Buy Lodha Developers Ltd for the Target Rs 1,400 by Emkay Global Financial Services Ltd
We maintain BUY on Lodha Developers (LODHA) and revise up our TP by 12% to Rs1,400 from Rs1,250, based on 8x EV/embedded EBITDA at 21% premium to the NAV (the stock is trading at 3% premium to NAV). The TP revision is driven by better land monetization at Palava City (data-center segment). In 1QFY27, LODHA delivered pre-sales of Rs46.3bn (4% yoy), primarily led by sustenance sales. Collections remained healthy at Rs42.1bn (46% yoy). Residential sales are expected to pick up pace in the remaining year. A key highlight of 1QFY27 is the monetization of land in Green Data Center Park at Palava City for ~Rs425mn/acre, substantially higher than the previous transaction in CY25 at Rs210mn/acre. The balance sheet remains strong, with net debt declining by Rs4.5bn qoq to Rs49.3bn and net-debt-to-equity improving to 0.2x.
1QFY27 snapshot
Operational: In 1QFY27, LODHA reported pre-sales of Rs46.3bn (+4% yoy) vs our estimate of Rs47bn led by sustenance sales. The company launched a new phase of a project in MMR during the quarter, with GDV of Rs3.3bn. Collections and operating cashflow (OCF): Collections remained strong at Rs42.1bn (+46% yoy). OCF stood at Rs18.9bn (+96% yoy). Financial: Revenue stood at Rs50bn (+43% yoy), EBITDA at Rs19.2bn (+95% yoy), and EBITDA margin at 39%; the higher margin was on account of better land sales in the quarter and PAT at Rs13.7bn (+103% yoy). Net debt: Net debt declined Rs4.5bn qoq, coming in at Rs49.3bn in 1QFY27. Net debt-to-equity is 0.2x.
Residential to pick up pace
1QFY27 pre-sales were impacted by limited new launches. The company launched only a new phase of a project in MMR with GDV of Rs3.3bn. However, launches are expected to accelerate in the remaining year (launch pipeline GDV: Rs241bn). Demand remains healthy, per the management. An NCR project is set to be launched in FY27 itself. Opening of the Mulund-Airoli-Palava Freeway is expected after the monsoons and is likely to improve sales velocity in Palava. We expect Lodha to meet its FY27 pre-sales guidance of Rs240bn
Improved monetization of land bank in Palava
Conclusion of the data-center land transaction at a higher-than-expected valuation in 1QFY27 reinforces optimism around LODHA’s prospects in the space, with land earmarked for data centers having increased from 400acres to 660acres. Of this, 132acres has already been sold and another ~143acres is expected to be monetized over the next 3- 4 years. This would generate ~Rs90bn (at Rs600mn/acre). Further, this would fund the build-out of 1GW (input power) of powered shell capacity on ~90acres which is expected to generate >Rs20bn of annual rental income, with the balance ~300acres earmarked for future expansion.
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