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New launches drive performance Achieves the highest ever quarterly collections

* Mahindra Lifespaces (MLDL) achieved bookings of INR10.2b, up 195% YoY (in line) in 1QFY25, driven by a strong response in the new projects in Pune and Bengaluru, which were launched towards the end of 4QFY24. These two projects generated ~INR7b of combined pre-sales.

* IC&IC segment – In the IC segment, MLDL leased 19 acres across Jaipur and Chennai for INR0.8b in 1QFY25. Realization stood at INR40m/acre.

* Cash flows – The company collected INR5.4b during the quarter and spent INR.8b on construction. The OCF for 1QFY25 stood at INR2.9b, leading to a decline in net debt to INR4.0b from INR6.4b in 4QFY24.

* P&L performance – In 1QFY25, MLDL’s revenue came in at INR1.9b, up 92% YoY, driven by 0.1msf completion of the premium project Vicino. It reported an operating loss of INR0.4b. However, PAT came in at INR127m, aided by INR365m of contribution from the JV projects and the IC business.

Key highlights from the management commentary

* New launches: Management is aiming to launch over INR35b worth of inventories across seven projects in the next three quarters. The key among them include Kandivali Phase 2, Malad redevelopment, Citadel, Pune phase 3, and the plotted project in Jaipur.

* Business development: MLDL signed INR20b worth of projects, and it currently has a pipeline of INR200b. Hence, management does not wish to chase new deals and its focus remains on signing projects that fit the profitability framework, especially given that the expectations of land owners have intensified. In FY24, the company spent INR8.5b on BD, and the spending for FY25 will be similar or lower.

* P&L: Most of the projects currently getting completed were launched before FY20. These projects are either in the affordable segment or have faced multiple execution challenges and hence, will continue to drag the P&L performance for a few quarters more. However, the profitability will improve from FY26.

Valuation and view:Growth priced in; reiterate Neutral

* MLDL posted a strong booking growth and it is well poised to sustain the momentum given the healthy project pipeline across all focused markets.

* We estimate the value of the existing pipeline at INR40b. Further, at the CMP, the residential segment is valued at INR72b, in line with our DCF-based value of INR74b. This indicates that the near-term growth potential is already factored into the current price.

* We reiterate our NEUTRAL rating on the stock with an unchanged TP of INR600, indicating fair valuation.

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SEBI Registration number is INH000000412