IGI Logo

Witnessed steady demand in ongoing projects

Mahindra Lifespace (MLDL) achieved bookings of INR4.4b, flat YoY/QoQ (13% lower than our estimate). Sales volume stood at 0.5msf, down 13% YoY. Bookings for 9MFY24 stood at INR12b, down 14% YoY. During this period, the share of sustenance sales increased 3x to INR9b vs. INR3.3b in 9MFY23.

IC&IC Segment – The leasing traction in the IC segment picked up sequentially as MLDL achieves the highest ever leasing of 77 acres across Jaipur and Chennai. Realization was steady at INR29m/acre.

Cash flows – The company collected INR4b during the quarter and spent INR1b on construction. In 9MFY24, it generated surplus operating cash flows of INR3.8b. Net debt (Resi+IC&IC) stood at INR3.1b vs. INR2.3b in 2QFY24.

P&L performance – MLDL’s revenue declined 56% YoY, but was up 4x QoQ to INR0.8b (vs. our estimate of INR0.3b). It reported an EBITDA loss of INR0.4b. However, PAT came in at INR0.5b, aided by INR0.75b contribution from JV projects and IC business.

Key highlights from the management commentary

New launches: The company is set to witness multiple launches in 4QFY24, including its key project at Kandivali (already launched). New projects at Pune and Bengaluru are at an advanced stage of approvals and are likely to be launched in 4Q. The GDV of all new launches is in excess of INR25b.

BD: The pipeline continues to remain strong at INR50-60b, of which, ~60% is in MMR and 20% each in Bengaluru/Pune. The immediate goal is to get a fair share of the market in the existing three markets, before venturing out in NCR (and other cities).

MLDL is also actively exploring the possibility of plotted projects at all the land parcels in the IC vertical and there will be multiple projects launched in this segment at Chennai and at other locations.

IC Segment: The company continues to look for an anchor at Ahmedabad, while remaining open to the possibility of an outright sale in the event of a large transaction. It is not inclined toward engaging in small leases of 2-5 acres, as it may dilute the overall potential of the park.

Valuation and view: Growth priced in; maintain Neutral.

While 9MFY24 pre-sales performance was moderate, the launch pipeline remains on track for 4QFY24 launch, and hence, we retain our FY24E/FY25E pre-sales. With higher-than-expected contribution from its JV business, we raise our PAT for FY24E/FY25E by 184%/10% to INR227m/INR1.3b.

We estimate the value of the existing pipeline at INR31b. Concurrently, at the CMP, the residential segment is valued at INR69b, in line with our DCFbased value of INR72b. This indicates that the near-term growth potential is already factored into the current price.

For More Motilal Oswal Securities Ltd Disclaimer http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html

SEBI Registration number is INH000000412