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* Mahindra Lifespace (MLDL) reported bookings of INR3.6b, up 10% YoY. However, this was 20% below our estimate due to sales spill-over from a recent launch at Nestalgia, Pune, and the postponement of the launch in Lakewoods, Chennai. New project launches of 0.4msf during the quarter contributed only 7% to overall bookings.

* In FY23, pre-sales grew 77% YoY to INR18b, driven by scale-up in launches (3.2msf in FY23 v/s 1.3msf in FY22), which contributed 52% to pre-sales. MLDL expects FY24 to be another strong year with a target to launch ~4msf across nine projects and GDV of ~INR40b.

* IC&IC Segment – Origins Chennai gained traction with the leasing of 52acre of land to Mitsubishi Electric. Additionally, the company signed a lease agreement with Alliance Group for 9acre land outside MWC boundary for a residential project. Overall IC&IC reported a 69acre of lease worth INR2b at INR29m/acre

* P&L performance – MLDL delivered 0.25msf of projects (incl. 0.14msf in Roots, Kandivali) and reported a revenue of INR2.6b, up 58%/37% YoY/QoQ. The company continued to report an operating loss of INR270m, due to recognition of low margin projects and high overheads. PAT came in at INR5m, including INR223m of JV profit.

Strong cash flows to drive growth in pipeline

* Cash flow performance – Collections were flat both YoY/QoQ to INR3b, while construction spend picked up to INR1.3b from INR0.9b in the previous quarter. Consolidated net debt declined QoQ to INR3.0b from INR3.7b in 3QFY23.

* Continuing with its strong business momentum, MLDL added three projects in FY23 with a saleable area of 3.4msf and a revenue potential of INR32b (including two projects added in 4Q).

* After the quarter ended, the company secured a second redevelopment project in Malad, Mumbai, with a GDV of INR8.5b. Despite this addition, MLDL is still assessing a business development pipeline worth INR55b. The company’s robust pipeline and steady cash flows suggest that the momentum of project additions will persist.

Scale-up, customer centricity, and financial prudence – three priorities

* Mahindra Group’s leadership fully supports MLDL, and considers it a “Growth Gem”, providing oversight to ensure any gaps in the business are addressed.

* The departing CEO has ensured that there was a prophecy in place to build institutional capability throughout the organization, which will ensure continuity not only at senior leadership but even at the second level leadership going forward.

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