IGI Logo

A strong start to FY27 Pre-sales ahead of expectations; we maintain 27% CAGR in FY26-28E

Mahindra Lifespaces (MLDL) posted record pre-sales of INR9.2b (+106% YoY) in 1QFY27, 15% ahead of our expectations. Pre-sales were driven by the successful launch of the Rainforest project (Bhandup), which contributed ~50% to pre-sales, whereas sustenance sales accounted for ~42%. BeaconHill (Mahalaxmi) and Citadel P-3 (Pune), launched in 1QFY27, will contribute to presales from 2Q. Five more projects are expected to be launched in FY27, and the company has reiterated its FY27 pre-sales guidance of INR45-50b. We maintain our pre-sales CAGR estimate of 27% to reach ~INR54.6b during FY26-28.

Strong launch pipeline provides healthy growth visibility

MLDL’s business development (BD) remained robust with the addition of the K2 project in Kandivali (Mumbai), having INR56b GDV. With this, the total residential GDV pipeline has increased to ~INR499b, which provides strong launch visibility over the medium term. Further, MLDL targets BD worth INR100-200b during FY27 as it intends to leverage the prevailing macro scenario to acquire additional land. This will enhance the growth visibility in the coming years.

Lukewarm performance in IC&IC business but likely to pick up

Revenue from the IC&IC business declined 66% YoY to INR408m due to slower deal momentum during the quarter. MLDL signed two customers during the quarter – INR78m in DTA and INR21m in SEZ. O&M and Other Income contributed an additional INR309m. MLDL has a healthy pipeline of leasing in 2QFY27, which should aid the IC&IC revenue in the coming quarters. Further, the business continues to offer significant long-term monetization potential, supported by 1,545 acres of leasable inventory and an estimated revenue opportunity of INR50-60b, with PAT potential of ~INR15b (MLDL’s share).

Cash flows remain steady

The company incurred an INR1.1b outlay towards land payments during 1QFY27, whereas INR4b was spent towards project execution. Collections remained steady at INR5.3b (up 2% YoY), but we expect this to improve in the coming quarters with progress in project execution. Overall, we expect collections at 29% CAGR to INR35.2b during FY26-28E. MAHLIFE has maintained a net cash balance sheet with a net cash-to-equity ratio of 0.20x.

Financial performance

In 1QFY27, MLDL’s revenue came in at INR9.6b, up 29x YoY. Occupancy certificates (OCs) were received for Eden Phase 2 and Luminaire, enabling revenue recognition. Luminaire has now achieved 100% profit recognition, contributing nearly INR6b in profits, while Luminaire and Eden together delivered ~26% PBT margins. Overall, EBITDA stood at INR945m against a loss of INR550m in 1QFY26. PAT stood at INR855m, up 67% YoY.

Valuation and view

We value the residential business on a DCF basis, with a WACC of ~12.3%, translating into INR78b. We reiterate our BUY rating on the stock with a revised TP of INR470, indicating a 25% potential upside.

For More Research Reports : Click Here 

For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH000000412