IGI Logo

The rubber hits the road

FY23 was a breakout year for Mahindra Lifespace Developers (MLIFE) as it clocked record residential sales bookings of Rs18.1bn (up 76% YoY) led by 3.2msf of new launches. With the new MD and CEO, Mr. Amit Kumar Sinha taking over from May’23, the company’s focus remains on achieving its medium-term guidance of Rs25bn of residential sales by FY25. With the company having 9 planned launches in FY24 having a GDV of Rs35-40bn (including Kandivali, Mumbai in Q2FY24), we estimate FY24E and FY25E sales bookings of Rs23.1bn and Rs27.1bn, respectively. We retain our BUY rating on MLIFE with a revised target price of Rs565/share (earlier Rs488) which includes a premium to NAV of 50% considering the strong business development pipeline. Key risks are residential demand slowdown and rising input costs.

* New MD & CEO to continue to focus on executing company’s growth strategy: In Feb’23, MLIFE had announced the resignation of its then MD & CEO, Mr. Arvind Subramanian who had been helming the company’s operations since May’20. In his place, the Mahindra Group appointed Mr. Amit Kumar Sinha as the new MD & CEO from May’23 who has been already working with the Mahindra Group as President, Group Strategy since Apr’21 and carries over 18 years experience and was a Senior Partner and Director with Bain & Company prior to joining the Mahindra Group. The new MD’s focus remains on achieving MLIFE’s medium term annual sales booking guidance of Rs25bn by FY25, continuing to pursue business development plans and also ensure continuity of key management personnel across functions in the company,

* Well on track to achieve FY25 sales guidance of Rs25bn: MLIFE had concluded three land deals in FY22 aggregating to a total GDV of Rs38bn of which the Dahisar JDA (GDV of Rs10bn) and Kandivali East outright purchase (GDV of Rs25bn) were the major projects. Further in FY23 and Apr’23, the company has added fresh land GDV of Rs39bn, including a Rs5bn society redevelopment project in Santacruz and another Rs8.5bn project in Malad, Mumbai, which takes the cumulative GDV of land bank addition over FY22-FY24YTD to Rs77bn. In FY24, the company is targeting nine new launches with GDV of Rs35-40bn including the Kandivali, Mumbai project (Dahisar project pushed to FY25) along with Citadel, Pune and Hosur Road, Bengaluru. While MLIFE has achieved Rs18.1bn of FY23 sales bookings (up 76% YoY), given the robust launch pipeline for FY24 along with new project additions, we estimate FY24E and FY25E sales bookings of Rs23.1bn and Rs27.1bn, respectively. Hence, we believe that the company is well on track to achieve its medium-term guidance of Rs25bn of residential sales by FY25.

* Healthy balance sheet to enable company to pursue growth plans: While the company has been pursuing an aggressive business development strategy in its residential business over FY22-YTDFY24, it also remains cognisant of not stretching its balance sheet too much at one go and had estimated consolidated gross debt of Rs7.1bn as of Mar’23 of which the standalone balance sheet had just Rs2.4bn of gross debt with balance debt of Rs4.7bn in other residential SPVs and IC & IC business. The company’s overall gross debt levels have remained steady at Rs7-8bn over FY20-23.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://secure.icicidirect.com/Content/StaticData/Disclaimer.html
SEBI Registration number INZ000183631

Above views are of the author and not of the website kindly read disclaimer