Target: ₹1,262

CMP: ₹894.85

Macrotech Developers (Lodha) achieved its best-ever annual sales bookings in FY23 worth ₹12,060 crore (up 34 per cent y-o-y) and higher than its guidance of ₹11,500 crore at the beginning of FY23. Further, the company’s India business net debt reduced by ₹2,230 crore y-o-y in FY23 to ₹7,070 crore as of Mar’23.

FY23 was also strong year for business development with the company adding GDV of ₹19,800 crore across 12 new projects vs. its FY23 guidance of ₹15,000 crore of GDV addition.

For FY24, the company is targeting 20 per cent YoY growth in sales bookings to ₹14,500 crore (I-sec estimate of ₹13,400 crore) driven by new Mumbai/Pune launches and two Bengaluru project launches and expects to generate an operating surplus of ₹6,000 crore pre-interest.

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Beyond FY24, the company is targeting a further 20 per cent CAGR between FY24-26 which implies FY26 sales bookings of ₹21,000 crore which is contingent on new project additions and the residential cycle remaining favourable over the long term.

We retain our Buy rating with a revised target price of ₹1,262/share (earlier ₹1,275) based on FY23 NAV owing to balance sheet adjustments.

Key risks are demand slowdown in the MMR market and rising interest rates.