr)
FY2018
FY2019
FY2020
9MFY2021
Total operating income
13,527.2
11,907.0
12,442.6
2,915.0
% chg
-
-12.0
4.5
-68.6
Total Expenditure
10,237.5
8,739.9
10,522.3
2,351.4
Cost of Projects
8,908.5
7,378.0
9,550.0
2,052.4
Employee Benefits Expense
493.0
389.9
390.4
201.5
Other Expenses
836.1
972.1
581.9
97.6
EBITDA
3,289.7
3,167.0
1,920.3
563.6
% chg
-
-3.7
-39.4
-65.8
(% of Net Sales)
24.3
26.6
15.4
19.3
Depreciation& Amortization
397.9
194.4
306.4
56.4
EBIT
2,891.7
2,972.6
1,613.9
507.2
% chg
-
2.8
-45.7
-64.9
(% of Net Sales)
21.4
25.0
13.0
17.4
Finance costs
381.6
555.6
731.5
811.0
Other income
199.4
71.9
118.4
245.5
(% of Sales)
1.5
0.6
1.0
8.4
Recurring PBT
2,709.5
2,488.9
1,000.8
-58.3
% chg
-
-8.1
-59.8
-106.1
Exceptional item
-
-
5.6
-463.0
Tax
-920.1
-844.9
-261.5
257.0
PAT (reported)
1,789.4
1,644.0
744.8
-264.3
% chg
-
-8.1
-54.7
-152.5
(% of Net Sales)
13.2
13.8
6.0
-9.1
Basic & Fully Diluted EPS (Rs)
45.2
41.5
18.8
-6.7
Source: Company, Angel Research
Macrotech Developers Ltd (Lodha):| IPO Note
April 06, 2021
5
Consolidated Balance Sheet
Y/E March (` cr)
FY2018
FY2019
FY2020
9MFY21
9MFY20
SOURCES OF FUNDS
Equity Share Capital
395.9
395.9
395.9
395.9
395.9
Other equity (Retained Earning)
1,823.2
3,445.1
4,156.4
3,891.0
4,014.8
Shareholders’ Funds (NCI)
2,254.9
4,375.8
5,071.5
4,812.1
4,819.7
Total Loans
22,600.4
23,362.3
18,414.2
18,633.5
22,585.7
Other liabilities
264.5
245.8
424.1
434.0
539.4
Total Liabilities
25,119.9
27,984.0
23,909.7
23,879.6
27,944.8
APPLICATION OF FUNDS
Property, Plant and Equipment
1,285.3
1,282.7
1,185.1
1,136.4
1,228.6
Capital Work-in-Progress
5.9
6.3
6.3
6.3
6.3
Investment Property
199.0
193.3
288.2
281.4
290.5
Goodwill
748.1
661.1
546.7
546.7
610.9
Other Intangible Assets
2.4
1.7
1.0
0.5
1.3
Investments by Equity Method
14.0
14.0
58.3
58.5
58.1
Current Assets
44,022.6
46,650.4
33,487.7
33,750.3
44,976.1
Inventories
39,163.5
41,512.4
29,031.4
29,200.1
39,782.6
Investments
1,248.6
1,269.4
1,290.4
1,298.4
1,244.1
Loans
563.2
480.2
416.7
413.8
486.3
Trade Receivables
734.0
484.3
794.3
650.2
708.6
Cash and Cash Equivalents
255.2
352.5
118.5
205.1
257.9
Cash and Cash Equivalents
267.2
305.0
68.4
90.3
571.0
Other Financial Assets
517.2
750.5
616.4
680.7
662.5
Other Current Assets
1,273.7
1,495.9
1,151.6
1,211.7
1,263.2
Current Liability
22,691.4
21,880.0
16,782.8
16,715.0
20,082.3
Net Current Assets
21,331.2
24,770.4
16,704.9
17,035.3
24,893.8
Other Non Current Asset
1,533.9
1,054.5
5,119.3
4,814.6
855.1
Total Assets
25,119.9
27,984.0
23,909.7
23,879.6
27,944.8
Source: Company, Angel Research
z
Macrotech Developers Ltd (Lodha):| IPO Note
April 06, 2021
6
Cash Flow Statement
Y/E March (`cr)
FY2018
FY2019
FY2020
9MFY21
9MFY20
Operating profit before changes
6,025
5,795
4,266
1,514
3,433
Net changes in working capital
-4,765
-5,947
-411
-213
-1,114
Cash generated from operations
1,260
-151
3,855
1,301
2,319
Direct taxes paid (net of refunds)
-564.6
-311.5
-82.1
135.8
-55.6
Operating Activities (A)
696
-463
3,773
1,436
2,263
Purchase of Non-Current Investments
-526.9
-10.7
-82.6
-13.3
-159.8
Loans (Given)/ Received back (Net)
-184.4
-66.1
471
309.1
41.6
Interest received
96.3
22.1
44.2
15.4
32.1
Sale/ (Purchase) of Current Investments
-31.3
-19.2
-199.5
1.0
28.2
Others
-8.9
-110.4
-21.3
-21.8
-7.0
Investing Activity (B)
-655.2
-184.3
211.7
290.4
-64.9
Proceeds from Borrowings
12972
11087
5389
888
1138
Finance Costs Paid
-3021
-2969
-3053
-1080
-2346
Repayment of Borrowings
-9927
-7872
-6497
-1453
-1057
Proceeds Opt Convert Deb
0
500
0
0
0
Repayment Opt Convert Deb
0
-10
-28.2
0
-28.2
Financing Activity (C)
24
736
-4,189
-1,645
-2,294
Inc./(Dec.) in Cash
64.7
88.5
-204.7
81.5
-95.7
Opening Cash balances
185.8
255.2
352.5
118.5
352.5
Closing Cash balances
250.5
343.7
147.9
200.0
256.9
Net Effect of Exchange
4.7
8.9
-29.3
5.0
1.0
Closing Cash balances (Net)
255.2
352.5
118.5
205.1
257.9
Source: Company, Angel Research
Macrotech Developers Ltd (Lodha):| IPO Note
April 06, 2021
7
Key Ratios
Y/E March
FY2018
FY2019
FY2020
9MFY2021
9MFY2020
Valuation Ratio (x)
P/E (on FDEPS)
10.8
11.7
25.8
-
38.2
P/CEPS
8.8
10.5
18.3
-
27.3
P/BV
8.5
4.4
3.8
4.0
4.0
EV/Sales
3.1
3.5
3.0
12.9
4.5
EV/EBITDA
12.5
13.3
19.4
66.5
25.1
Per Share Data (Rs)
EPS (Basic)
45.2
41.5
18.8
(6.7)
12.7
EPS (fully diluted)
45.2
41.5
18.8
(6.7)
12.7
Cash EPS
55.3
46.4
26.6
(5.3)
17.8
Book Value
57.0
110.5
128.1
121.6
121.7
Returns (%)
ROE
79.4
37.6
14.7
-
10.4
ROCE
11.5
10.6
6.7
2.1
5.2
Turnover ratios (x)
Receivables (days)
33.7
38.9
37.9
162.6
49.0
Inventory (days)
1,056.7
1,272.5
851.6
3,656.3
1,565.9
Payables (days)
612.3
670.7
492.3
2,092.9
790.5
Working capital cycle (days)
478.2
640.7
397.2
1,725.9
824.4
Source: Company, Angel Research
Macrotech Developers Ltd (Lodha):| IPO Note
April 06, 2021
8
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