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20:20 innings intact in FY25; outlook upbeat

Macrotech Developers (LODHA IN) reported presales of INR 48bn in Q4FY25, up 14% YoY and 7% QoQ, translating to FY25 presales of INR 176bn, up 21% YoY. This is backed by robust collections growth of 27% YoY in Q4 and 29% YoY in FY25, aiding in core FCFF growth of 21% YoY for Q4 and 26% YoY for FY25. Embedded EBITDA margin of 33% is aided by increasing share of high value markets of South & Central Mumbai and Western suburbs in presales to 44% in FY25 vs 37% in FY24. ROE stands at 20% on proforma P&L (based on presales) for FY25. FY26 outlook remains upbeat: 1) INR 210bn in presales, up 20% YoY, aided by a 6-7% increase each in footfalls, conversions and pricing, 2) embedded EBITDA margin sustaining at 33%, implying strong demand for high value products, and 3) robust business development (BD) opportunities intact – plans to add projects amounting to a gross development value (GDV) of INR 250bn (FY25: INR 237bn). Overall, LODHA remains a prime beneficiary of industry consolidation, aided by its robust execution, industryleading KPI, and large-scale operations. Retain Accumulate.

High value markets aiding in presales growth: South & Central Mumbai and Western suburbs accounted for 44% of pre-sales mix in FY25, up 45% YoY. New markets of Pune and Bengaluru accounted for 18% of overall presales mix vs 21% in FY24. In the Pallava township, a mix of luxury and premium segment (>INR 15mn) has increased to 20%. Notably LODHA products achieved an average realisation growth of 4% YoY. Overall, under construction projects are accounting for 50% of the presales, new launches at 30% and ready inventory at 20%.

Guidance remains upbeat and implies favourable market share outcome for Tier 1 developers: Management remains confident of delivering on its 20:20 Action Plan (20% presales growth and 20% ROE) in the medium term. FY26 presales guidance of INR 210bn is backed by 6-7% increase in each of the following – footfalls, conversions and pricing. Notably, MMR is expected to account for ~40% of presales growth while Pune and Bengaluru for the rest 60%. New BD for FY26 is envisaged at INR 250bn (vs INR 237bn in FY25). Overall, both the growth and BD guidance implies customer and landowners’ preference to Tier 1 developers, aiding in industry consolidation.

Retain Accumulate with a TP of INR 1,300: We view LODHA as a key beneficiary of industry consolidation, led by strong execution, industry-leading KPI and large-scale operations. Also, improving core FCFF trajectory (INR 71bn in FY25, up 26% YoY) and repricing of Pallava land (up 8x during CY21-24) should support valuation. The Palava township offers multi-decade visibility on earnings, which underpins >25% premium on target multiple. We currently have an Accumulate rating and Mar’26 TP of INR 1,300. Key upside risks include faster-than-anticipated pace of market share expansion in existing markets and entry into new geographies. Key downside risks are subdued sales velocity and land monetization in the Pallava township.

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