Buy Lodha Developers Ltd For Target Rs 1,250 By Emkay Global Financial Services Ltd
We reinitiate coverage on Lodha Developers (LODHA) with BUY and TP of Rs1,250, based on 8x EV/embedded EBITDA, at 31% premium to the NAV (the stock is trading at 5% discount to the NAV). LODHA is among the largest players in terms of pre-sales – it has established significant scale in MMR (is the largest player) and made considerable progress in Pune (is #2), while scaling up in Bengaluru (FY26 pre-sales of Rs24bn, within 2Y of market entry). It has maintained business development strength (GDV of >Rs104bn) since 3Y, led by solid operating cashflow (Rs189bn over the period). LODHA holds large land parcels in Upper Thane and Dombivli, which are expected to benefit from the Navi Mumbai International Airport and other large upcoming infrastructure projects. LODHA’s foray into the data center space would lead to a separate revenue stream (~Rs30bn rental income over the next 7-10Y), thus unlocking value. Since its listing in FY21, LODHA has posted pre-sales CAGR of 28%, ending FY26 with pre-sales of Rs205bn (16% YoY). We expect FY27E/28E presales to be Rs240bn/265bn, respectively. Key monitorables: land monetization for data centers and infrastructure upgrades around Palava City in Dombivli
Strong execution capabilities
LODHA is among the leading real-estate developers, having delivered >110msf of real estate. Its FY21-26 pre-sales CAGR is 28%, with sales worth Rs798bn of real estate, backed by the dominant MMR and Pune markets. Bengaluru and NCR markets would provide further headroom for pre-sales growth.
Foray into data center could lead to significant re-rating
To unlock value, LODHA has earmarked ~400 acres in Dombivli for data-center development, leveraging strong location advantages and supportive policies. Currently, the rate of sale of land is ~Rs350mn/acre, with potential to scale up to Rs600– 700mn/acre in coming 3-4Y. In addition, LODHA targets >Rs30bn annuity income from powered shell data-center assets.
Infrastructure upgrades to aid faster absorption and premiumization
Upcoming large-scale infrastructure developments around Dombivli are expected to support both volume and pricing growth for Palava City. Ongoing premiumization is underway with a healthy customer response, thus leading to improving margins
Debt-free target for DevCo
LODHA’s FY23-26 net collections CAGR and operating cashflow CAGR stand at 16% each, with collections-to-pre-sales consistently above 80% and operating cashflow-tocollection above 50%. The company’s higher operating cash flows have led to continuous reduction in net debt while it has maintained business development momentum. Current D/E is 0.23x and LODHA aims to make the DevCo debt free going ahead.
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