Rating agency Moody's has upgraded the outlook of realty major Lodha Developers (LDL) to positive from stable on expectation of improvement in the company's operating sales. Lodha Developers plans to raise about Rs 5,500 crore through its proposed initial public offer (IPO).
"The positive outlook on LDL's ratings reflect our expectation that the improvement in the company's operating sales and collections will be sustained and will lead to an improvement in its financial profile, such as to support a higher rating over the next 12-18 months," Moody's Assistant Vice President and Analyst Saranga Ranasinghe said. Moody's Investors Service has affirmed LDL's B2 corporate family rating (CFR) and also the B2 backed senior unsecured debt rating of the US-dollar denominated bonds issued by Lodha Developers International Ltd and guaranteed by LDL. Moody's has also changed the outlook on the ratings to positive from stable, the agency said in a statement. "We expect LDL's operating sales to further improve by 15%-18% in FY19. Further, we expect the increase in its cash collections, largely driven by London projects, to be higher than increase in its construction spending, such that company will report a positive cash flow from operations," said Ranasinghe.
Moody's estimated that the company will raise total proceeds of around Rs 55 billion, the majority of which the company will apply to debt reduction. LDL is the largest real estate developer in India by sales of residential apartments. The company is focused on residential development in the Mumbai Metropolitan Region, with some projects in nearby Pune. The company and its promoters expanded into the London market by acquiring two properties, now in the process of development, Moody's said.