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Real estate developer Lodha, which is listed as Macrotech Developers, is poised to surpass its full-year guidance of Gross Development Value (GDV) of Rs 17,500 crore for new project additions in the current fiscal year, according to a high-ranking company official.
In the first half of the financial year, the company has already added projects with a development value of Rs 14,300 crore, which is over 80% of its full-year target. Abhishek Lodha, the Managing Director and CEO of Macrotech Developers, expressed confidence that the company is well on its way to exceeding its full-year guidance, given the substantial progress made during the first half and the momentum in adding new projects and strengthening the business development pipeline.
Macrotech Developers will continue to execute its 'supermarket' strategy, which involves developing projects every 3-5 kilometres across key core property markets, particularly in Mumbai and Pune. This strategy is rooted in the belief that Indian homebuyers tend to stay within a 3-5 kilometre radius of their current residence. To capture the market share effectively, it's essential to be present within this catchment area.
In the September quarter, the company added two more projects covering 1.2 million square feet, with a total worth of Rs 2,300 crore, in addition to the five new projects added in the June quarter, which had a potential value of Rs 12,000 crore. Lodha highlighted that the company's substantial project portfolio across various micro-markets in the cities it operates in provides a unique opportunity for granular and predictable growth.
The first half of the fiscal year 2023-24 saw Macrotech Developers achieve its best-ever first-half pre-sales of Rs 6,890 crore, despite not launching any new locations. This achievement underscores the company's ability to consistently grow pre-sales in a predictable manner with low variability, independent of specific locations, market segments, or projects.
Along with robust pre-sales numbers, the company managed to command approximately 3% higher prices for its projects in the first half of the financial year and anticipates achieving a 6-7% increase in prices in 2023-24. Lodha explained that they have guided for 20% growth, with 6-7% coming from pricing and the remaining 13% from volume. Out of this, 5-6% of the volume will come from existing locations, and the balance 6-8% will come from new locations.
Macrotech Developers maintains a focus on reducing leverage while actively pursuing business development opportunities. The company is well on track to achieve its goal of a net debt-equity ratio of less than 0.5x and net debt less than 1x operating cash flow by 2023-24. During the quarter ending in September, the company managed to reduce its net debt by Rs 540 crore, bringing it to Rs 6,730 crore.
Recently, it was reported that Lodha secured Rs 650 crore in debt facilities from Standard Chartered Bank and Deutsche Bank for a three-year period to refinance its high-cost debt. Standard Chartered Bank provided Rs 245 crore at 9% interest, payable annually, while Deutsche Bank provided Rs 405 crore at 9.5% interest, payable quarterly.
Rising competition among mortgage lenders, along with the Reserve Bank of India's decision to pause interest rate hikes, and the expected downward trajectory in interest rates in 2024, have led to the belief that the market has already seen the peak of mortgage rates. A likely reduction in mortgage rates, coupled with government incentives for affordable housing, is expected to further boost demand in the real estate sector.
This story was earlier published by th Times Group
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