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Strength anticipated in Q4

Strong operational performance

Mahindra Lifespace Developers (MLIFE IN) achieved a quarterly sales of INR 4.4bn, with volume of 0.37mn sqft. Sales value showed a drop of 3% QoQ and 2% YoY. It launched 0.62msft of saleable area at Mahindra Citadel – Phase 2 in Pune and Happinest Palghar 2 – Phase 2, which received good traction. Average realization soared 45% QoQ and 62% YoY, led by the increased sales of premium inventory in the sales mix. Revenue from operations was INR 820mn, down 56% YoY but up 361% QoQ. To the total, the residential segment contributed INR 807mn and IC & IC segment INR 13mn.

Integrated cities and industrial cluster segment – Milestone quarter

The Integrated Cities & Industrial Cluster segment experienced a sluggish first half (H1), but saw significant improvement in Q3, marking Q3 the most successful quarter to date. MLIFE secured a land leasing of 77.4acres, generating a lease income of INR 2,238mn, at ~7x of Q2FY24 and ~3.2x of Q3FY23 level. This achievement is attributed to the robust performance of MWC Jaipur, which leased ~60 acres of land in Q3.

Promising project pipeline for Q4FY24

MLIFE saw a robust launch pipeline for the final quarter of the fiscal year. Recently, it obtained RERA approvals for Mahindra Vista (Kandivali project), with the first phase comprising INR 12bn worth of premium housing inventory (scheduled for a launch in Q4). Additionally, projects in Wagholi Pune, Hosur Road Bengaluru, and Lakefront Phase 2 Chennai are slated for launch in Q4, collectively amounting to an inventory of ~INR 14.5bn. The Malad Redevelopment Project is also in the pipeline, although it could be rolled over to Q1FY25.

Valuation: Revise to Accumulate with a higher TP of INR 614

MLIFE is geared to seize mega business development opportunities. The positive progress on the Thane land parcel, strong launch pipeline with huge captive land bank offer robust operational visibility in the medium term. Due to delayed project deliveries, we pare our revenue by 17% for FY24E and 20% for FY25E and introduce FY26E. So, we revise to Accumulate from Buy but at a higher TP of INR 614 from INR 588, on 1.25x one-year forward NAV

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